Provincial Preview: Marijuana business opportunities abound in Nova Scotia

(This is the fifth installment in a series over the next few months that will look at the marijuana markets in each of Canada’s provinces and territories. Other installments: AlbertaBritish ColumbiaNew Brunswick, OntarioQuebec and Saskatchewan.)

Nova Scotia may be off-limits for retail marijuana entrepreneurs, but dig a little deeper and a picture emerges of a potential hotbed for other cannabis business opportunities.

The province boasts tax credits that greatly benefit new businesses.

It also has affordable real estate and an abundant, highly educated workforce.

Within Nova Scotia, marijuana entrepreneurs will have the opportunity to participate in ancillary businesses ranging from cultivation equipment and packaging to security and legal services.

The province’s three existing licensed cannabis producers also could benefit, as might a new crop of smaller growers and MJ oil manufacturers.

Fred Bergman, senior policy analyst for Atlantic Provinces Economic Council, said the Nova Scotia economy has much to gain from cannabis legalization.

“The potential is significant in Nova Scotia,” he said, pegging the province’s marijuana-related market at potentially 150 million Canadian dollars ($120 million) in annual pretax sales.

Bergman said the province has a research and development tax credit that’s appealing to cannabis companies because it’s fully refundable.

In other words, you can still get a check from the government even if you don’t turn a profit – something that’s appealing when building a regulated industry from the ground up.

Nova Scotia-based startups also could potentially save millions through equity and input tax credits.

Such incentives have already helped the province’s burgeoning marijuana industry land a rare (at the time) inbound foreign investment.

“Nova Scotia offers many low-cost advantages and has access to many universities for human resources, training and research, as well as access to scientific research and development tax credits,” Australia’s Creso Pharma noted last year when it bought Halifax-based marijuana production applicant Mernova Medicinal.

Market snapshot

Nova Scotia is one of the busiest markets in Canada for medical marijuana.

The province has the second-highest number of patient registrations in Canada as a ratio of its population – 1,080 registrations per 100,000 people. New Brunswick is next with 802.

Demographics suggest Nova Scotia will continue to be a growing market for medical cannabis:

  • Nova Scotia has the highest number of military veterans in Canada per capita, at 4,500 per 100,000 people.
  • The province is also tied with New Brunswick with the nation’s oldest population, with about 20% of its citizens being seniors.
  • A Health Canada survey found that the average medical cannabis patient spends CA$121 in a typical month.

Aggregate adult-use cannabis consumption in the province after legalization will probably range between 30,000 kilograms (33 tons) per year to 50,000 kilograms per year – depending heavily on how much of the black market the province can bring into the regulated fold, according to government and private estimates.

The provincial marijuana wholesaler will be looking to local and regional licensed producers to lock up supply, which could mean big business for the province’s three LPs: Breathing Green Solutions, THC Inc. and Aqualitas.

Zero retail opportunities

The Nova Scotia government plans to introduce legislation this spring that would regulate recreational marijuana sales alongside alcohol in government-run stores.

Privately owned businesses will not be allowed to invest in retail opportunities for the foreseeable future.

Like other cities in Canada, Halifax has struggled to curtail illegal dispensaries.

Last summer, the city council voted to initiate a process to consider amending bylaws to allow for commercial production and dispensaries.

Education and ancillary

Despite retail being a no-go for entrepreneurs and standard cultivation licenses taking years to acquire, ample MJ business opportunities exist.

As in other provinces, analysts note that ancillary opportunities exist in greenhouse equipment, security services, shipping and distribution, marketing/branding, legal and accounting services.

Evan Price, president and co-founder of the late-stage production applicant Truro Herbal, suggests opportunities also exist in information and education.

“Whether that’s through a doctor’s office or private clinic or a private company, there’s a real big opportunity in anything that helps facilitate better use of the product,” he said.

He points to counseling, private classes and software services as examples.

As with other provinces, Canada’s newly proposed licensing system comes with a host of opportunities up and down the supply chain.

Some opportunities would exist for:

  • Micro-cultivation license holders could be licensed for the same activities as standard growers, but on a smaller scale.
  • Nursery license holders could be permitted to produce seeds and seedlings, including clones, for sale to other licensed producers and researchers.
  • Microprocessing license holders could produce cannabis oil for sale to other LPs and researchers. The same license will also allow for packaging and labeling product sales to the public.

Cultivation

Price said the province has major advantages for local cultivators, including affordable water, land and highly trained people.

With 10 universities for just 700,000 people, the province’s higher education is another big advantage for cannabis companies there.

“Having all these colleges in the province is a big advantage because there’s a highly educated and skilled workforce that any employer can tap into,” said Price.

More producers are in the pipeline. Some of those include:

  • Vida Cannabis, in Stellarton
  • Aqualitas, in Liverpool
  • International Herbs and Medical Marijuana, in Stellarton
  • Robinson’s Cannabis, in Kentville
  • Prime Pot, in Port Hawkesbury and Dartmouth
  • Mernova Medicinal, in Halifax

“There’s great opportunity for companies to provide high-quality product at a fair price,” Price said.

“And having lower capital expenses in Nova Scotia gives us the ability to compete on price and gives up flexibility to meet the market in different ways.”

Bill Sanford, chairman of licensed producer Breathing Green Solutions, also touted the province’s academic credentials:

“We have incredibly talented and educated people to choose from.”

Matt Lamers can be reached at [email protected]

To sign up for our weekly Canada marijuana business newsletter, click here.

Leave a Reply

Your email address will not be published. Required fields are marked *