The past few months have been unusual, to say the least. The world as we know it has been thrown into disarray. COVID-19 brought “business as usual” to a grinding halt, while simultaneously laying bare some of the more troubling discrepancies in our society.
In some ways, being forced to stay apart has shifted our mindset about what it means to stick together. The inaugural issue of NORML Canada’s revived newsletter taps into this notion by taking a bird’s-eye view of the impact of the pandemic on cannabis policy in Canada (Alex Krause), and exploring some of the ways that Licensed Producers are stepping up to the plate to support patients (Sarah Colero). This issue also covers a retailer’s transition to the regulated market (Jennawae McLean), factors to consider when starting a cannabis business (Derek Mascarenhas), and upcoming virtual job fair (CanMar Recruitment).
I am grateful to everyone who wrote an article, as well as those taking the time to read the newsletter. If you are interested in contributing to future issues, please contact email@example.com
How COVID-19 Sped Up Cannabis Reform In Canada:
A Consolidated History of the Last Four Months
On March 11th, 2020, the World Health Organization declared a global health pandemic as COVID-19 cases began to pop up in jurisdictions across the world, including outbreaks in North America. On Monday March 16th, Justin Trudeau announced that Canada would be closing our borders with the US. The very next day, Ontario Premier Doug Ford initiated a sweeping province-wide lock down in response to public concern over the surge in COVID-19 cases and the very real potential to overwhelm hospital resources.
In the midst of all of these global developments, NORML Canada was focused on what we believed to be the two most pronounced “glaring” issues in cannabis.
- Legal industry exclusion of the legacy market, which includes the systemic racism tied to the criminalization of cannabis in the first place. We demand the expungement of nonviolent records, and equitable treatment and representation of traditionally marginalized groups within the legal industry. This includes, but is not limited to, medical cannabis patients, people with disabilities, Black, Indigenous, and racialized people, and LGBTQ communities.
- Federal level cannabis legislation flaws. Not only do these flaws jeopardize the safe sale of cannabis (the Liberal parties original stated intent of legalizations was in the context of “public safety and to remove the illicit market”), but also jeopardizes the legalization movement that NORML Canada has fought so hard for, over the span of the last four decades. Banks and financial crediting entities have been reluctant to support this new economy. Long before the pandemic emerged, it appeared that Cannabis retailers would soon be a significant employer in municipalities across Canada.
Over the winter, the NORML Canada board or directors decided to put together a cannabis hiring fair in the Spring aimed at promoting equitable hiring in the cannabis space. We wanted to provide a networking opportunity to help canna companies and brands reach out to a more diverse pool of prospective employees. Due to COVID-19 restrictions on large public gatherings, the event was cancelled. And so it began…
COVID-19 + Cannabis + Canada: The Impetus for Change
Once the entirety of Canada’s economy came to a grinding halt, it became immediately clear that access to cannabis is more than just a recreational consumer good, and in fact an “essential service”. The definition of cannabis as an “essential service” would have ripple effects across the country. Along with liquor, grocery stores, and many other “essential services”, cannabis would eventually gain “essential” status across Canada. A few provincial jurisdictions were slower to recognize the new heightened role of provincial distributors as part of the supply chain to access legal cannabis products.
This is where Canadians saw the first major pivot in government policy, with COVID-19 creating an overwhelming and un-ignorable impetus for regulatory reform. In the cannabis industry, this form very quickly took shape, expediting openness to online click-and-collect/delivery options in jurisdictions where it had not been available before (AGCO announcement from April 3rd).
As soon as click-and-collect/delivery options were permitted, cannabis retailers were left scrambling, seemingly overnight, to accommodate the decision to revamp storefronts to allow digital ordering to promote social distancing procedures. This step in the reform process also highlighted a new regional challenge – that for those in rural areas without access to a local “pot shop”, it was very hard to order cannabis with a “same-day delivery” option. Plexiglass windows, masks, virtual inspections, and social distancing circles quickly became the new norm. Trends began to emerge in cannabis, and other retail store environments which resulted in record provincial cannabis sales as people started venturing out to their local stores to “stock up” (MJBiz Daily Solomon Israel COVID-19 sales boost story linked here).
