2018, Volume 3, Issue 3 - Winter 2018

With Joel Peterson, vice president of government relations with H+K Strategies

Recreational pot is now legal in Canada. Where do you think the economic opportunity is most prevalent?

In the gold rush that started in 1896, most of those who made lasting fortunes were not miners. Rather, they were the ones selling picks and shovels, building hotels and restaurants, and supplying food and clothing to those hoping to strike it rich.

Just think of the Levi Strauss story. When news of the California Gold Rush made its way east, Strauss journeyed to San Francisco to establish a wholesale dry goods business under his own name and served as the west coast representative of the family’s New York firm. He eventually renamed his company Levi Strauss & Co., maker of the famous Levi’s jeans.

Similarly, now that cannabis has been legalized, the $23 billion pan-Canadian ‘green rush’ spans well beyond production. There is a vacuum of potential on the supply and services side, too, with significantly lower barriers to entry.

Can you provide some examples from other jurisdictions?

In Colorado, the ancillary cannabis market is estimated to be more than $20 billion, and Washington has benefitted from an additional $100 million in cannabis-related tax revenues that are not directly from sale of cannabis. The sky is the limit — everything from technological solutions to breathalyzers and testing kits, cannabis paraphernalia, security and transportation services, hospitality and tourism, not to mention investment and financial support.

Why are the Prairies so well-positioned to capitalize?

Cannabis cultivation is a high-tech, high-skill industry. With the different types of cannabis, and the multiple strains, there is opportunity for genetically engineering cannabinoid profiles to create new variations.

The linchpin will be finding the people — and enough of them — with the right competencies to do the work. It just so happens these skill sets tend to be geographically concentrated in Western Canada, and that alone presents a major opportunity for our agricultural sector and its sophisticated biotechnology industry.

Will farming really play that big of a role in cannabis development?

It’s hard to say, but the potential is there. Cannabis is a notoriously finicky crop, and the ability to fine-tune growing processes could lead to superior products and larger, better quality yields.

Agricultural producers in this part of the world are a technologically savvy group, and have long been leaders in adopting new practices, implementing systems and procedures for organic production, genetically modifying crops, leveraging data, as well as leading standards for food and food supplement safety.

The new cannabis framework will require innovative approaches to assist in product differentiation, traceability, safety, and compliance — all of which already have a foundation in other regional industries, like beef production. The experience and knowledge learned in those other sectors can easily be adapted for cannabis.

Perhaps the most underestimated growth opportunity, however, relates to the ugly cousin of cannabis — hemp, which produces valuable cannabidiol (or CBD), a non-psychoactive compound with an array of potential medical applications.

While cannabis is generally grown in small quantities under tightly controlled conditions, hemp is grown like most other field crops, such as peas, lentils, and alfalfa. Hemp also tolerates a wide variety of soils and temperatures, requires no pesticides, and grows extremely fast, soaring to as much as 20 feet in 100 days.

You mentioned product traceability — that requires technological infrastructure. Is there a role to play for the private sector in that space?

Although cannabis will be legalized, it will still be a controlled product, and will be subject to various controls throughout the growing, wholesaling, and retailing phases. New advancements and innovations in IT will be vital to moving the industry forward across the country, and will be required to track cannabis from seed to sale.

For instance, producers will need a software solution to track the growth cycle and maintenance of their plants. Retailers will need software for keeping tabs on inventory that preserves compliance with federal and varying provincial rules. And those selling will also need to limit and monitor the amount sold to consumers. There is definitely a niche there for solutions that sync up the compliance burden with internal quality assurance and other business demands.