Who is involved? Who are the leaders of the process?
In October 2018, Vancouver-based Grow Tech Labs (GTL) announced plans to establish an Accelerator Program for small BC cannabis producers and processors to:
• maintain BC’s competitive advantage as an international cannabis leader
• provide BC SMPs with a safe, accessible alternative to the black market
• provide consumers in BC, across Canada and around the world access to authentic BC cannabis products the province is so well known for
• establish a business model for BC SMPs to foster collective innovation, achieve sustainable economies of scale and establish a retail network
• create a platform for collaboration among SMPs that promotes a culture of quality, competitiveness and corporate social responsibility
• achieve government goals related to public health, market diversity and black market
• foster collaboration with all levels of government, colleges, universities, financial institutions, business, innovation and community associations
• build on early stage outreach by sector associations and government
Who has signed up to the co-op so far?
GTL has announced the establishment a working group of 8-10 sector leaders and experienced co-op professionals to develop a provincial engagement plan, transparent governance structure and application to incorporate a BC Small Cannabis Producer and Processor Co-Op within the provincial Co-operative Association Act.
GTL and working group will invite potential members to participate in the process and shape the Co-Op’s mandate by contacting the Co-Op Accelerator at email@example.com. All communication is confidential. Participants will not be required to disclose their address or pay any fees to become involved in the co-op’s development phase.
Potential members will include any of the 5,000-6,000 small BC cannabis producers already designated by Health Canada to produce medical cannabis, BC residents who have expressed an interest in becoming a SMP under Health Canada’s proposed regulatory framework released October 17, 2018 and independent BC retail applicants interested in selling BC SMP products.
What are you launching today?
Today GTL is announcing three things today:
First is the selection of a co-operative as the best model to accelerate the participation of small BC producers and processors in the legal marketplace.
Second is the establishment of a working group of 8-10 sector leaders and experienced co-op professionals to develop a provincial engagement plan, transparent governance structure and application to incorporate a BC Small Cannabis Producer and Processor Co-Op within the provincial Co-operative Association Act.
Third is plan to establish a consultation process with small BC producers and processors to invite them to participate in this opportunity and shape the co-op’s scope and mandate. Details of the consultation process will be confirmed this month.
What does the co-op provide to cannabis producers?
The final mission, vision and scope of the co-op’s services will depend of feedback GTL receives from potential members across the province over the coming month. Based on feedback we have received to date from working group members and best practices of other successful co-ops, the small BC cannabis producers and processors co-op’s activities are likely to focus on:
• developing a governance framework that supports the establishment of diverse, local BC SMP co-ops
• collaborating with investors, BC credit unions and other financial institutions to develop financing options for members
• pooling purchasing power of members for essential services (human resources; product testing; distribution; quality control; legal, accounting and financial services; public affairs)
• collaborating with existing co-ops; colleges and universities; business, innovation and community associations; and government agencies (BC Hydro, economic development, municipalities, police and fire departments, etc.)
• facilitating special events and sector meetings to provide project updates and respond to challenges and opportunities with regulatory processes
• developing policies and proposals to improve provincial, federal and local regulatory frameworks
• collaborating with all levels of government to achieve shared goals of public health, diversity, job creation, black market and sustainability
• developing a communication and stakeholder engagement plan that builds on early stage outreach by sector associations and government
• organizing first annual meeting and support establishment of co-op Board of Directors
What is the advantage to a producer or processor to join?
In addition to receiving the benefits of the services described above, co-ops are a well-established, viable model for how people can collaborate to achieve common goals by pooling resources, decision making, risk and rewards.
Whether they are customers, employees or producers, all members have the right to an equal say in the business and share in the profits. Each member is entitled to one vote, regardless of the number of shares they own. Members elect a Board of Directors to provide direction, manage governance, establish goals and policies.
In a marketing co-op, members may have their own businesses and sell all or some of their goods to, or through, the co-op. By marketing together, members can get a better price and access larger markets.
These for-profit co-ops may also issue investor shares to members and non-members. These shareholders can vote on matters that affect the co-op’s financial viability. Each investment share entitles the holder to one vote. Up to 20% of a co-op Board may be investment shareholders.
