Cannabis Commerce Association of Canada

Transcription

1 Cannabis Commerce Association of Canada To the Legislators of British Columbia, I write to you today on behalf of the Cannabis Commerce Association of Canada, a national, not-forprofit trade association representing small and medium-sized cannabis farms, dispensaries, and other cannabis businesses across BC. CCAC s members are committed to ensuring that the legalization of cannabis allows a fair opportunity for existing cannabis business owners to apply for licensing, rather than being shut out by either private or government-owned monopolies. Recent announcements by the governments of Ontario and Quebec regarding their plans for cannabis legalization have raised significant concerns among the small scale, craft cannabis entrepreneurs of BC. Despite statistics showing cannabis farmers in BC currently produce the clear majority of cannabis consumed across Canada, BC has yet to articulate a position with regard to licensing these existing farmers, or offering them a path toward legitimacy. At the same time, the governments of Ontario and Quebec have articulated a clear intention to shut BC s producers out of their own new monopolies. If this effort proves successful, tens of thousands of British Columbians could be left jobless; if it fails, BC will continue to suffer from a rampant cannabis black market. The need to address this shortfall in the federal government s framework are pressing, and cannot wait until the passage of the Cannabis Act has already happened. Attached you will find a short, three-page policy brief, aimed at sharing CCAC s most urgent concerns with provincial politicians in BC. These policy positions are non-partisan, evidence-based, and aimed at providing meaningful stakeholder input. While they are not the only regulatory challenges facing us, CCAC believe that they are the ones that require immediate action by the Government of BC. If you have questions about any of these policy proposals, would like more information about CCAC, or would like to meet a CCAC member business from your home riding, please do not hesitate to contact me by phone at , or by at ian.dawkins@cannacommerce.ca. Thank you for your time and your interest in this matter; I look forward to continuing to work with you and your office to ensure cannabis legalization is as successful and beneficial to the people of this province as possible in your home community. Sincerely, Ian Dawkins President Cannabis Commerce Association of Canada

2 Item 1: Ensuring BC s craft cannabis producers have access to cannabis production licensing for small cannabis farms, and that the barrier to these licenses is reasonable and evidencebased. Based on government statistics and economic modelling conducted by CCAC 1, cannabis production employs anywhere from 13,000 to 30,000 British Columbians in full-time equivalent (FTE) jobs paying approximately $1.25 billion in wages alone, and brings approximately $7 to $9 billion dollars to BC through interprovincial trade (e.g. cannabis exports to Eastern Canada). When compared to other sectors of BC s economy, cannabis agriculture and retail is the third-largest sector of BC s economy, dwarfing any other agricultural commodity. At present, a number of factors threaten these existing jobs. First, the Federal government has made it clear that they will retain control over production licensing, and that they do not intend to loosen the requirements for these licenses from the present regime. At present, the total cost of meeting the requirements for becoming a Health Canada-approved Licensed Producer are typically estimated at several million dollars, with enormous paper burden and regulatory challenges in addition to prohibitive security requirements. This large regulatory burden has limited the number of Health Canadaapproved Licensed Producers to a few dozen, in comparison to the tens of thousands of craft producers across British Columbia whose production licenses are protected by the Allard injunction. Put simply, there is currently no economically viable mechanism for these small-scale cannabis producers to become licensed. CCAC believe that engaging the federal government on this point is of critical importance to crafting a realistic and effective cannabis economy. A second, equally dangerous factor now threatens BC s craft cannabis sector: the governments of Ontario and Quebec have indicated they will move towards government monopolies for cannabis distribution, and that this cannabis will only be purchased from Licensed Producers (in the case of Quebec, they have further indicated Quebec will only purchase cannabis from Quebec-based Licensed Producers). Because the federal government has indicated they do not intend to license existing craft producers, this combination of factors will de facto block BC from exporting cannabis to two of Canada s largest markets for cannabis. As this export economy currently brings in several billion dollars to BC annually, CCAC believe it is critically important for the Government of BC to engage in the cannabis file not simply in reaction to federal direction, but to actively negotiate meaningful interprovincial trade regulations for cannabis sales. Given these factors and the very real danger of significant economic disruption to BC s cannabis economy, CCAC calls on the Government of BC to engage the federal government in comprehensive negotiations aimed at including craft-scale cannabis production licensed in future regulations, and ensuring BC s licensed craft producers are permitted to compete in other Canadian markets. 1 Please refer to CCAC s 2016 Economic Report, The Cannabis Market in Canada and British Columbia. Copies of this report are available by request; contact CCAC if you would like a copy.

