June 23rd, 2018

Business Beat: The economic impact of cannabis production in Medicine Hat

By Medicine Hat News on June 6, 2018.

On April 16, 2018, Aurora Cannabis announced plans to construct Aurora Sun, a 1.2-million-square-foot cannabis production facility, in Medicine Hat. According to publicly available statements, Aurora’s new greenhouse will cost $120-million to build and will employ 450 people when fully operational. Using these numbers as a starting point, and rounding out the picture using data from Alberta’s existing greenhouse industry, we are able to estimate the potential economic impact of Aurora Sun on Medicine Hat.

First, let’s look at the impact of building the facility. Construction impacts are one-time only and occur during the construction period. These one-time construction impacts include everything from surveying land to pouring concrete to installing production equipment. Assuming the facility will cost $120-million to build, and adjusting for economic leakages from imports, we estimate total gross output impact of $116.9-million, total gross domestic product impact of $49.9-million, total employment impact of 331 jobs, and total labour income impact of $30.7-million.

Next, let’s look at the impact of operating the facility. Annual operational impacts are ongoing for as long as Aurora is producing cannabis in Medicine Hat. These ongoing operating impacts include everything from purchasing fertilizer to harvesting cannabis to shipping the finished product to market. Assuming the facility will employ 450 workers, and using an entry level wage of $20 per hour as a starting point, we estimate annual gross output impact of $52.7-million, annual gross domestic product impact of $19.2-million, annual total employment impact of 455 jobs, and annual total labour impact of $18.6-million.

As with any major industrial project, construction and operation of Aurora Sun will have a lasting impact on the local business community. The two primary impacts are related to facility construction and to working at the facility when it is fully operational.

During construction, we anticipate that the bulk of local business opportunities will be concentrated in the construction, professional services, administration and support, and waste management service industries. Already a number of local contractors have contacted our office for more information on how best to engage with Aurora, and we expect interest to intensify as construction gets underway later this year.

When construction is complete, Aurora’s plan to create 450 new jobs has the potential to lower the region’s overall unemployment rate, which may put some upward pressure on wages or increase vacancies in minimum wage industries. Companies that are at risk of losing employees should begin planning for when Aurora opens for business in Medicine Hat. Job seekers, meanwhile, are encouraged to visit Aurora’s website for current and future opportunities.

When all is said and done, construction and operation of Aurora Sun is projected to have a significant positive economic impact on the region for many years to come. It will result in new construction jobs for local firms, new jobs for local residents, and new opportunities for entrepreneurs and investors looking to capitalize on an exciting new industry taking root in Medicine Hat.

Jon Sookocheff is the director of business development for Invest Medicine Hat. is the city’s economic and business development initiative whose role is to uncover and promote business opportunities in Canada’s sunniest city. For more information on investment opportunities, visit http://www.investmedicinehat.ca

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