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Pod 311 - What you need to know about BC’s farm-gate retail regulations

by Jay Rosenthal
August 30th 2021

On this episode of BofC Live, we connect with Lucas McCann of CannDelta – the Official Regulatory Advisory of Business of Cannabis. We wanted to have McCann on to talk about the latest regulatory u... More

Yeah, welcome to be Fc live. The daily video and podcast series of business of cannabis BFC live highlights the company's brands, people in trends driving the global cannabis sector. Find out all that we do at business of cannabis dot com. Coming up on this BFC live, we connect with Lucas McCann from Can Delta. They are official regulatory advisory of business of cannabis. We want to connect with Lucas about what is happening in british Columbia, especially as it relates to Farm gate retail. Wow. Yeah, Lucas McCann. Happy monday morning A. J. How are you doing? I'm doing well very well because next week school starts so that is, that's got me pepped up. I think. Congrats been awhile. I'm happy you made it. What's that? I'm happy you made it back to school yet. Have not yet. Uh, I want to talk to you well your, I want to talk to you because things, this is going to be a generalization, things seem to be shifting slightly as it relates to retail in some parts of Canada.

Do you agree with that statement? I agree there have been some recent developments and, and uh, we, we, well close to my home. I followed closely what's happening in Ontario but other places I'm equally interested in. Tell me about our, their updates happening in british Columbia. There are for sure. So we've been very, very closely following our, our team and business of cannabis. What's been going on with arm get across Canada. Um, this has been a very interesting and developing situation, but it's also a very important project that each province is launching independently to help showcase and to support local businesses in that province. Ontario was um one of the more popular ones, the Saskatchewan already had a model built into their regulations automatically and again hats off to them for doing a great job. You can open as many farm gate stores as you want without any kind of special permission um in Ontario that was very publicly showcased with thrive. We've we've seen there's announcement in nova Scotia as well for their farm gate or starting new Brunswick rather.

Um so that that's also great news as were, you know, seeing some developments there and we're very closely following B. C. And Alberta and there's kind of a neck and neck two uh, to see who is sort of gonna break out first. And there's been another development that it's not specifically on on farm Gate but a new model that's being uh explored And and and and it was recently um uh explained to our team, we had the privilege of sitting on the call with the L. G. B. S, the liquor distribution branch who is looking to implement a new model for for for for cultivators or craft producers. I should say somebody what we have here in Ontario. Okay. Yeah I like it already but it's not Farm Gate, it's not Farm Gate. So I don't like it that the L. G. B. Is a different branch from the L. C. R. B. Which is the one we're usually talking to, the L. C. R. B. Is the one that's in consultation right now. Their colleagues of the L. G. B. And they're working at the Farm Gate model and what that's going to look like and how that's going to support businesses in british Columbia.

Great, very excited about that. The L. G. B. Has come up with a different model that they can use to help highlight and showcase small businesses specifically uh cultivators that that are in british Columbia. So here's what this model is, it's called D. D. Or direct delivery. Um and it will allow those who have a nursery license, a cultivation license or cultivation and processing license to be able to ship product directly from the process the processors site to a retail store, similar to what Saskatchewan has been doing. Okay. So this model is made to help to showcase local products. Um It is going to help cut down on some of the unnecessary logistical hurdles so it doesn't have to go to a central warehouses er or wholesaler there and and be stored there and then shipped to a retailer. It's up to the retailer to order directly from the processor. Um That is purchasing products from A.

B. C. Cultivator, wow, that sounds good. It does but there's a few, there's still a few gaps and you know there's I think a great opportunity here to really focus and showcase on local products, but from my analysis of the notes, I'm thinking this is a little bit of a swing and a myth because there's a little caveat here that I'd like to dive into. So to participate in the program, um you need to be a nursery license or a cultivator, have a cultivation license and your cultivation limits cannot be over 3000 kg year, which is sort of similar to what we have in in Ontario with the craft 3000 kg is way more than any micro could ever produce. A standard licensed producers would be able to participate with this model. Um It's not clear how that threshold works for 3000 kg because you're not selling everything you make is a cultivator, you know, is that, you know what if the business model is to maybe take the top 20% bud from an outdoor cultivation and the rest just goes and you know, get sold off as, you know, some kind of extract biomass, so how they've gotten that that limit still needs to sort of be defined.

But the tricky part here is that there's no micro cultivator that also has a processing license and a sales amendment, all NBC. So, yeah, the challenge here is that it's sort of only hand picking to help select and support certain businesses in Bc. Um if you're a process er only in B. C. You are not permitted to participate in direct delivery unless you're showcasing beastie cultivator products from that sense. The B. C. Businesses that are following the processing model are not being supportive. Right, okay. So there appears to be gaps as you've just described them both in sort of size but also how they're getting to the 3000 kg annually. But let me ask you a question assumes. So putting those sort of hiccups aside, there is a scenario within what you've just described that I am a I am a cultivator NBC and I have all the appropriate licensing. I could actually develop a relationship with one or more retailers for my products are basically only being sold in, you know, retailer X in downtown Vancouver one in whistler one insure?

