Some of Canada's biggest cannabis companies want the Senate to ban outdoor cultivation of cannabis on a commercial scale, but critics say outdoor growing is an important tool to keep prices low, ensure environmental sustainability, and compete in the future global cannabis market.
Right now, Health Canada regulations effectively limit commercial cannabis cultivation to indoor facilities, including greenhouses. But in draft regulations released in November, Health Canada said it was considering allowing legal cannabis producers grow their heady crops in the great outdoors.
On Wednesday, Bruce Linton, chairman and CEO of Canopy Growth Corporation, told the Standing Senate Committee on Social Affairs, Science and Technology that allowing outdoor production would be a big mistake.
"Outdoor cannabis cultivation will not be nearly as secure as our current indoor and greenhouse production facilities," Linton told the committee, which will ultimately suggest amendments to the federal government's Cannabis Act.
"The number and small size of these operations will make outdoor cultivation unregulatable."
Linton also said the quality of outdoor cannabis "is likely to be suspect," and that outdoor growth would "significantly increase the potential for diversion of cannabis to the illicit market."
Outdoor cannabis grown by smaller players and then sold to big companies like Canopy for processing and possible extraction wouldn't command the same prices as indoor cannabis, he said.Advertisement
"And my concern is that they might find Johnny down the block might pay a bit more than me," he told the committee. "And so I don't think that we're intending for them to become economically motivated to sell to the black market or illicit market, but they might."
In February, Linton told senators visiting Canopy Growth's headquarters in Smiths Falls, Ont. that allowing outdoor cultivation would be "the dumbest thing you'll let us do."
Linton's Wednesday comments to the Senate committee were backed up by Shawn Pankow, the mayor of Smiths Falls, who expressed concern that commercial outdoor cultivation "will discourage continued investment by licensed producers like Canopy."
The industry association Cannabis Canada Council, which represents Canopy Growth and a number of other large, publicly traded cannabis firms, also joined the full-court press against outdoor growing.
Allan Rewak, executive director of CCC, offered the committee a draft amendment that would prohibit outdoor commercial cultivation. He said outdoor cannabis production could lead to "cross pollination and contamination" of indoor cannabis crops, and that CCC was "concerned around the danger around the danger of unintentional exposure to agricultural pesticides."
Rewak told the committee that CCC's position on outdoor cultivation doesn't apply to outdoor cannabis production by individual Canadians.
"If someone's got two plants in their backyard, that's not the issue we're concerned with," he said.
'There's a huge opportunity for outdoor, seasonal cultivation'
Proponents of outdoor cannabis cultivation say the concerns raised by Canopy Growth and the Cannabis Canada Council are overblown.
"There's a lot of other legal jurisdictions that have gotten around these issues," said Mark Spear, founder and CEO of Burnstown Farms Cannabis Company in the Ottawa Valley. His company plans to grow organic, outdoor cannabis for extraction into cannabis oil.
"Quite a few states that have legalized for recreational use allow outdoor growing, as do several other countries, and none of them have had serious issues with security, product quality or cross-pollination. These are considerations, of course, that have to be addressed, but outdoor areas can be made very secure."
Spear already grows his personal supply of medical cannabis outdoors, and said he uses "99 per cent less electricity growing outdoors than I would growing indoors."
Environmental concerns are an important reason to allow outdoor cultivation, said Brittny Anderson, co-founder and director of operations at the pro-sustainability Cannabis Conservancy.
"As we're seeing, indoor facilities can often have a huge environmental footprint, especially when we're looking at energy," she said. "And I think that there's a huge opportunity for outdoor, seasonal cultivation of cannabis in Canada."
Cultivating low-cost cannabis outdoors could also keep retail prices low, Anderson said, helping to eliminate the black market trade in cannabis.
Successful outdoor cultivation of high-quality cannabis would require "very sophisticated operators," said Dan Sutton, CEO of B.C. greenhouse cannabis growers Tantalus Labs, but over time it could pose a business risk to indoor cannabis growers.
"The cost of production for outdoor cannabis is fractional... Plus you've got substantially lower (capital expenditure) barriers for new entrants," he explained.
Sutton said he supports allowing outdoor commercial cultivation in Canada, especially to compete with other countries where cannabis is being grown.
"We've got Columbia, we've got Peru, we've got a variety of Mediterranian nations that will be producing cannabis outdoors," he said. "And if Canada wants to remain competitive, we have to not only develop low-cost production — especially for product destined for extraction or derivatives — but also the (intellectual property) around cultivating outdoors in a consistent, quality-assured and secure way."
Deepak Anand, a vice-president with cannabis industry consultancy Cannabis Compliance Inc., also thinks outdoor cultivation should be allowed.
"Health Canada is going to put into place enough safeguards to ensure that quality control is maintained on any cannabis that's grown... I don't expect that the quality is going to be any different," he said.
Concerns about illegal product diversion from outdoor cannabis are also off-base, added Anand.
"I think it's somewhat naive to say that we're going to be having no security and anti-diversion mechanisms put in place for stuff grown outdoors."
'My worry is... it turns into a gong show'
In an interview with The Leaf News, Canopy CEO Bruce Linton acknowledged that his calls to ban outdoor cannabis cultivation could look like an attempt to protect his company's existing investments in indoor cannabis cultivation.
"I would financially think we would actually do better, in the short term, if it happened outdoors," he said.
"My worry is, that if it happens outdoors, it turns into a gong show and we start to have major pushback by society because they're seeing way more stuff flow to the illicit market under this regulated system. People might start changing their view on what should happen, and all of a sudden we feel pressure at a national level and it becomes a political issue again."
Allan Rewak of the Cannabis Canada Council said his industry group's position "is not that outdoor cultivation has no future, but that this is a process."
"And we believe that at this point in time, we have the infrastructure to meet the needs of Canadians, and that's what we should focus on," he said.
Aurora Cannabis chief operating officer Cam Battley sits on the board of Cannabis Canada Council, and says his company stands "in solidarity" with its fellow members against allowing outdoor commercial cultivation.
At the same time, Battley said Aurora isn't worried about the prospect of going up against outdoor growers.
"We're really not particularly fussed about outdoor grow in the future, whether it be in Canada or other jurisdictions, because we think we've got a superior approach to cultivation and production."