Could a co-op model save the mom-and-pop growers?
Recognizing that mom-and-pop growers may face costly infrastructure upgrades and challenges getting space on the shelves next to larger producers, pot entrepreneurs in B.C.’s Kootenay region are asking the government to consider a model that would allow them to go in as a collective.
“There’s a lot of uneasiness and uncertainty and people not knowing whether they should jump on board or stay (underground),” says Todd Veri, president of the fledgling Kootenay Outdoor Producer Co-op.
Under the co-op model, cannabis would be grown on a few dozen outdoor farms of varying sizes (leased and owned) throughout the region. The co-op would handle the paperwork for licensing most or all of the farms. Plants would be sent to a central processing facility operated by the co-op for harvesting, trimming, drying and packaging. Profits would be shared among farmers and workers.
B.C.’s securities regulator allows co-ops to issue investment shares to up to 150 members, who can each invest up to $5,000 (potentially yielding $750,000). Veri anticipates that he is close to signing up 150 members and plans to incorporate soon.
“This is real, we’ve got the lawyers, accountants... this is a real venture,” he says.
By spring next year, he hopes to raise a million dollars through investors and fundraising.
He says the co-op model is attractive because it puts small growers on a more equal footing with large producers because of the volume of output.
“Although (the government has) made it easy for anyone who wants to grow to grow, they haven’t made it easy to sell their product,” he says, using the analogy of small craft wineries that struggle for shelf space in liquor stores.
Organizing the co-op has not gone smoothly. Veri acknowledges the board of directors “imploded” earlier this year because of disagreements on their approach. Some dropped out while others were asked to leave.
But Mary Childs, a Vancouver lawyer specializing in co-op law who is advising Teri on the project, says, co-ops have been successful in other parts of the agricultural industry for years and are an attractive alternative to those worried about going into the regulated market alone.
“It’s a really good way for individuals and small businesses to pool their resources and share expertise and equipment without having to effectively sell out to a majority shareholder,” she says. “There’s a lot of membership control and accountability.”