Legal pot may breathe life into small Canadian towns hit by resource losses

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DUNCAN, B.C.—In a tree-nestled First Nation community on Vancouver Island, forestry and farming used to be the major industries that kept the economy humming and put food on families’ tables.

But members of the Cowichan Tribes, like people from so many small and rural towns in Canada, have seen jobs driven elsewhere through dramatic changes to those sectors.

So when a medical marijuana company moved next door, Chief William Seymour saw an opportunity for his members to get good jobs and stay in the area.

“It’s their home. It is hard for any First Nation, doesn’t matter where you go, when they grow up in their own community. Having to move is always a huge thing,” he said.

Harvest One Cannabis Inc.’s grow facility is located on land owned by the Cowichan Tribes just outside Duncan, B.C. The company hopes to employ members of the First Nation once it completes a $9-million expansion, and the band is offering to pay for training courses to get prospective workers up to speed.

Across Canada, medical marijuana companies have begun ramping up production capacity and staff levels in anticipation of legalization of recreational cannabis on July 1, 2018. The companies need space — and lots of it — to grow thousands of plants, making rural areas or former manufacturing towns a natural fit for their operations.

Canopy Growth Corp., Canada’s largest pot producer, transformed a vacant Hershey chocolate factory in Smiths Falls, Ont., into a grow facility that largely employs locals. In Alberta, suffering since the oil-price crash, Aurora Cannabis Inc. is building a nearly 75,000-square-metre production plant in Leduc, while Invictus MD has moved into the tiny hamlet of Peers.

British Columbia’s Cowichan Valley, which includes Duncan, is an example of a region that’s been supportive of the cannabis industry, said Graham Whitmarsh, chief operating officer of Harvest One and a former industry consultant who once worked on projects in the province’s Interior, including Merritt.

“There’s a (type) of community where I think this fits well, especially those that may have historically relied on the logging industry,” said Whitmarsh, a former deputy minister in B.C.’s previous Liberal government. “Merritt is a good example. A major sawmill closed down there just a couple of years ago.

“This is an entirely new business. It’s going to grow to be something substantial at the end of the day and it’s not dependent on the local resources, so the communities are a good fit.”

Some laid-off resource workers are looking forward to legalization. Sixty-year-old Arnold Meyer worked at the Tolko mill in Merritt for 40 years before receiving a pink slip last December. Standing outside the shuttered mill in May, as Premier John Horgan made a campaign stop, Meyer said he was still looking for work.

“It’s OK, pot’s going to be legal soon,” Meyer said, adding he’s hopeful a large cannabis company will move to the community.

In U.S. jurisdictions that have legalized recreational marijuana, some small towns have reaped the benefits. The Colorado Springs Gazette reported the town of Sedgwick was on the verge of collapse before it allowed cannabis dispensaries to open in 2012, and it has since used the tax revenue to rebuild crumbling infrastructure.

Across the country in Adelanto, Calif., commercial marijuana growing ignited a land rush that prompted home values to skyrocket, LA Weekly reported. And on Friday, marijuana company American Green Inc. announced it planned to buy the entire town of Nipton, Calif., for $5 million and transform it into an “energy-independent, cannabis-friendly hospitality destination.”

But Lewis Koski, a consultant who was formerly director of Colorado’s Marijuana Enforcement Division, advised caution to Canadian municipalities hoping to cash in on legal cannabis.

He said in Colorado, the only tax that’s levied on cultivation goes entirely into state coffers and it’s not until tax is collected at the retail point of sale that a shareback goes to local jurisdictions. Municipalities may be able to create their own cultivation taxes, but that would harm their competitiveness, he said.

Further, the $500-million in tax and fee revenue collected by the state since 2014 is less than one per cent of the state’s budget and most of it has gone back into cannabis enforcement and education, he said.

But he said there has been statewide job growth, with about 30,000 people licensed to work in the cannabis industry. That figure doesn’t necessarily include people peripherally employed by the sector, including construction workers, plumbers, electricians, lawyers, accountants and consultants.

Still, some experts remain skeptical.

Prof. Werner Antweiler of the University of British Columbia’s Sauder School of Business said he expects legalization to create few new jobs, but it probably will move some illegal jobs into the legal economy.

“I seriously doubt that small towns in particular would benefit from cannabis legalization,” he said.

“The point to keep in mind is that marijuana legalization is not an employment policy. The main focus is on taking this business out of the hands of gangs, regulating and safeguarding supply, and influencing demand in order to reduce negative health outcomes.”