Tim Hagen had come to quietly appreciate the cannabis growing operation tucked away in the woods a few kilometres north of his village.
But this week, one of the underpinnings of the local economy, Aurora Cannabis’ Mountain facility, got the word from corporate headquarters in Edmonton that it would be uprooted, a victim of hard times in the country’s fledgling pot industry.
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With it goes more than 100 jobs, tax revenue for Mountain View County and money for the village through its sale of water, said Hagen, mayor of the village of 444 people.
“It’s going to hurt,” said Hagen.
“A few people thought it may happen but didn’t think it’d happen this quickly.”
It’s also a blow to local businesses that catered to grow operation staff, most of who hail from outside Cremona, said the mayor.
Although he said he hopes the 55,000-square-foot facility will be purchased and put to use after Aurora’s departure, he’s not optimistic about that at the moment.
The same might be said for the wider cannabis industry in Alberta which is seeing a retrenchment after the heady days of 2018 and 2019 when recreational legalization loomed, then became reality.
Last November, Aurora announced it would scale back plans for a massive, 1.2 million-square-foot greenhouse at Medicine Hat, alarming locals who had anticipated the creation of hundreds of jobs.
On Tuesday, Aurora said the closures of its Cremona operation and four others across the country would help reduce staff by 30 per cent and consolidate production in its larger facilities. The company insisted it’s all part of a plan to streamline and find efficiencies.
“Both the Canadian facility rationalization and inventory revaluation are expected to improve gross margins and accelerate our ability to generate positive cash flow,” interim CEO Michael Singer said in a press release.
Earlier this year, Sundial Growers began trimming positions at its Olds plant that had grown dramatically along with the number of production rooms.
Olds Mayor Michael Muzychka said it’s another setback for the town of 10,000 amid a string of them.
“It’s been a snowball on top of COVID and the oil-and-gas struggle, like a one-two-three punch,” said Muzychka.
Those setbacks are particularly hard to absorb by smaller centres, which host most of the production in Alberta, said Nathan Mison, chairman of the Alberta Cannabis Council representing growers and retailers.
“This disproportionately falls on rural areas and when you’re talking about hundreds of jobs lost, that is very real,” said Mison.
In the last six months, he said, the province has shed as many as 1,700 cannabis industry jobs.
Industry analysts have pointed to overproduction in the industry that didn’t take long to catch up to it, after months of shortages in stores immediately following legalization nearly two years ago.
Some say that over-reach has extended to Alberta’s retail scene, which at 486 contains about half the country’s permitted stores.
That has led to a series of store sell-offs, takeovers and consolidations across the province.
“We’ve seen missed expectations, people are coming down to earth,” said John Arbuthnot, CEO of Winnipeg-based Delta 9 which has purchased store sites in Calgary and Grande Prairie under the Prairie Records brand.
“We’re now seeing large numbers of licences coming up for sale.”
Dozens of licensed locations in Alberta, he said, have yet to open, reflecting that economic uncertainty and market saturation.
A spokeswoman for regulator Alberta Gaming, Liquor and Cannabis said the agency doesn’t have figures for operating locations but added it’s safe to say the total number open is below 486.
“Some stores have limited their hours, chosen to close operations during COVID and others may have recently received a licence and are still determining when they will open their doors,” said Heather Holmen.
Arbuthnot, whose company is also a licensed producer, said the industry outgrew itself — a practice that’s led to perishable inventory left on shelves that quickly loses its value.
“There’s too much capacity on the cultivation side and you just can’t produce the quality of cannabis that you really want on that scale,” he said, adding that uncertainty is making it more difficult for the industry to raise capital.
The Alberta cannabis industry, particularly among its licensed producers, will continue to retreat, said the Alberta Cannabis Council’s Mison.
“We’ll see more consolidation in the industry, not less,” he said, noting such retreats have been far more severe in B.C., which has a considerably larger growing industry.
As for retail, “we’re starting to see a saturation in certain (cities) because we didn’t how many stores a place could support.”
Also hindering the industry in Alberta are the country’s second-highest cannabis excise taxes and increases in municipal property taxes slapped on growers, said Mison, a cannabis retailer-turned-industry consultant.
He said the industry’s also been neglected by governments that don’t even include the activity under any ministries.
“There’s no one we can talk to, we can’t get anybody to care,” said Mison.
Just as ignored, he said, is a thriving black market that operates fearlessly online offering products the legal sector can’t.
Even so, both Mison and Delta 9’s Arbuthnot say a shaking out in the sector should lead to better days in an industry that’s not going away.
“The cannabis industry that emerges is going to be more profitable,” said Arbuthnot.
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Authored By: Calgary HeraldArticle category: Marijuana Business NewsRegional Marijuana News: Alberta
READ MORE: https://420intel.ca/articles/2020/06/29/alberta-cannabis-industry-retreat-operations-pruned-jobs-cut