The legalization of recreational marijuana will not offer an easy road to riches, according to industry experts speaking at the Okanagan Cannabis Business Symposium held in Kelowna on Tuesday.
While many are optimistic about the potential for retail sales, it remains a new industrial ecosystem overshadowed by uncertainty about regulations, delivery of product to retailers and unknown consumer needs.
Maurizio Terrigno, founder of the Canadian Cannabis Chamber of Commerce headquartered in Alberta, was in Kelowna Tuesday and said many early investors got into the business by accident.
“When we started the chamber three years ago, a lot of us starting out in the business kind of fell into it,” Terrigno, who was retired living in Arizona after 45 years in the hospitality industry when a friend in Calgary called him to say the prime minister planned to legalize marijuana and the business opportunity that might present.
Terrigno went to Colorado to research what that state had learned thus far from legalizing marijuana, and found himself feeling out of place at first.
“I went there to introduce myself to people in the industry, a suit-and-tie guy meeting guys in hoodies. It didn’t go well at first, some of them wondered if I was an FBI agent,” he recalled.
He said the legalization experiences of California, Oregon, Washington and Colorado offer an early lesson in the pitfalls and opportunities a legalized cannabis industry will present.
“Our goal as a chamber is to help avoid some of those pitfalls,” he said.
Darcy Bomford, chief executive officer and founder of True Leaf Medicine, said exaggerating the hype surrounding legalized cannabis in this province can happen given that “B.C. bud” is known worldwide.
“I think in the end, the 80-20 rule will likely prevail. Eighty per cent of the new retailers will not make it and 20 per cent will be successful,” Bomford said.
But he feels strongly the cannabis industry footprint on the Okanagan, from retail to production, will be massive.
“They call the Okanagan the ‘green mile,’ which probably stretches from Penticton to Cherryville and probably can be extended into the Kootenays,” Bomford said.
True Leaf is awaiting its Licensed Producer status from the federal government, which he hopes will come this fall.
The company has already developed a line of pet health products using hemp seed, which is already legal and sold in 2,000 stores across North America and Europe. The company recorded $1.4 million in sales for the year ending March 2018, a 280 per cent increase over the past year.
True Leaf has purchased a 40-acre property in Lumby with the long-term plan to develop it into a cannabis supplier once its LP application process is approved.
The initial 18,000 sq.ft. lab and production facility will be operational this fall, but with the land available to them Bomford sees the long-term potential for up to one million feet of production space as the cannabis industry unfolds.
“For us, it’s been a long road over the last five years working on this, but our branding message is becoming more anymore focused and clear on a global level. With pets, we see a huge opportunity for cannabis-related products in that market. We want to be the Apple of that space in the market,” he said.
Lindsay Blackett, direction of public policy and government relations for the Cannabis Chamber, reiterated the ‘gold rush’ mentality behind the industry’s potential growth, but added some cautionary words for the more than 100 people attending the forum, sponsored by the Greater Vernon Chamber of Commerce.
He said projections of legal retail sales approaching $6.5 billion in 2020 across Canada is guess work at best, because polls and studies are inaccurate in getting a handle on how much marijuana people currently consume illegally.
“Nobody is going to give you a totally honest answer on that question, so these projections are really numbers being pulled out of the air. We think the market in B.C. alone is a $5.7 billion market, so you could add the rest of the country on to that,” Blackett said.
“While people are anxious to get in the industry and not miss the boat, the reality is the boat hasn’t even pulled up to the dock yet.”
He said some of the early headaches in the industry will include the current delays in the license approval process at the federal, provincial and municipal government levels; selling at a retail price that falls below the black market level; the ability in B.C. of the Liquor Distribution Branch to keep up with product delivery to the retailers; and the eventual impact of marijuana in edibles which has yet addressed by the federal government.
“The edibles factor is huge because people will be looking for a way other than smoking to consume cannabis because they don’t want to smoke,” Blankett said.
“There is lots of opportunity and exciting times ahead for this industry. With the potential for edible products being legalized and the global trade potential, a new workforce with high paying jobs being created. When the first day of legalization comes into place on Oct. 17, expect that to enter in a whimper rather than a bang. But over the next two years it will be a wonderful ride.”
Blankett said initial projections will see B.C. generating up to $150 million in tax revenue from cannabis sales.
“In Colorado, a state of 5.6 million people, legalized cannabis generated $950 million in tax revenue for the government and $2 billion in economic creation dollars.”
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