Yes, that's right, That's right, That's right. So that's that's definitely a great use case for for this uh for this model. So it could be several retailers, you know, directly delivering from the processor, but here's the caveat, so there's a focus here on sustainable business. You know, I'm cutting down on unnecessary logistics. However, you could be shipping that product over to me who is a professor in Ontario where I package that product and then I ship it back directly to the retailers. So is it self defeating in that case maybe a little bit the other challenge there is that because I'm a process er you know, it's going to be my name and my details listening all those packages. So you'd have to launch a brand with me if that were the case. Um So there's there's a little bit of a challenge there but really I I think the biggest part here is that, you know, it it draws parallels to the wine and the beer industry but from from that aspect of it it's only sort of Helping with various parts of the supply chain. So from that aspect a little bit confused, it's still early on.

So they're looking for a launch fall 2022. So there's still an opportunity for folks to provide some consultation on this and and and really have their voice heard to see if this is something that maybe it could just be fine tuned a little bit to help support all businesses in BC. Yeah I can I can we zoom out a bit because even though there's gaps in what you just described it appears and maybe I'm wrong but I'm going to ask you that that provinces Bc not the important problems but the biggest provinces that sell the most cannabis that are also not private models like those carrots like B. C. Alberta Ontario are thinking about how to do what they're doing potentially a little bit better that supports businesses within the province supports some businesses businesses. What some businesses. Right. Right. But I mean maybe I'm zooming out even further. There is movement or desire to move slightly. Yeah. Okay so there's an attempt and and it's it's great it's great that any time the government wants to work with local businesses to support those local businesses, especially in the cannabis industry, which seems like it never happens. You're right there, there's this is a positive movement, you know, it's a movement in the right direction.

Uh This is great, you know, I'm uh I think it's commendable that they're they're taking this initiative and you know, it has a lot of good things about it. Its intentions are are great, great intentions for sure. It still is is difficult to understand why I, you know, particular business model might not be reflected and supported in this. So for example, we work closely with a processor that's based out of the lower mainland uh and their focus is on extraction, molecular distillation and producing very, you know high quality refined products. They have no interest in cultivation whatsoever. Um So the only way that they could sort of get on the shelves using this model would be to work with the with the cultivator. Um But even from a reporting standpoint it's sort of a record keeping nightmare to know, okay, you know this this lot, you know, you know this is the BC lot that can be direct delivery, this exact same skew, but from this lot cannot be because it didn't actually use the cannabis that came from that B.

C. Cultivator, It came from Alberta instead. Um So from that aspect of it a little bit of a dis joint there. Um Yeah I mean it's kind of left me thinking like why why only support certain certain businesses? And it really seems like they have a focus on the agricultural agricultural part and supporting agriculture in D. C. But these are still you know agriculture, you know agricultural products that are refined I guess right? And what is your business model is producing you know the best hasher live resin or live rosin uh that that you possibly can you know that that kind of gets swept under the carpet right? Which is an important part of the sector especially in Bc. And especially with some of the processes at NBC that are really unique out there right now. Um It would be great to support those businesses because those businesses that are creating the I. P. That are exporting the I. P. That are sharing the I. P. Across the country. It really is it is it's not agricultural meaning they're not going to product but it is unique to B. C. It is B. C. Based I. P. All those things. Right? Absolutely.

That that's really right and I think it's important to realize that this is all part of a larger federal are you know framework that that's been put in place. The cultivators you are required to to work with the processors is part of the supply chain. They need someone who has that quality assurance approval and and and security clearance from health Canada to be able to to get the product to make sure that they're safe before release, they get all the training on how to conduct recalls. A lot of the onus falls on the process and the supply chain and you know, the way that this model is set up, that processor could be the one basically making the most amount of money. They don't have to be in Bc from that aspect of it is a bit concerning to sort of, not just, you know, give it the hat to those that are required and part of this process um and you know, if they limited this model to maybe just allowing processors from BC to participate, then that I think would be a, you know, a step in the right direction, because now it's it's also I guess encouraging collaboration in the space, right, cultivators and processes from Bc. I'll have to sort of get along. Now we're together, not to say that they don't, but you know, I think that would do what they're trying to do a little bit more efficiently.

Well, you talked about what um I'm gonna forget the the initials, but one is working on sort of retail, how it works with Farm Gate one, we'll see the L C R B is working on, one is describing, sort of how this uh small processors, director retailer, d d write direct delivery and what the timelines of both of these processes are are not imminent, are they? Uh they are imminent to direct delivery a you know, it sounds like this is uh this is going to be launched uh for for fall, so that's that's something that's going to be coming out relatively quickly. And you know, it does sort of highlight some of the shortcomings that we have, I guess with the Ontario model. So the Ontario model for Farm Gate, you can as a producer, you can sell the products that are coming out of your facility there, your Farm Gate store has to be on the same property that you're licensed, but the issue with that is the product that you're selling have to be vetted and approved by the USgs, you can't just sell whatever you want, it has to be sort of going through some kind of approval process. The nice thing about this direct delivery and this is, this is a plus for sure, is that those products don't actually have to be vetted first, so you can sell whatever you want to direct delivery.

