N.S. farmer urges rule changes so he can sell cannabis directly to consumers

A craft cannabis farmer in Nova Scotia's Annapolis Valley says his dreams of a lucrative cash crop have withered due to restrictive federal and provincial regulations.

Adam Webster says he's hoping the provincial government will back local rules to allow him to sell cannabis directly to retail customers from his farm near Port Williams, N.S.

"I'd like to be able to sell straight to customers, either straight from the farm or at a farmers' market," said Webster, co-founder of Annapolis Valley Craft Cannabis.

"I feel as long as we pass the tests that Health Canada requires, what's the reason not to? If it's safe for the end consumer, I think we should be able to sell straight to them."

Webster's micro-cultivation licence was issued by Health Canada in January 2020. But his options to sell his crop are limited. A micro-cultivator may only sell to individuals or companies that hold a higher level of Health Canada licence.

These licensed processors are the only ones allowed to test and package. A smaller group with a sales approval from Health Canada can sell cannabis directly to medical patients, or to official provincial cannabis retailers, such as the Nova Scotia Liquor Corporation (NSLC).

But Webster still hasn't found any legal buyers offering a viable price for his cannabis crop.

"As of right now we've made no income," he said.

Help for a family farm

Webster's family has been farming in the Annapolis Valley since the late 1700s. His cannabis field is on land his grandparents bought near the Cornwallis River in the 1940s.

He hoped a micro-cannabis operation would supplement income from the 40-hectare farm's pesticide-free fruits and vegetables.

"My hopes were just to have an extra layer of security for the farm to kind of keep it going, to fall back," he said. "We considered other crops, high-value crops like wine and apples. But then when cannabis was legalized, that's the thing we can probably make the most money on, per our small acreage.

"This kind of props up the vegetable farming, because you don't make as much money on vegetables, obviously."

$80K startup cost

Webster and his father invested approximately $80,000 in the cannabis operation, including an outdoor fenced enclosure, and insulated shipping containers where seeds can be sprouted until they're ready to be planted outdoors.

The farm also pays a $2,500 annual Health Canada licence registration fee.

Webster's business plan anticipated buyers paying around $5 per gram of raw cannabis. But the highest offer he's received is $1 per gram, with one offer as low as 20 cents per gram.

"When it's sold at the NSLC for $15 a gram, that seems like quite a discrepancy," he said.

Licensing complications

As a micro-cultivator, he can grow plants with a maximum canopy of 200 square metres.

He says the sticking point is the conditions attached to his Health Canada micro-cultivation licence. Webster says the extra steps involving licensed processors cut farmers out of the financial loop.

"Probably just because there are so many layers it has to go through before it gets to the market, the NSLC or whatever provincial retailer. It just seems there's a lot of stuff in the middle before it reaches the customer," he said.

Webster says he's not interested in being a licensed processor, because that requires hiring extra staff such as cannabis quality testers.

He also wants to focus his cannabis business on his area of expertise: Farming. This leaves the long-term future of his business up in the air.

"We're going to give it at least another year, maybe two.... But if something doesn't change within five years, I doubt we'll still be doing this," he said.

Webster says his letters to provincial and federal politicians remain unanswered.

An online petition to change cannabis regulations has so far garnered more than 275 electronic signatures.

Common challenges

David Brown, a former Health Canada cannabis policy analyst who provides regulatory advice to Canadian cannabis companies, says Webster's predicament is part of the growing pains of the industry.

"I think it's reflective of a lot of the frustrations I'm hearing from a lot of micros in the industry right now," Brown said.

Brown says because craft cultivators often grow outdoors, their cannabis often contains less THC, the primary chemical responsible for the high cannabis users enjoy.

"One of the barriers for any cultivator to get into a provincial market right now is that provinces have a preference for products that are over 20 per cent THC," Brown said.

"There's a perceived, or real consumer demand there. So if you have a crop that's under 20 per cent, you might get less for it, because there's an impression that consumers are going to want to pay less for that as well."

Brown believes that trend will eventually change, but only as the market becomes more sophisticated.

"In the same way that most people don't go into a store and choose wine based on the highest alcohol percentage ... cannabis companies have the opportunity to brand themselves in that way," he said.

'Farm gate' sales possible

Brown says Health Canada's current legislation permits cannabis cultivators who have a processing licence to sell from their farm, which the industry calls "farm gate" sales.

But since provinces regulate cannabis retailers, local rules have to be changed to allow this to happen.

He says Ontario is set to issue its first craft cannabis farm gate approvals in the next week or so. He thinks Nova Scotia may follow, but not quickly.

"Nova Scotia hasn't established a framework for that.... But there is the potential for that down the road," Brown said. "I don't think the provincial market in Nova Scotia is quite ready for that yet."

Craft cannabis in NSLC?

It's possible that Nova Scotia craft cannabis is for sale in the province, just under a different brand.

"Licensed Producers are not required to disclose to us where they get their cannabis so it seems you'd have to ask them directly," said NSLC spokesperson Bev Ware.

Ware says none of the province's 14 micro-cultivators, four of whom hold processing licences, have applied to sell directly on the NSLC's shelves.

"When they do, we're happy to talk with them about listing their products," she said.

The Nova Scotia government wouldn't discuss the possibility of farm gate cannabis sales directly.

The provincial Department of Finance controls the legislation governing alcohol and cannabis sales, and without regulatory changes, sales at a farm, or a farmers' market, remain impossible.

"We continue to monitor how best to meet consumer demand while protecting public health and safety," said finance spokesperson Tracy Barron.

Meanwhile, Webster says he's in talks with a licensed producer in Saskatchewan who has offered to buy this year's crop at $1 per gram, "which is not what we hoped for, but which is better than 20 cents a gram."

"That would mean that we're able to continue going," Webster said.

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