At this point of the pandemic, Canada Post even made it apparent that they now had an increasingly crucial part to play in the entire supply chain to ensure that cannabis parcels could reach their intended customers and/or patients. April 3rd marked a significant milestone for Canada’s medical cannabis patients, when medical access to cannabis was officially deemed essential after a House of Commons petition (Mugglehead Media story from April 3rd). Due to increased pressure exerted by NORML and our fellow advocates, LPs were some of the first to adapt to this new reality by offering alternative delivery programs. Another LP development we saw was a trend of adopting sympathetic COVID-19 pricing, and also adoption of delivery services that avoided reliance on local community mailboxes/post offices, and to instead allow for deliveries be handed off “doorside” at the customer’s place of residence (MJBiz Daily Matt Lamers article March 17th).
Over the course of April and May, Ontario alone added an additional 13+ cannabis retail stores, bringing the total to 87 by June 10th, with another 413 Retail Store Authorizations “in progress”. It appears that many LPs awaiting Health Canada licensing have been expedited recently. We have seen some small yet promising signs of Health Canada deferring licence fees amidst the immense financial pressures on Canada’s hard-hit economy.
Another critical point for Cannabis amidst covid was the broadening of the scope of the BDC, Canada’s federal investment bank, to broaden its scope to include potential investment in Canadian cannabis businesses. Early in the lockdown, it became apparent amidst mass layoffs that one of NORML’s critical concerns might be coming to life faster than we had anticipated. Then the layoffs ensued. This was an unfortunate confirmation of NORML Canada’s fear – that job security in cannabis has relied on the feasibility of these cannabis brands to make profit. With added layers of regulatory red tape we have witnessed since cannabis was legalized October 17 2018, the layoffs began. Many naysayers called for the end of the legal landscape as we know it, referring to it all as “fake legalization’. NORML Canada kept fighting, and joined a multipronged effort, petitioning the BDC to remove its blanket exclusion of cannabis companies in desperate need of federal funds to maintain their workforce. In the end, NORML Canada, and our business alliance successfully lobbied for the BDC to change its policy, a major financial milestone for cannabis business in Canada.
The result. The BDC efforts were successful, along with access to medical cannabis being deemed an “essential service”. Cannabis retailers across Canada reinvented themselves, modernizing to adapt to the new reality of online shopping and social distance shopping. In many ways cannabis retailers are a “shining light” at the “end of the tunnel” as far as the legalization reform efforts are concerned. NORML Canada believes that retail cannabis stores will continue to provide a huge economic boost to Canada’s stagnating economy. What has become clear, is that demand for cannabis sales have remained at all time highs over the course of the covid outbreak, including new 2.0 formats of cannabis topical, beverages, edibles and extracts.
Over the last 4 weeks, the world has yet again shaken to its core, by the horrifying and tragic video footage that surfaced of brutal police brutality. The George Floyd murder created a global #defundthepolice movement, which has spread on all around the globe. NORML Canada believes that the voices of BIPOC have been actively excluded from legal participation for far too long. It is time that the cannabis community begin to reshape and reform the government’s original stated goal – to pursue legalization as a means of increasing public health by removing the illicit market. NORML Canada suggests reframing a more realistic and positive outcome – the removal and acknowledgement of historical injustices against racialized communities, and the need for reforms that promote inclusion of all marginalized groups to advance and distribute the economic value represented by Canada’s national cannabis industry.
Cannabis reform in Canada has come a long way since the pandemic started, but there is a long way to go before legalization efforts can be considered “successful”. We need to stop fighting legalization, we need to stop fighting our own community, we need to stop calling it “fake legalization,” we need to start collaborating with one another.
Our call-to-action is simple. Join our communal voice so that we can be heard loud and clear when the Cannabis Act is submitted for review next year. Please reach out to NORML Canada with any revisions you would like to see to the Act. Health Canada, and Justin Trudeau need to consider rational regulatory reforms that would better serve all Canadians. It’s time to consider the racialized historical implications of cannabis criminalization, as well as the real and often overlooked unintended consequences of the overcommidification of cannabis as a recreational product. NORML Canada is glad to see cannabis defined as “essential”, and we intend to continue our fight for Canadian cannabis consumer rights to access world-class cannabis products.
NORML Canada is a consumer non-profit advocacy group with four decades of cannabis legal experience. We hope that our newsletter helps shed light on cannabis reform discussions and also the need to foster inclusiveness within the industry. Both are essential steps, if Canada wishes to properly normalize, destigmatize and reimagine our relationship with cannabis.
COVID-19 Crisis Leads to Emergency Compassionate Pricing in Medical Cannabis
As medical patients, there are multiple issues driving our anxiety right now. Appointments cancelled, surgeries rescheduled, expenses are going up through no fault of our own, we are high-risk so a lot of us cannot leave our homes, job layoffs, being deemed an essential worker; the list goes on and on.
