Breathe. Cannabis Is Here.
Mark Leger is the editor and part-owner of Huddle. This is a weekly column that features opinion, analysis and reflections on Huddle stories, podcasts and business news in the region.
On my short walk home from work in uptown Saint John, I pass by four places where I can buy Maritime craft beer: two brewpubs and restaurants (Big Tide and Gahan House), one taproom and store (Picaroons), and one brewing facility with a small retail outlet (Loyalist City). If I didn’t have to get home for the kids, I could stop in for a beer and bite to eat. For the time being, I buy some canned or bottled beer, or a growler, and head home.
In cities, suburbs, and towns across the region, I’m sure you could identify the same kinds of places you could drop into in much the same way. When I was younger, there were only provincial liquor or agency stores, where you could buy mainly the products of large brewers that were, apart from local companies like Moosehead, headquartered outside the region.
The craft alcohol industry, which includes cideries, wineries and distillers, is one of the region’s “Buy Local” success stories. There are more than 100 of them in New Brunswick with annual sales of over $17-million, according to the New Brunswick Craft Alcohol Producers Association.
Fifty-seven of those New Brunswick businesses are brewers. In Nova Scotia, there are more than 50 craft brewers with sales of more than $10-million last year.
I’m not a cannabis consumer, but in 2015, I was the first editor of the cannabis culture digital magazine, Civilized. At the time, I closely followed the legalization of cannabis and the evolution of the industry in both Canada and the United States. The structure of the retail environment was a big debate, revolving around the question: should stores be owned and operated by the government or companies in the private sector, or a mix of both?
I looked at the issue through an economic-development lens and favoured a private-sector, small business approach, where there would be privately owned cannabis cafés and retail outlets, a sector that looked something like the craft beer industry.
The Trudeau government, which campaigned on legalization in 2015 and followed through on that promise in October of 2018, had a public health and safety lens that aimed to protect kids, kill the black market and create a regulated retail framework for recreational products.
In New Brunswick, the Liberal government led by then-Premier Brian Gallant ultimately put in place the publicly run Cannabis NB network of stores and there are now 20 across the province.
Even though Gallant followed Trudeau’s lead, identifying health and safety as more important priorities than developing private-sector growth opportunities, Cannabis NB designed a network of boutique stores with an emphasis on the consumer experience, as Huddle reporter Cherise Letson discovered when she visited one of the new stores shortly after it opened.
This consumer-oriented approach to design and marketing quickly got them into trouble with Health Canada, which took issue with images and characterizations on the Cannabis NB website, which Huddle wrote about at the time in an article with the headline, Cannabis NB Rids Website Of Happy, Relaxed People.
However, Cannabis NB soon had bigger problems than running afoul of Health Canada marketing guidelines. They started regularly reporting operating losses as they went about establishing the stores and growing the business, with stories like this one in Huddle becoming the norm. Posting losses in the early days is understandable for any business in a newly emerging sector but they encountered critics, of course, in a politicized environment.
In early November of 2019, premier Blaine Higgs expressed impatience with the continuing losses at Cannabis NB and said privatizing it was a possibility. A week later, the government announced a request for proposals (RFP) for a single private operator of the retail stores.
“Government shouldn’t be in the business…we should be in the business of regulating,” said Finance Minister Ernie Steeves at the time. “We’ve proven that we can’t run [the stores] … you can’t run a business the same way as you run a government.”
And then, in one of the many twists in the Cannabis NB story, the stores starting making money and stories about operating profits became the norm.
But the government remained committed to privatizing the stores and appeared close to finalizing an agreement with a single private operator when local companies, the province’s cities, and First Nations leaders began lobbying to halt the process.
In a letter to the premier, industry leaders and Chief Roger Augustine of the Assembly of First Nations wrote that having a single operator of the stores would limit opportunities to make the local industry more diverse and robust, stifling the growth of an industry that employs 2,000 people in the province now, a labour force that is expected to grow to 3,000 by 2022.
In a recent interview with Huddle, Tanner Stewart, the owner of Stewart Farms, said New Brunswick needs to open up the retail environment and allow private retailers to operate their own stores, something that’s permitted in provinces like British Columbia, Ontario and Newfoundland and Labrador.
“Ontario is opening almost 30 stores a week right now,” said Stewart, who is a guest on the next Huddle “Home Office” podcast. “This government can generate [economic growth] with no investment or by spending any money and they can unleash an economic powerhouse in this province.”
On March 19, the province announced it would not proceed with the privatization of the stores, though it did not embrace the model put forth by people like Stewart. It said it would merely preserve the status quo.
“Discussions with the top-ranked proponents have concluded and our government has decided that the best approach for New Brunswickers is to continue with the Cannabis NB model that is now in place,” Premier Blaine Higgs said in a statement.
Stewart praised the decision and said they would keep pressing the government to make more significant changes to the retail model.
“Keeping the industry within the government’s control and, therefore, New Brunswick citizens was a great decision by the Higgs government,” Stewart told Huddle. “Now, we have the option to open up the industry to all New Brunswickers, support dozens of more entrepreneurs and create hundreds of additional jobs.”
Stewart is right. The government needs to give the private sector a larger role in growing a retail sector that creates more economic opportunities for local companies and better serves the needs of consumers, much like they have in the alcohol industry.
The province, of course, now also permits the sale of beer and wine at grocery stores. Near my neighbourhood, a Cannabis NB store is located beside an Atlantic Superstore. The grocery store has an enormous promotional banner on an outside wall that reads, “Breathe. Wine is here.” The cannabis store isn’t allowed to market in the same way so there is nothing but the Cannabis NB sign.
The government mentality seems stuck in 2015 when the fears over the legalization and its effects kept its focus mainly on health and safety issues. We need to loosen up and more fully embrace the economic opportunities of this industry too.
Breathe. Cannabis is here.
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Banner image: a screenshot of an image that used to be on the Cannabis NB website.