The Cannafesto

After 3 years of hard work we have made the decision to not continue with our cannabis micro-cultivation licence. This is because we have not sold anything in all this time, and the reason we have not sold anything is only because of the policy, rules and regulations put in place by Health Canada. 

I am writing this not because I want to rant, but because I want anyone who is considering starting a cannabis business to know what they are getting into so they do not end up wasting their time, energy, and money. I could do this in a very bitter way and it would feel really good to get all the anger out that I have at this system, but I’m choosing to do this in a level-headed way that shows the facts of what it’s like to work within the Health Canada system and to share our personal experience with it to hopefully help others. 

First I’d like to share this graph that shows the breakdown of who your money supports when you purchase cannabis on the legal market.

As you can see on the graph the “producer margin” is barely visible. It is notable to mention that NSLC marks up it’s cannabis by 50%

The next graph shows national sold and unsold cannabis by month

As you can see the tall green and grey lines are unsold cannabis and the tiny grey and purple lines are sold cannabis. This graph hasn’t been updated in about a year so we don’t know what happened after march 2021 yet.

The above graph shows national production vs inventory in kilograms. “Unpackaged” means it hasn’t been placed in retail-ready containers yet. This shows how much cannabis is sitting unsold in cannabis businesses.

Next I want to show you how the average consumer price for cannabis is dropping:

And the projected price for 2022:

As you can see, growers are making less and less for their cannabis, when they can even sell it. In our experience as an outdoor micro grower the prices that were thrown around for our dried cannabis were between 20 and 75 cents a gram, but those talks never went anywhere. This is down from 1-3 dollars a gram when we were first licensed.

The next image shows the types of cannabis licences you can apply for to be a part of the legal market in Canada.

The licence we have is a micro-cultivation licence.  The only legal route for our cannabis to get to the end consumer at NSLC is for it to go through a processing licence, then a sales licence (not shown), and then to go to NSLC.

If Nova Scotia were to allow farm-gate sales, we would need to have a micro-cultivation licence, a micro-processing licence, a retail operator licence and a retail store licence. All of these have annual or bi annual fees. 

As you can see this is a complicated and expensive process to go through to end up not making any money in. 

In order to get a micro-cultivation licence you must go through a complicated licensing process which can take anywhere from a few months to several years (it took us about a year). You must build your facility and growing area completely before getting the licence, and it must be built  within the strict rules and regulations of the Cannabis Act and Cannabis Regulations. Here is an example of some of the wording used in the Cannabis Act

“93 (1) Dried cannabis or fresh cannabis that is a cannabis product — or that is contained in a cannabis accessory that is a cannabis product — must not contain or have on it anything other than anything referred to in item 1 of Schedule 1 to the Act.” 

You are expected to understand and follow the hundreds of pages in the Cannabis Act and Regulations.

Next I’d like to show you the letter I wrote to various levels of government last year (including the prime minister, minister of health, NS premier, NS minister of finance, our MLA and MP). This was signed by 5 NS micro cannabis growers.

“I am writing this to express the difficulty that holders of a Cannabis Micro-Cultivation License are experiencing in making any money in this industry due to all the barriers currently in place for “Micros” under the present government regulations. 

We have been licenced since January of 2020 and have produced our first crop in October, and are currently sitting on it as of March 2021. Under the current laws we must sell our harvest to a standard Licensed Producer, (LP) or processor who will then be able to package it and sell it to a provincial retailer such as NSLC in Nova Scotia, (the only legal retailer in the province).  We have contacted every standard LP in Nova Scotia and of the handful that replied, only one has made an extremely low offer of 20 cents per gram. This is simply insufficient for Micros to continue and have a viable business.

We pay $2,500 a year for registration to Health Canada to produce Cannabis.  Over $80,000 in fees and buildings in order to get licenced which had to be completed prior to submitting our application to Cannabis Tracking and Licensing System, (CTLS). And we have no way of moving our product except for by the whim of standard LPs. The government, (CRA), collects $1.00 per gram on excise tax. The illegal market is making at least $2-5 per gram while the government continues to let this black market exist. The public interest is very high in buying locally grown cannabis, especially in Nova Scotia, but we must turn interested parties away as we cannot supply them under current laws.