The one thing that creates peace in my mind, personally, is the fact that I can still afford my medication. But this is only due to the compassionate pricing program at my LP. What about medical patients who are stuck in this unprecedented financial crisis right now who don’t qualify for the usual compassionate pricing programs? How will they be able to afford their medicine? The answer is clear: Compassionate programs should be expanded to include those whose financial situation is affected by COVID-19. In a global pandemic, emergency compassionate pricing is the just thing to do. Let’s take a look at some LPs that have taken this initiative to help their patients through these trying times.
Medical Cannabis by Shoppers (Shoppers Drug Mart) led the movement of emergency compassionate pricing with a program of their own. Their program, titled ‘3-Month Emergency Compassionate Care’ (3ECC) is a 20% discount for the next 3 months for anyone affected by the COVID-19 crisis. Their website says that patients qualify for it if COVID-19 has caused them to experience job loss, temporary lay-off, cancellation of pending employment, disruption of forward income from self-employment or contract roles, loss of housing/other basic needs, or has impacted them in other ways that may cause an interruption in the patients’ ability to access medical cannabis.
Nova Scotia-based LP Aqualitas now has an emergency compassionate pricing program where clients experiencing financial distress due to COVID-19 may qualify for a 25% price reduction for a three-month period. Their website says medical patients qualify for this emergency program if COVID-19 has resulted in job loss, temporary lay-off, or loss of housing or other basic needs that may cause an interruption in the patients’ ability to access medical cannabis.
Toronto-based LP CannaLogue is now offering a new, more comprehensive compassionate care program which provides a 20-50% discount on selected products. (Which is the deepest discount of any of the LPs offering one.) Medical patients are eligible for this program if they are eligible for any subsidy from the Government. Their website further confirms that people affected by COVID-19 will now qualify, including those who recently have been unemployed/laid off or had their income reduced by at least 30%. It also mentions that those who have been deemed essential workers can also qualify.
Edmonton-based LP Aurora has just recently announced their new ‘Emergency COVID-19 Discount.’ Patients who are dealing with loss of income as a result of COVID-19 can get a 15% discount on their medicine. Their website says this is a temporary support measure that will be re-evaluated at the end of July. Along with that discount, Aurora is also giving a ‘First Responders Discount’ of 25% to all medical patients who are employed as first responders as a thank you for their tireless work.”
Ontario-based LP Aphria has also noticed the emergency pricing trend and jumped aboard, giving a 10% discount on select products. Their website does not say there is any specific qualifications for this discount, just that it is due to them understanding that some patients may need financial relief during COVID-19.
British Columbia-based LP Tilray has also joined in, saying on their website that they have discounted their oil bundles by 15% (at point of checkout) as part of their COVID-19 response. The website does not say there is any specific qualifications needed to get the discount.
Most LPs across Canada have their usual year-round compassionate pricing program for those who are living on a tight budget on the average day. As a medical patient on social assistance I am thankful for these compassionate programs, for I would not be able to afford my medication without them. However, I am sure we can all agree that these are extremely special circumstances. The right thing to do in this unprecedented crisis is to follow the lead of the compassionate, forward thinking LPs mentioned above and give emergency compassionate pricing to those who don’t usually fit the qualifications for the year-round compassionate pricing programs.
Thank you to everyone who helped me gather information, and special thanks to Ashleigh Brown.
CanMar Career Day
You are invited to participate in CanMar Recruitment’s first ever Virtual Job Fair!
About this Event:
During these unprecedented times, we have taken the initiative and social responsibility to take our #Changingives movement to the next level! CanMar Recruitment is proud to host this event where 20 companies specialized in the Cannabis industry will be presenting their brands, their activities as well as the type of jobs they are actively recruiting for.On July 10th, 2020 we will be live on Zoom from 8 am to 6pm PST (11 am – 9pm EST)!
Register now and fill out our online form with your details, including where you live and what type of job are you looking for. We will send you the schedule as we get closer to the event as well as the Zoom link 48hrs prior to the date!
At CanMar this is our way of giving back to the community and our industry i.e. to bring everyone closer and for people to know that our industry cares. Looking forward to continuing our #ChangingLives journey with you!
BREAKING NEWS: Health Canada is extending the expiry date of all cannabis registrations by six months. We did it!
