Cannabis May Be Saskatchewan’s Next Cash Crop

Ryan R. Shebelski

Cannabis Greenhouse

As late as July of 2018, the Cannabis Act (the “Act”), is slated to come into force making cannabis possession, sale and cultivation legal for recreational use to varying degrees in Canada.  No longer will cannabis users need to seek out the shady underbelly of the black-market, they will be able to venture to their local store and select from various strains of cannabis much like a fine wine, and this could result in economic gains for Saskatchewan’s agriculture industry.

The bullet points of the proposed Act are as follows:

  1. Adults would be permitted to possess up to 30 grams of dried cannabis in public, and an unlimited amount of cannabis in their personal residence;
  2. Adults would be permitted to cultivate up to 4 plants in their residence, with certain height restrictions;
  3. Adults would be permitted to give cannabis to other adults in an amount of less than 30 grams, but would be prohibited from selling to other adults or minors (with strict penalties);
  4. Retail sale of cannabis would be legal with a license and so long as the retailer remains in compliance with Provincial and Municipal regulations;
  5. Cultivation of dried cannabis on an industrial (i.e. farm or greenhouse operation) or micro (i.e. craft cultivation) scale would be legal with a license; and
  6. Operation of a nursery for live cannabis plants would be legal with a license.

Left to be seen, however, is how the Province of Saskatchewan will regulate the provincial cannabis industry in the realms of regulation that the Federal government left to the provinces. Most importantly, the Federal Government left it to the provinces to set regulation regarding retail sales. The Saskatchewan government, via Mr. David Morris of the Saskatchewan Liquor and Gaming Authority (SLGA), stated on January 8th, 2018, that the Province will license approximately 60 private retail outlets to sell cannabis to the public. While it is a relief for those interested in the industry that the Saskatchewan Government decided to allow private retail sales, the limited number of licenses that are projected to be issued to retail locations may artificially stunt the growth of this new industry in its early years.  However, Mr. Morris also stated that the SLGA will allow online sales, which has the potential to bolster the limited retail locations, though no details of the restrictions and regulations placed on such sales has yet been announced.

For the agriculture industry, this proposed legislation means big dollars and an opportunity for large-scale investment.  In 2017, between the months of January and October, the cannabis industry in Colorado (a State where cannabis is legal) saw sales of $1.26 billion dollars (projected to be $1.5 billion at year end) (Source: Colorado Department of Revenue). Similarly, in fiscal 2017, Washington state reported cannabis sales of $1.37 billion dollars (Source: Washington State Liquor and Cannabis Board).

While those numbers are certainly impressive, what’s even more impressive is the growth of the industry.  In the first year of legalization of cannabis in Colorado, the industry reported $683 million dollars in sales.  In 2015 and 2016, the industry reported sales of $995 million and $1.31 billion respectively.  The 2017 numbers are not yet available, but the projected sales in Colorado are expected to exceed $1.5 billion.  Since its inception a mere four years ago, the cannabis industry in Colorado has grown at an annualized rate of 21.74%.  Washington State saw an annualized industry growth rate of 74%!

Adjusted for population, and using the Washington and Colorado numbers as a benchmark, the Saskatchewan cannabis industry can be estimated to be worth approximately $200 – $300 million dollars per year.

The infancy of legal cannabis in Canada is presenting a rare opportunity for Saskatchewan producers to enter a fresh and growing market in a variety of ways. In addition to cultivation of cannabis for dried consumption, Saskatchewan producers will also be well positioned to explore investment in the following ways:

  1. Production of cannabis seed for oil extracts;
  2. Operation of a nursery of young plants to sell to cultivators;
  3. Operation of a seed bank or seed cleaning;
  4. Cannabis breeding and strain development; and
  5. Cannabis processing – for example, cannabis seeds to oil.

The wealth of experience and knowledge of Saskatchewan’s producers will lend itself well to a booming market in cannabis production in this province, which is destined to create further economic prosperity and jobs.

* The regulations respecting the cultivation and sale of Cannabis have not yet been finalized.  The information in this article is based on the current draft of the Cannabis Act and the “Proposed Approach to the Regulation of Cannabis” document published by the Federal Government (Health Canada) in November of 2017.