3 Item 2: Developing a robust virtual distribution branch system, where cannabis is tracked seed-to-sale by regulators and all retail cannabis must carry batch-specific testing results from a Health Canada-certified third-party analytics lab. The use of comprehensive cannabis tracking systems, also known as seed to sale tracking, or CTS, is well-established in jurisdictions in the United States that have legalized cannabis for recreational purposes. These locations include Colorado, Washington, California, Oregon, and several other legalized jurisdictions. The reason why virtual tracking systems like seed-to-sale are used by regulators in most States with legal cannabis retailing is simple: cannabis, unlike tobacco and alcohol, is fresh produce and has a very short shelf life. Cannabis requires intensive climate controlling for storage, including humidity, temperature, and light control, as well as robust security requirements. Building centralized distribution facilities for cannabis storage and shipment is prohibitively expensive. By opting for a virtual tracking system, these States have avoided the significant cost of building out warehousing and distribution facilities 2, while retaining full control over taxation and excise, analytical testing standards, and other areas of regulatory concern. Rather than spending billions of dollars to create and maintain a warehousing system that will not bring the government any additional revenues, CCAC believe BC should establish a seed-to-sale cannabis distribution regime, based on the creation of a regulatory framework for mandating lab testing for cannabis products. By requiring cannabis retailers to only purchase cannabis from licensed growers that has been pretested by a Health Canada-certified lab, regulatory authorities in BC can gain control over the safety standards for cannabis products and ensure tax collection compliance. This can be achieved without involving the government in the prohibitive cost of warehousing billions of dollars worth of a product that is more analogous to fresh produce than liquor or tobacco. CCAC recommend that the Government of British Columbia work with cannabis producers and the existing Health Canada-certified cannabis testing labs to develop a robust and transparent Virtual Distribution Branch, based around mandatory lab testing for cannabis products, as well as a requirement that all cannabis retailers receive proof of testing and tax compliance from their suppliers. 2 By way of comparison, Royal FloraHolland, which handles a similar quantity of fresh cut flowers ($6bn in 2017) as a hypothetical BC Cannabis Distribution Branch would handle fresh cannabis, had operating expenses of $500 million dollars last year; it s annual report for 2017 also states the value of the company s facilities and other fixed assets at approximately $1 billion. Building a similar warehouse for cannabis distribution would likely involve similar if not higher asset costs.

4 Item 3: Include cannabis-specific private retailers (e.g. dispensaries) in the provincial regulatory system. After a careful review of best practices from many jurisdictions across North America, CCAC have concluded that private-sector retailing of recreational cannabis is not only safe and reasonable, but it is also the only way to truly dismantle the black market for cannabis. Time and time again, North American regulators have concluded that private-sector retail is the only way to effectively compete with a highly entrenched black market. CCAC also believe that this option is the most likely model to elicit broad support from the citizens of BC. Public-opinion polling consistently indicate a broad public preference for private-sector dispensaries 3, and BC s largest municipalities have already moved forward with licensing cannabis retailers, with the active support of local law enforcement. Privately owned dispensaries are also the norm in Colorado, Washington, Oregon, California, and every other major jurisdiction that has legalized recreational cannabis. Licensing and regulating private retailers also frees the government from having to build hundreds of cannabis-specific retail locations. Similar to the enormous cost of building a centralized distribution warehouse, building cannabis-specific retail environments comes with significant challenges. These challenges include climate-controlled storage, security, UV light protection, negative pressure HVAC and carbon filtration for smell mitigation, and a host of other technical challenges not faced in liquor distribution or pharmaceuticals. Given the need for wide geographic coverage for cannabis retailers to compete with the black market, there will be a Day 1 need for hundreds of stores across the province; by way of comparison, there are approximately 900 liquor stores today in BC. With cannabis-specific multimillion-dollar development costs per location, even a dangerously modest roll-out on par with Ontario s plan for 150 stores could potentially run into the billions of dollars when real estate and staffing costs are added on. Simply put, opting for private retailing for recreational cannabis is not only in line with best practices in world-leading jurisdictions like California, it is also the best option for saving the government hundreds of millions of dollars while still ensuring maximum revenue collection from taxation. CCAC recommend that the Province of BC follow the best practices of other jurisdictions, and include existing and future private-sector retailers in our regulated marketplace. 3 The Globe and Mail, Majority of Canadians agree pot should be legal: poll, February

5 Conclusion There remain many important aspects of cannabis legalization to be worked out, including impacts on ALR land usage, sustainable agricultural practices, impacts on our healthcare system, and other important areas of provincial jurisdiction. CCAC are committed to engaging proactively and supportively with governments at all levels on these, and other critical issues relating to cannabis. However, we believe that the three areas outlined in this paper- licensing small-scale craft cannabis farms, developing a virtual distribution branch, and including private sector retailers in the governments legislation- are all far more pressing areas of policy that need addressing. Of particular importance is the need for BC-focused, provincial engagement at the federal level. No province in Canada will be as dramatically impacted by cannabis legalization as BC, and it is of critical importance that our government take a leadership role in ensuring a meaningful place in the legalized market for BC s craft cannabis farmers. Failing to address this hole in the current iteration of the federal Cannabis Act will not only put thousands of BC jobs and billions of dollars of import revenues at risk, but it may very well cripple the government s ability to effectively regulate the market.