August 17th, 2018

Business Beat: Not just blowing smoke

By Medicine Hat News on February 14, 2018.

The federal government is on track to legalize recreational cannabis in the summer of 2018. It’s not every day that a multi-billion-dollar industry comes to life. For it or against it, the business of cannabis is worth a closer look.

In 2018 Canadians are projected to spend between $4.2 and $6.2 billion on legal cannabis, according to the Parliamentary Budget Office. By 2021, the global cannabis industry is projected to be worth $31.4 billion. Canada’s major cannabis producers have gone global, with deals already in place to supply international medical markets. Indeed, the cannabis industry is in the midst of a “green rush,” with something in the neighbourhood of 10 million square feet of cannabis production facilities currently under construction in Canada alone.

Taking a broader view of the industry, cannabis production is driving growth of controlled environment agriculture, which combines robotics, LED lighting, and smartphone apps into state-of-the-art farms that grow everything from cannabis to micro-greens. In 2017, investors poured more than $200 million into controlled environmental agricultural startups. Industry-wide, investment rose 60 per cent between 2011 and 2014. This kind of activity shows the level of interest in controlled environment agriculture, regardless of the crop.

Back to cannabis, there are two business opportunities to consider. The first is cannabis retailing, which will have an impact at the neighbourhood level. Recognizing the social implications of legal cannabis, in January the City of Medicine Hat released its public cannabis survey as it seeks community input into how and where cannabis will be sold within city limits.

The second business opportunity to consider is production. Cannabis greenhouses are springing up across Canada, bringing with them new investment and new jobs. Here in Alberta, one of Canada’s big licensed producers recently put the finishing touches on an 800,000 sq.-ft. greenhouse at Edmonton International Airport. Closer to home, a Lethbridge-based company has announced plans to build a 180,000 sq.-ft. cannabis production facility, with potential to create 150 new jobs.

It’s also worth looking south of the border, where cannabis is legal in a number of American states. Coachella, Calif., is home to a large cluster of cannabis production and processing companies. And yet the City of Coachella does not allow retail dispensaries and delivery services to operate in city limits, illustrating that retail and production are, in fact, two distinct business opportunities.

Looking at Medicine Hat, it is worth considering both opportunities in their entirety. On the production side, our region is home to Western Canada’s largest greenhouse cluster. Medicine Hat’s electricity rates are competitive with any jurisdiction in the country. And we have the land, expertise and workforce to compete for our fair share of the global cannabis industry.

On the retail side, the City of Medicine Hat is in the process of consulting with the community regarding dispensaries and retailers. No doubt the small business community is busy working with the City of Medicine Hat to better understand the future of retail cannabis in our city. With so much at stake, it is important to consider multiple viewpoints, as municipal jurisdictions across the nation are currently in the process of doing.

Whatever the case, one thing is certain. This summer, a multi-billion-dollar industry is going to emerge, as if by magic. It truly is a once-in-a-lifetime opportunity, and one that we’re watching closely.

Ryan Jackson is the CEO of Invest Medicine Hat.

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