BC has one of the most vibrant co-op communities in Canada, with 2 million members, 700 businesses and close to $50 billion in total assets. Nearly twice as many BC co-ops remain in operation after 5 years compared to other forms of enterprise. Co-ops create jobs at nearly 5 times the rate of the overall economy and are more accountable than publicly traded corporations.
Where will the co-op be based?
This will be determined by the Co-Op’s Board of Directors which will be established after incorporation and following a vote by members. The governance model being considered would support the establishment of diverse, local co-ops of small producers and processors.
When will the co-op begin to operate and have product to sell?
The co-op will begin to operate after a provincial consultation process with small producers and processors (SMPs)and as soon as it is incorporated. Product will begin to flow as soon as BC SMPs are licensed by Health Canada. Applications became available October 17, 2018.
How do you keep organized crime out of the co-op?
Co-Op members will be small producers, processors and retailers working within various federal, provincial and municipal government process, most of which require significant screening and requirements for criminal background checks. Co-op members and Board of Directors may also establish a code of conduct that promotes compliance with laws and regulations at all levels.
How many small producers are there in BC?
Currently, Health Canada has licensed 5,00-6,000 British Columbians to producer medical cannabis for either themselves or a designated person with a doctor’s prescription. This does not include small BC cannabis producers that have been operating in the black market.
What is the difference between a small producer and small processor?
The Cannabis Act defines these terms but generally, producers grow the plant and processors extract the plant’s various properties to create other products like edibles, oils and lotions. The Cannabis Act caps small producers at 200 square metres but allows them to also be small processors.
Would joining the co-op help SMPs get licensed from Health Canada?
While each individual SMP will be responsible for their own application and compliance with Health Canada regulations, the co-op members and the elected Board may prioritize advocacy as part of its mandate. While this may not include advocating for individual proposals, it could include efforts to improve current regulations, particularly as it relates to 200 square metre production cap, non-specific security clearance criteria and lack of municipal awareness. GTL has been in contact with Health Canada regarding the proposal to establish a co-operative of small BC producers and processors and been encouraged to move forward with our efforts.
Would the Health Canada license belong to the SMP or jointly held with the co-op?
Participation in the co-op is voluntary for SMPs. The Health Canada license would belong to the SMP. They are responsible for meeting the terms and maintain compliance.
In a marketing co-op, it is common for members to have their own businesses and sell all or some of their goods to, or through, the co-op. By marketing together, members can get a better price and access larger markets.
How much am I expected in invest in the co-op? Is there a minimum? Is there a maximum?
Potential members are not required to pay any fees to become involved in the co-op’s development phase. Through this development and consultation phase, various investment structures will be assessed and discussed as part of the incorporation process.
Incorporating a co-op requires the establishment of operating rules, membership structure and minimal financial commitment in the form of member shares. Members vote on these elements and elect a Board of Directors to provide direction, manage governance, establish goals and policies.
For-profit co-ops may issue investor shares to members and non-members. These shareholders can vote on matters that affect the co-op’s financial viability. Each investment share entitles the holder to one vote. Up to 20% of a co-op Board may be investment shareholders.
Are dividends paid to investors as with a credit union?
When it comes time for the processor or producer to sell their product, what will the process look like? How will the co-op benefit them when it comes to getting good value for my product compared working on my own?
While this will be subject to consultation with members and the BC purchasing and distribution authority, it is common for co-op members to have their own businesses and sell all or some of their goods to, or through, the co-op. By marketing together, members can get a better price and access larger markets.
The proposed co-op business model also includes establishment of a retail network in accordance with BC regulations to ensure BC SMP products reach consumers across the province, Canada and around the world.
The BC government’s regulations do not allow cannabis producers to own retail stores unless they agree not to sell their own product. How will BC SMPs get around this reality?
The BC regulations related to participation of producers in the retail market only apply to licensed producers. The BC government has created the opportunity to make an exception for BC SNPs. The co-op will be exploring this option closely with the BC government on behalf of members and may consider establishing retail locations in other provinces.
What are the main benefits the co-op gets by having more members?
The more members the co-op has the more opportunity it has to pool resources and purchasing power to get more competitive rates for good, services and better market value for products.