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Getting “zoned out”: Canadian municipalities resist craft cannabis growers

The biggest barrier to becoming a cannabis micro cultivator might be in your own backyard

5 min

Cannabis might have been legalized months ago, but that doesn’t mean growing cannabis on a small scale has necessarily become easier. 

Some micro-cultivators eager to enter the craft cannabis market are still facing challenges getting their farm sites approved by municipalities. Zoning bylaws in some municipalities that prevent the production and sale of cannabis in certain areas have become major, unexpected obstacles that are slowing down local producers’ abilities to start operating. 

“We submitted a letter to the municipality four months ago and are still waiting for approval after back and forth emails with the city requesting information,” said one would-be micro cultivator, who declined to be named for fear his application to grow with the British Columbia municipality of Pitt Meadows would be compromised. “I’m not sure if it’s COVID-related, but we’re just not anywhere near getting our business started because we can only apply for a Health Canada licence once we get a permit from the municipality.” 

Many municipalities across the country, but particularly in Ontario and B.C., have zoning bylaws that split “farming” and “non-agricultural use” into separate approval categories. In B.C., unless cannabis is grown in an Agricultural Land Reserve (ALR) area, most municipalities require a special permit to allow production to take place. 

“When I talk to applicants that are having frustration with the process of setting up their micro cultivation business, most of them say the municipality is trying to zone them out. Maple Ridge (B.C.) and Pitt Meadows are two good examples of that,” said David Brown, a former Health Canada official who founded consulting firm StratCann Inc., that advises micro-cultivators looking to enter the legal market.

“My understanding is that COVID has made [cannabis] even less of a priority for municipalities. Even pre-COVID, the municipalities were concerned about moving too quickly with approving cannabis production… sometimes you get backlash from residents, sometimes it’s because they themselves weren’t very informed about the process of cannabis cultivation,” said Brown. 

Despite the hurdles some would-be growers are encountering, there are some success stories — to date, Health Canada has issued 43 production licences to micro-cultivators and 10 licenses to cannabis nurseries. 

Katy Connelly of Sea Dog Farm, a micro-cultivation licence holder who grows on 200 square metres of farmland designated under the Agricultural Land Reserve in Saanich, B.C., said the process of obtaining a licence was fairly arduous, but encouraging. She counts herself as one of the lucky ones for not needing to obtain municipal approval because she was growing on ALR land. Connelly applied for a federal licence in February 2019, and after a number of requests for clarification and additional documentation, obtained her licence to begin growing in November 2019. 

In early March 2020, the municipality of Saanich, B.C. amended a zoning bylaw that finally allowed for the production of cannabis in designated areas beyond just ALR land. 

“If you have, for whatever reason, a city council that does not like the cannabis industry, then that’ll be difficult for micros,” said Brown. Maple Ridge, he added, has a “huge concentration of illicit growers” making cannabis growing an uncomfortable subject for the city. 

“But if they were providing more of a path for the legal space, rather than bottlenecking, that would arguably be more of an incentive for some of those people to transition.” 

For decades prior to legalization, what was considered to be some of the best cannabis came from thousands of illicit growers scattered across B.C. — particularly in the Lower Mainland and Kootenay regions of the province. In fact, according to data from the B.C. government (in November 2019), there are an estimated 2,500 small scale, unlicensed pot growers in the Kootenays, many of whom have hoped to transition into the legal market. 

Gord Nichol, who runs North 40 Cannabis, one of only two micro-cultivator craft brands in legal retail stores, said that one of the first things he did when he transitioned out of the legacy market was to make sure cannabis growing was an approved activity in his municipality, to remove an additional layer of bureaucracy in obtaining licensing. 

“Our application to Health Canada went in November 2018, we were licensed by July 2019. It was challenging, took time, and was expensive, but it was all very necessary. I support a rigorous screening and application process,” Nichol said. 

His advice to first-time growers looking to obtain a micro cultivator licence is to make sure they genuinely understand how to grow good cannabis, and have the patience and diligence to navigate the often tedious reporting requirements for Health Canada approval. 

That advice is vehemently echoed by Rudi Schiebel, the CEO and Founder of Habitat Life — the other micro-cultivator brand available in the legal market. 

“You really want to not only have your cultivation expertise dialed in, but you might want to bring in an administrative or regulatory person because it definitely takes a huge amount of administrative work to put together an application,” Schiebel said. 

He works with Shelter Craft Collective, a middle-man of sorts that helps liaise between the grower and the wholesaler. To date, no micro-cultivator has received a sales licence which means that they are only allowed to sell to other businesses and not directly to consumers, complicating the supply chain. 

“I feel like I’m the Grim Reaper when I have conversations with micros everyday because I’m always giving them bad news. The supply chain is messy because they have to find a processor to go through or someone to sell their gear to first,” said Kyp Rowe, business development lead for Shelter. 

Rowe said that one of the issues micros having been facing of late is declining legal cannabis prices. While large licensed producers like Canopy Growth, Aurora and Aphria have the financial bandwidth to absorb price declines, smaller growers whose cost per gram of cultivating is significantly higher, tend to disproportionately suffer. 

“My job is to go to the provinces and say look, this is craft weed, there’s a market for this, this is what you need to be selling it at, and you gotta trust us on this,” Rowe said. 

Brown believes that bureaucracy aside, this new wave of craft growers entering the market will really be the future of cannabis in Canada. 

“You can’t grow good cannabis at a large scale. Most cannabis growers know that and we are seeing that borne out now. These craft products are $12 to $15 a gram, and are flying off the shelves, so much so that the provinces who once rejected them, are now crawling back begging for more.” 

Extracts

  • This story explains the risks many new cannabis entrepreneurs face when they fail to make gaining local government approval step one of their business plan
  • It should help avoid and solve local barriers that could otherwise leave a new business stuck in an expensive regulatory limbo

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