Our Journey to the Regulated Market
At the beginning of 2018 the idea of my partner and I selling cannabis was a pipe dream. At the time, we had a couple cannabis businesses based out of Kingston, Ontario on the go. Most notably, we owned 420 Kingston, a head shop and former seed bank. We were worried about the provincial plan to monopolize cannabis sales and how that would affect our livelihood. Would we be competing with the government just to sell bongs? Would we even be allowed to? At the time a longshot contender for Premier Doug Ford had made an offhand comment that the best way to deal with legalization in Ontario was private sale, and we joked we were members of Ford Nation. Fast forward a few months, he got elected and followed through with his plan. There was a chance we would be able to sell cannabis! Would people like us be included?
At 420 Kingston, we were one of the largest and most successful seed banks in Canadian history. If you smoked cannabis grown in Canada between 2010 and 2017 there was a very good chance it came from our seed stock. We were even supplying most of the Licensed Producers at the time! Our house of cards collapsed on April 7, 2017 when we were raided by Canada Border Services Agency with a warrant citing the Plant Protection Act. We were ultimately arrested because we were also handling the Lift Cannabis Cup and there were a few pounds of packaged entries on site and at our house. We were charged with possession for the purpose of trafficking. After some community donations to local worthy organizations and 14 months in and out of court, our charges were reduced to simple possession. We paid our fines and had records.
Luckily for us, it was announced that if we didn’t sell cannabis or have any related charges after October 17, 2018 (the date of legalization in Canada) we would not be precluded from participating in the legal system! We finalized a new property in early August 2018, and from the advice of one of our lawyers, we developed a brand separate from 420 Kingston for that location: Calyx + Trichomes. We hedged our bets and started building our space based on guidelines from Alberta (since none had been announced for Ontario yet). We got way ahead of the game and were well-prepared.
Most of our construction was complete when in December, the province announced that there would be a random lottery for only 25 spots for the first phase of licensing. We obviously didn’t win and were devastated. Knowing we didn’t need 2 head shops in Kingston, in January 2019 (when construction was complete) we closed 420 Kingston for good and moved all the inventory to Calyx + Trichomes hoping we would be able to survive the first phase.
Opening in our new location with no cannabis was difficult for us and our team. We invested everything we had into opening our space. and (knowing who and what we were going to be competing with) we really splashed out so there wasn’t a lot of budget flexibility. On top of that some of our old customers had a hard time finding us in our new location (because when we moved, in January, the most notoriously slow retail month of the year, we also changed our name to something complicated…slam dunk).
Our days were slower (about half the traffic we were used to) and ultimately lost disillusioned team members who were sick of the long days and sending customers to our competition. A second lottery was announced, and this time the barrier of entry was even higher. We had to jump some serious financial hurdles (which we did by the skin of our teeth) and roll the dice only to lose again. When would we get our chance? Even if we got to the next phase, what if they change their minds about criminal records?
At around the same time the lottery was happening, the Federal government started accepting applications for expedited pardons for simple possession charges. We thought it was a long shot (because we were originally arrested for possession for the purpose of trafficking (even though we were ultimately only charged with simple possession). We had nothing to lose and a clean record to gain so we went for it! This was a brand-new program and our file sat at our police station for about 6 weeks with no movement. Finally, only 2 months after we began the process we received a letter saying our pardons had been granted! For all intents and purposes we had clean records.
2019 was a lot of long hours, worry, uncertainty, second guessing and heart break. It was also a lot of finding out who are real friends are, feeling supported by our community, and an appreciation for every single customer who walked through our doors. Slowly but surely, our customers have started to find us. It was humbling in the best way to feel so many people behind us and rooting for us. It was amazing to connect with other store owners in our boat. It also gave us the opportunity to see what other stores were doing right, and what we would need to improve. It was hard, but hopeful.
After months sending people to our competition or the OCS.ca, we were finally told the licensing would reopen and we would be able to apply! There was a brief period in early December where the forms were made available on the AGCO portal. I started filling them out and included everything about our charges, our pardons, even our speeding tickets! With our application complete and ready to go, we applied at midnight on January 6. On the afternoon of January 8 we received our first contact from the AGCO, and I cried over the phone with joy. She got some clarification on a few things in our file and they continued to process it. From the first point of contact every person we’ve talked to at the AGCO has been wonderful and understanding. It feels like they are on our team and trying to help us along. It felt like they were on our team.
