SMITHS FALLS — Long before reports came out suggesting that Doug Ford’s Progressive Conservative government would turn to a private-retail model for cannabis sales, two eastern Ontario communities had hitched their wagons to the budding industry.
We don’t yet know much about the government’s plans, but we do know one thing for certain: legal cannabis is coming, and it will create economic winners and losers throughout the province.
Potential winners include companies such as Canopy Growth Corporation — already considered the largest cannabis company in the world — which is expecting further growth once recreational cannabis is legalized on October 17.
The losers will be the producers and sellers who have been operating in grey and black markets. It’s impossible to say precisely how legalization will affect Canada’s underground cannabis market, which is valued at roughly $5 billion. But companies such as Canopy Growth will doubtless steal customers and revenue from sellers who have been operating in the shadows.
It’s also unclear how legalization will affect First Nations communities that have come to rely on cannabis revenue. Take Tyendinaga Mohawk Territory, for example, the main reserve of the Mohawks of the Bay of Quinte First Nation. Provincial and federal law-enforcement agencies have generally left the territory’s dispensaries to their own devices (whereas in Hamilton and Toronto, for example, police have shut down dozens over the past few years). But it’s difficult to say what their place will be in the cannabis economy after legalization.
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Smiths Falls: The ‘pot capital of Canada’
The former Hershey chocolate factory in Smiths Falls is buzzing. For years, the 430,000-square-foot facility sat vacant, and municipal leaders wondered whether it would ever be used again. Today, construction is underway on a 130,000-square-foot expansion.
In 2014, Canopy Growth (then known as Tweed Marijuana Inc.) set up its growth facility here, and its workforce has since increased to more than 600. It already employs more people than Hershey did at its peak, and it continues to expand — the company currently has hundreds of job openings.
Canopy Growth has been refining its manufacturing and distribution processes under strict Health Canada guidelines. In addition to the various strains of cannabis it grows and distributes, the company has begun producing oils and softgel capsules, as well as beverages (which are still in the testing phase).
A CIBC report released in May estimated that the market for legal cannabis in Canada would approach $6.5 billion by 2020, rivalling the size of the country’s wine market. And if Ontario moves ahead with private retail, Canopy Growth could benefit further: CEO Bruce Linton suggested that the company could have up to 100 stores in operation by the end of the year.
Mayor Shawn Pankow notes that Smiths Falls is not just benefitting economically from Canopy Growth’s success — it also takes pride in its newfound reputation as the “pot capital of Canada.”
The Hershey Company, once the town’s biggest employer, shuttered its Smiths Falls facility in 2008. Other major local employers, including the Rideau Regional Centre and a Stanley Tools factory, closed over the following couple of years. Altogether, 1,500 people lost their jobs in those shutdowns.
“For a long time there was a cloud over our community — a bit of uncertainty about our future,” Pankow says.
When Canopy Growth arrived in 2013 in search of a manufacturing facility, Pankow says, “there was absolutely no reluctance” on the town’s part. “You can look back and ask, ‘Were we desperate?’ Well, absolutely. We were looking for opportunities for people in our community, and trying to fill that space.”
Tyendinaga: ‘It’s a lifestyle we’ve only dreamed about’
The cannabis business is also booming in Tyendinaga Mohawk Territory, about 150 kilometres southwest of Smiths Falls. The territory is home to roughly 40 dispensaries; on some stretches of road, there’s a dispensary every 100 metres or so. The shops mainly attract customers from Kingston, Belleville, and the east end of the GTA.
Tim Barnhart, who owns the dispensary Legacy 420, says cannabis sales have brought a renewed sense of hope and prosperity to the community. “You’re probably talking $50 million to $60 million total in revenues on reserve,” says Barnhart, who grew up on Tyendinaga. “That’s new houses. Fresh water. It’s a lifestyle we’ve only dreamed about. We’ve always had to leave to find good work. But with this, we can stay and succeed.”
But with legalization just around the corner, Barnhart says, Indigenous dispensary owners are worried that cannabis users will gravitate toward off-reserve private retail stores — which will be regulated by Health Canada and the province.
“We are absolutely concerned,” says Barnhart, who is also president of the National Indigenous Medical Cannabis Association. He hopes dispensaries in the community will respond to the looming changes by regulating themselves.
Barnhart thinks Indigenous businesses will be able to compete with the big producers — but only if they recognize that consumers will expect their cannabis “to be a tested, regulated product.”
Band leadership has also acknowledged that the future of dispensaries at Tyendinaga is a “highly sensitive issue.” Talks between Mohawk leaders and federal and provincial governments are scheduled to take place this summer. Representatives will discuss taxation and revenue, policing, and public health and safety.
Mohawks of the Bay of Quinte chief Don Maracle says Indigenous leaders across Ontario want the federal government to recognize that First Nations have the “authority to regulate and license cannabis retail on reserves.”
As long as they lack formal recognition, First Nations dispensaries will be subject to police raids. Such raids haven’t happened at Tyendinaga yet, but police have charged Indigenous cannabis retailers elsewhere in the province.
Seth LeFort, currently based at Six Nations of the Grand River, near Brantford, is fighting charges following a November 2017 raid on his dispensary. He hopes the provincial and federal governments will come to an agreement with First Nations not to interfere with on-reserve dispensaries.
Of the cannabis economy, LeFort says, “If left uninterrupted, the Indigenous population will flourish. That’s my prediction.”
This is one in a series of stories about issues affecting eastern Ontario. It's brought to you with the assistance of Queen’s University.
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