If the government were to allow farm-gate sales it would enable Micros to survive as we would be able to offer a lower price and better quality to customers through direct sales and cut out the middleman.  All current government taxes would still be collected similar to craft beer and wine sales that are permitted. This would drive down the illegal market as people would feel more comfortable purchasing through legal means at a reasonable price as we’ve seen in Indigenous cannabis stores. I understand the government is concerned about quality of product and the sale of illegally produced cannabis through licensed Micros. But wouldn’t that risk be less than the current situation we are in where people that purchase illegal cannabis are not protected through regulations? Farm-gate sales would be grown in Health Canada approved conditions and could have constant video surveillance. It would be far safer for the public than the current illegal market.

The public wants locally-grown quality cannabis from locally owned companies and farms. As it is right now the large multinational companies that own the standard LPs control the legal market. With the huge influx of Micro-Cultivation Licenses being approved in Canada, they are going into this with the promise of a high value business, but the reality of the current laws mean that many of these businesses will go bankrupt.

If the government intends on Micros being part of the legal market then the current barriers make it nearly impossible, it feels much more that we are given a symbolic gesture to be in the market with no real support or plan of how that will translate to reality.”

I received a response from everyone I contacted eventually and the responses just boiled down to “we are aware of the trouble micros are having but these are the rules as they currently are.” 

One Health Canada employee that I spoke to recently in January 2022 said that they are just beginning a 3 year review process. So from that it seems highly unlikely that anything major is going to change any time soon (if it ever does change).

Now I’d like to give you a summary of the last 3 years since we’ve been involved with the cannabis market.

2019 was the year of getting our licence. This process is very long and complicated, with a lot of back and forth. If we didn’t have a consultant help us with it, it probably would have taken 2 years and I would have pulled all my hair out. It includes getting security clearances for the 3 people required to get the licence (Responsible person in charge, Master grower and Head of security), writing SOPs for everything that happens within the confines of your licence, making a site and floor plan, notices to local authorities, organizational security plan, responding to “requests for more information”, good production report, survey information (surveying the site), and much more. 

The structure and site must be all built, ready to go and following the guidelines exactly before you can get your licence. Particularly important is security of the fence, doors, locks and outer walls so people can’t get in to your cannabis. Sanitizability of everything within your growing, drying and curing rooms is super important, this means everything needs to be able to withstand constant washing and sanitizing. Flow of product through the facility, from growing area to trimming, drying, curing and storage needs to be clear. Heating and ventilation is important. All equipment needs to be cleanable and they seem to prefer it be all new.

Once you get near the end stage of licensing, with the requests for more information they may ask you to make changes to your structure. And what they’re looking for will depend on the person you get, one person told us that plastic dividers between rooms were sufficient to combat contamination, another said it had to be a door, and yet another said it had to be a door that was not made from wood. Another thing we had to change was to re-sand and repaint the entire inner walls and ceiling because of slight depressions in the plywood we used. Another was to fill in every screwhead with putty and paint over it. All of this was to ensure that no dirt or bacteria could be caught in indentations.

We signed up with a cannabis broker to help sell our product and a seed-to-sale software company for keeping records.

The software company turned out to be very expensive and came with lots of problems so we decided to change it to paper records instead which was much easier. Here’s some of the issues we had: 

• we paid for a full year before we had our licence because we were led to believe we needed to sign up then
• we purchased a tablet that stopped working within months of receiving it
• we were led to believe the tablet was necessary to use the software
• support for the software sometimes took weeks to respond
• support could not "fill in the gaps" of basic questions like "how can I get my plants and seeds into the program"
• support said they would walk through every step of getting us set up then stopped contacting us
• support was argumentative and did not believe issues we happening until I contacted them several times about it
• software is clunky, unintuitive and full of glitches

The fees of applying and cost of building added up to more than $80,000 in the first year.