Meanwhile, a friend of ours, Erin Goodwin, received her Managers Licence from the AGCO! Erin had a far more illustrious career as an activist than we did and a laundry list of charges related to her cannabis activism that dwarfed our pardoned simple possession charges. Erin getting her licence was a beacon of hope for us. Erin was the push we needed. We ultimately decided to expand into the unit next to us to better prepare for cannabis sales and began construction. We wanted to make one of the largest most beautiful cannabis stores in the province.
After a few weeks we heard from an investigator with the AGCO (formerly with the OPP). We met at a local police station and my partner and I were interviewed separately. We were fully transparent and honest with him. We figured he knew the answers to any questions he was asking anyways. The process was a bit intimidating. We waited, and waited more. Every week I would call and check the status. Apparently there was an issue with getting police stations to release information (even though we gave permission for them to) through the Freedom of Information Act. When March came we were able to apply for the Retail Store Authorization (which is the licence for our space). By the end of March we closed for for Covid-19, and temporarily laid everyone off.
Luckily after 12 weeks, we were finally granted our Retail Operator Licence and I was granted a Retail Manager Licence on April 3! Everything we waited for and hoped for finally happened! We were told that morning that our RSA would be issued in the afternoon. The state of emergency was declared (and RSAs were going to be put on hold). We knew it was coming though so nothing, not even a global pandemic, could burst our bubble! Finally, last week our RSA was granted by the AGCO! We have all 3 licences! Now we are going through the hiring and training process (doing everything over Skype), and are getting everything in order so we can hit the ground running as soon as the state of emergency is over. We have about 2 weeks of cosmetic construction left (painting and window dressing) so that’s first for us. I can’t believe it but the next time we open we will have cannabis for sale! It’s so validating and exciting that after all these years our dream is finally going to become a reality. We fought for legalization (and while far from perfect) we have earned a spot to compete in the legal market. Our pipe dream came true.
3 Steps to Starting a Legal Canadian Cannabis Business
Starting a cannabis business in Canada is a complex process. Before you click submit on your applications, here are a few financial “good to knows” to help you succeed.
Despite modest margins (~15% net profit yearly), retail stores are a good business opportunity. It’s no surprise that consumers prefer the feel of buying cannabis products in person. The potential for store owners to create community, and obtain long-term brand awareness through consistent customer service is worth the effort, especially if you have previous retail, logistics or corporate business pedigree. A well-situated retail store that can carry it’s legacy onward is intangibly valuable.
Things to consider before starting the retail store process:
● Plan to put together a minimum of CAD $ 300K to bring this to market.
● Consider an area that is currently being under-served. Avoid locations that already have good retailer coverage.
● Expect that your net profit on legal cannabis products sold will be on average 15%. This means you must be selling large volumes to pay back a large investment ask. Either keep your rent and renovation costs low, or plan to sell large volumes (eg. sell CAD $ 2 million worth of product to make a net profit of ~CAD $ 300K)
Cultivation startups are strong choices, as the return can be good (20-30% net profit yearly). When applying for a micro cultivation licence, Health Canada does require a location to be secured as part of the application. Expect startup capital needs of ~CAD $ 700K or more. Don’t be dissuaded by the stock prices of behemoth LPs and their performance. They do not represent what micro cultivators and craft producers are capable of.
Things to consider before starting a micro-cultivation business:
● Differentiate! Instead of full cycle dried flower, consider being a part of the bigger supply chain in other ways. Consider growing clones for LPs, or growing unique strains with cult followings.
● Experience with farming, growing crop or managing cultivation logistics will go a long way in making your plan a success.
● Expect to raise between CAD $ 700K to CAD $ 1.5 Million.
Edibles and micro-processing
This is an excellent opportunity as processed products are worth much more than their equivalent in wholesale dried cannabis. Processing businesses can yield a net profit between 20-30% yearly.
If entering this space, make sure to really differentiate and connect directly with a potential audience. Most entrepreneurs are starry-eyed with their concepts and fail to properly test demand before building out. Also expect higher equipment startup costs. Ideally, try to build buyer connections before beginning and application, to secure some potential future sales before diving in head first.
Things to consider before starting a micro-cultivation business:
● Expect to need a financial vehicle of around CAD 500K for concentrates, oils processing and packaging. Expect to raise a minimum of CAD 250K to set up an edibles business.
● Do homework to try and find buyers for your outputs as early as possible. It’s never too early to build relationships with potential customers.
● Consider working to share risk with another licence holder instead of setting up your own facility.