Now, there are some alternative models that they could consider. There's this one model that I um that I've been looking at called Crosstalk. So in the alcohol side, the B C L D B will allow for small batch limited release used to be effectively put on pre order by some of these stores. So the retail stores could be made aware of some products that might come down the pipe and then that information effectively get sort of passed on and then they can place those orders directly and those orders get filled within 24 to 48 hours. Um So something like that, you know, uh definitely being used in uh in Ontario would be would be huge as opposed to sort of having everything sort of goes through the approval of of, you know, a company like docs. Um that would be something we'd like to see, to see implemented. Um So yeah, I mean, there's, you know, it's obviously a step in the right direction, that there's still some consultation going on. And I think if people still have questions, you know, I would definitely, you know, or comments or or you know, strong word statements in favor or of uh you know, I think you can still reach out to the, to the L G.

B. They have a special email that's set up for folks, it's direct delivery at BCL db dot com. Uh and it sounds like they're they're taking their at least entertaining the emails that are coming through. So if you are NBC, if you are a cultivator and or a protester definitely reach out to them and let them know that you're watching this and that, you know, you're, you're, you're thinking about what's happening there for sure. And for nurseries, it's great, you know, absolutely great for nurseries, the logistics of sending close to the mail. It just doesn't make any sense. So um having something there for for plants and seeds. Fantastic. Don't need a processor. Great. Well so um I don't know if if it's like two steps forward, one step back if that's what you're doing these things. But I think there are at least the two steps forward. Right? I think there's this this moment, I don't know if it's momentum but consideration that things could be better could be different, could support ideally lots of businesses but the idea that that things are could be improved is is uh people have the governing agencies certainly in B.

C. And I think in Ontario to have not just washed their hands of this and said we're done. It is this sort of evolving process. That's a great comment and you know, uh definitely an election season. And I've noticed that uh nowhere in any of the platforms, is there anything to support folks in the cannabis industry as it's always been right? Um you know, we we sort of remember how how this has been brought into place. You know, would it have been different? You know, if NdP was brought in, you know, majority government student perhaps, but you know, who knows. Um but you know always important considerations because since legalization of 2.0 products, it's like, you know, governments mouth has never had the word cannabis in it. Right. So, well mine has and yours has too. So you blame us for not talking about it. Yeah we should be asking about it we should be asking your local politicians how they plan to support local businesses. Uh that that that that's not a conversation that that people are having but you know at least from uh from the standpoint as you said two steps in the right direction, maybe a little fine tweaking I think would would sort of help spread the wealth amongst those B.

C. Businesses and why only certain aspects of the supply chain are getting the attention and getting that potential additional revenue and opportunity. Um Yeah it's not totally clear for me is it clear for you know? No um not at all but uh it's not and uh and I think elected officials people running especially are risk averse right? They don't want to say anything that's gonna screw up their chances of winning. But it is a good time for the industry to be talking about it because there's an election at hand right? And the parties while they're not really talking about it. Like we do have different views about how things roll out and how things might be tweaked or changed. So I think it is a good time to talk about it and we've had on George Smitherman talking about what's happening. Like we have had this conversation I think it is It just speaks to the newness of the sector overall right? If this industry has been around for 20 years, there would be 20 years of building a grassroots of talking about in Ottawa, elected officials comfortable talking about it. It's just not there yet. Yeah. A better framework for marketing and advertising, which again is another challenge I guess too, is you know how okay called the invaders would benefit from this if they can't really talk about it agreed And and retailers.

Yeah, yeah, yeah, Yeah. Very true. Very true. Yeah. Sandwich boards apparently are, you know, they're offside. So what we see them everywhere they are then the people in my neighborhood and pay attention, which is fine. I'm ok with their sandwich boards. So um, Lucas as always, thank you. This is up to the minute what's happening in Bc, which I think is really critical. And um, so thank you for that. We look forward to connect with you and the team uh in the days and weeks ahead. So thanks again for your time and uh have a good week. X ray. Always a pleasure, wow. Yeah. Was Lucas McCann of Can Delta, if you like this program, please rate and review us on apple podcasts. Spotify or wherever you heard the show. It helps support the work we do. We're able to do what we do because of our ongoing partners, including alternate savings cannabis at work cannabis benchmarks. Can Delta Gallagher headset and torque remains. Find out all that we do at business of cannabis dot com. Yeah, Yeah.

Pod 311 - What you need to know about BC’s farm-gate retail regulations
Pod 311 - What you need to know about BC’s farm-gate retail regulations
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