In early 2020 we received our licence. 

Every month you have to file a report to the Cannabis Tracking and Licencing System (CTLS) of Health Canada and one to the CRA whether you are selling anything or not. For us this just meant keeping track of our seeds, plants and dried cannabis. In May we started growing our first crop of cannabis in our Outdoor Grow Area, aka the field. When growing there are a lot of records to keep including: growing information, substances added to cannabis, temp and humidity, destruction records, lot and batch numbers, scale calibration, filter replacements, visitor sign in sheet, plant inventory, dried flower inventory, shipping and receiving. 

How you dispose of trimmed leaves, dead plants and other waste is very important to Health Canada, because they want to prevent people from getting into any part of the plant that could contain THC. 

In the fall after everything was harvested, dried and cured we were told by our cannabis broker that they could not sell our product because it wasn’t a large enough quantity and not high enough THC.

So in 2021 we began contacting other Licenced Producers (LPs) to try to sell our cannabis, including every possible one in Nova Scotia. There were some that seemed interested at first and there was some back and forth but nothing ended up working out. It seems what they are looking for is large quantities (over 50kg) of high THC (over 20%) indoor grown cannabis. As a small scale, outdoor grower we were at the bottom of the totem pole in competition with huge international operations that grow indoors, hydroponically with synthetic fertilizers. It didn’t matter that we were growing sustainably in soil, using natural fertilizers and the sun for light and heat. Meanwhile many people were calling and asking me where to buy my cannabis, I had to turn away customers because I couldn’t find middlemen to buy it from me to sell to them. 

In the early spring I realized that I had to try something different so I began speaking to different government officials, different news companies, created a petition and tried to organize with other craft growers in Atlantic Canada. All I really succeeded with this is to shine some light for the public on the plight of what small scale growers like us were going through within this system, which is not nothing but I had hoped to get some momentum happening with the government policy. I knew going into it that it probably wouldn’t change anything but I had nothing to lose.

The second year of growing we went into it with little enthusiasm that anything would be different, and mostly it wasn’t. One success of our second year of growing was a huge increase in yield thanks in part to the absolute perfect growing conditions of the summer, however our THC was not up to the level that the “big guys” wanted, and so even after contacting over 100 LPs across Canada (almost everyone we could find) we have even less interest than the first year. There are lots of businesses that call us trying to sell us services and products, but no one that wants to buy, except for regular people who we can’t legally sell to. Seems everyone is trying to make money off the producers.

So all of this (and more) is why we’ve decided not to be involved with the cannabis market anymore. As a small scale vegetable farm, we expected that adding a high value crop like cannabis would be a no brainer. We thought it would add to the future security of our farm and family but all it did was waste our time, energy and money. One silver lining in all this is everything we built and purchased to grow cannabis can easily be used to grow other things so we will be making use of these for different crops that aren’t so overregulated. As another craft grower said to me  “there’s more money in vegetables, and there’s barely any in that” . Another grower said “the government really f***ed up cannabis so only their cronies and the rich have profited”.

You can argue to the contrary that this is all done for safety because this is a newly legalized crop, but people are allowed to grow it in their backyard, dry it in their garage and smoke it and there’s no regulations or lab testing around that. 

The system as it stands is built for the largest companies to control and monopolize the market. It doesn’t matter if a smaller grower grows better quality cannabis if they can’t access the market to sell it. The majority of cannabis available right now in Canada is grown in large warehouses with hydroponic systems, with synthetic fertilizers under lights, using much more energy and producing the largest quantity and highest THC products they can. The small outdoor growers I know all are growing more sustainably, more carefully with less energy, using more organic methods and growing cannabis with more reasonable THC levels. You would think that the government would incentivize more sustainable ways of growing and milder potency but that is not the case.

Unfortunately the legal cannabis market is slanted towards big businesses and those rich enough to profit from them, just like most everything else. I don’t have any faith that will change any time soon but I hope for the sake of other craft growers it will. I hope that this has helped you to understand what you could be in for if you decide to join the legal cannabis market in Canada.