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Smiths Falls, about 40 miles south of Ottawa, used to be known as “Hershey Town” before the chocolate factory shuttered its doors. Today the ailing community of about 9,000 has re-emerged as the cannabis capital of Canada, says Mayor Shawn Pankow with pride. Such is the attitude of many in the towns seeking to capitalize on Canada's legalization of recreational marijuana, set to go into effect on Oct. 17, by turning themselves into cornerstones of the nascent industry. Entrepreneurs and investors are pushing their way through the doors, while those supplying the already legal medical arena scale up to target a much bigger audience. Sales alone could amount to $7.2 billion by this time next year, according to one study. And that’s not including the ripple effects of new infrastructure, technology, or construction. Many unknowns remain, including how ready governments will be to implement the law, how high unintended costs might be, and whether this “green rush” is just a bubble that will burst. But the move is also being viewed as a potential solution that could stamp out an illicit market while it generates new taxes and jobs. Tomorrow, a town taking the opposite approach to Canada's legalization act: It wants to bar pot shops within its borders to minimize the uncertainty of the new legal regime.
Doubling the staff; tripling the number of grow rooms; quintupling production.
These are just some of the goals that Ram Davloor, the general manager of medicinal cannabis producer 7ACRES, shares with employees in a company strategy session ahead of the legalization of recreational marijuana on Oct. 17 in Canada.
“All of you who have come in right now are coming into a business that’s right at the very beginning,” Mr. Davloor tells the three dozen employees gathered at company headquarters in Kincardine, a municipality of about 11,000 on Lake Huron. “And this industry is going to be around for the next 200 years. So all of you here, if you think you are coming late, you are wrong.”
His words seem to have moved the crowd, especially as he lists the production aims of 50,000 kilograms annually of premium cannabis, with each gram selling at an estimated $6 (Canadian, US$4.60), by the end of next year. Adam Schacher, a team lead hired six months ago, breaks in. “Did anyone else do that on their calculator? Fifty thousand kilograms of premium cannabis. That will gross $300 million a year. This will pay power bills, water bills. This is quite a thing.” Applause and cheers erupt.
They are calling it a “green rush.” The legalization of recreational cannabis in Canada, the first major world economy and only the second country in the world to do so after Uruguay, has touched off frenzied economic activity across Canada. Entrepreneurs and investors are pushing their way through the doors, while those already supplying the medical arena like 7ACRES scale up to target a much bigger audience. Sales alone could amount to $7.2 billion, half of that the legal recreational market, by this time next year, according to a study by Deloitte in June.
And that’s not including the ripple effects of new infrastructure, technology, or construction. There are even new college programs dedicated to commercial cannabis production. “It is a big deal to us,” says Sharon Chambers, the chief administrative officer in Kincardine.
Many unknowns remain, including how ready governments will be to implement the law, how high unintended costs might be, and whether this “green rush” is just a bubble that will burst. And there is a cultural dissonance depending on how you see the issue affecting your community. But the move is also being viewed as a potential solution that could stamp out an illicit market while it generates new taxes and jobs. Nowhere is hope higher than in municipalities with cannabis production facilities, especially where they’ve taken over inactive plants and symbolize the rise of a new industry.
“I think we're going to show the rest of world how it can be done properly,” says Shawn Pankow, the mayor of Smiths Falls, where Canopy Growth, North America’s first publicly traded cannabis supplier, based itself four years ago.
The pot boom
Smiths Falls, about 40 miles south of Ottawa, used to be known as “Hershey Town” before the chocolate factory shuttered its doors. Today the ailing community of about 9,000 has re-emerged as the cannabis capital of Canada, says Mr. Pankow with pride.
Marijuana producer Tweed, a subsidiary of Canopy Growth, is now Smiths Falls’ largest employer and has generated growth across industries. Pankow says last year his town saw $30 million in construction volume, more than the previous four years combined, while this year they’ve already exceeded $150 million, mostly due to the cannabis industry. They also hope to draw cannabis tourists. “This has been moving faster than we ever expected,” he says.
Murray Clarke, who was Kincardine’s chief administrative officer when 7ACRES opened its doors, says it helped diversify the local economy, which is marked by high-paid jobs at Bruce Power, a nuclear generator, and the low-paid service sector. It is telling that there was no pushback from the town council to the production plant. The municipality even sent a letter in support of 7ACRES in March when the government was reviewing the Cannabis Act, noting that the company was honored by the Kincardine Chamber of Commerce as “best new business” in 2017. With plans to grow to 500-plus employees by the end of next year, holding several job fairs to meet those goals, 7ACRES is the second biggest employer in the region after Bruce Power.
Brad Thomas, owner of Lake Huron Rod & Gun down the road from 7ACRES, says he hasn’t heard anyone protesting the cannabis facility, housed in a formerly abandoned tomato greenhouse, on moral or any other grounds. “Most people don’t really care,” he says. “If anything it’s creating jobs.”
For those in the industry, it is more than just a job, however. Davloor used to have a traditional job as a manager at Bruce Power. But he was restless, and happened upon a handful of people in the area planning a start-up to supply the medicinal marijuana market. “When I entered first here, it felt like an underground operation,” he says. Some of his friends thought it was hilarious that he should leave the nuclear power industry for pot. “My mom and dad didn’t like it. There was some kind of stigma attached to it,” he says. “That’s getting purged really rapidly. People here are coming from just mainstream society.”
Today he works at a state-of-the-art facility. He still doesn’t talk to his parents about his job, however.
At the strategy session, he tells the staff, who range from former basement growers to scientists, that their opinions about personal use of cannabis don’t matter. They only have to have a passion for growing it as a plant.
For him, job satisfaction comes from being part of an industry with no road map. That's the vibe around the lunch table too.
“It’s a new era, it’s exciting to be around in this time,” says Mr. Schacher during a pizza break from the strategy session. “This is a movement. This whole cannabis industry is a massive thing taking place.”
• Tomorrow, a look at a town that is taking the opposite approach to Canada's marijuana legalization act: It wants to bar pot shops within its borders to minimize the uncertainty of the new legal regime.