Greenhouse operators search for ‘pot’ of gold
Growing pot is a lot more profitable than growing bell peppers and tomatoes.
That’s the simple logic driving a hot market for greenhouse space in the London-Windsor area.
In the past year, plans have been unveiled to fully or partially convert greenhouse operations near Strathroy, Exeter, Petrolia and Leamington to marijuana production.
For the operators, it’s part of a scramble to get in the market for both medical marijuana and soonto-be-legal recreational marijuana that has been valued at $23 billion. But one agricultural expert warns a gold-rush mentality may be behind the rush of investment. Sylvain Charlebois, who is also dean of the business school at Dalhousie University, says the market for legal recreational marijuana is still speculative.
“It’s not going to last forever. At some point everything is going to fall back to earth and normal market conditions will apply to cannabis.”
Charlebois says the new cannabis operations could face some NIMBY issues if they are anywhere near residential areas. Residents living near cannabis production facilities in California, Colorado and Vancouver have complained of a strong, skunky odour. Residents near a huge marijuana greenhouse facility near Langley B.C., have also complained about light pollution, an intense orange glow that lights up the sky at night.
Marijuana was the big topic at the Canadian Greenhouse Conference last November and for good reason. Cannabis could become a major disrupter in the industry. In Ontario, greenhouse growing is a $3.2-billion industry with half of all the greenhouse space in Canada and employs 16,000 people, about 10 per cent of all the jobs and GDP in the agriculture sector. But Jan VanderHout, chairperson of the Ontario Greenhouse Alliance, said the industry has been struggling for years with competition from imports and high energy and labour costs.
For example, the production of roses, once a flourishing business in Ontario, has almost been wiped out by cheap imports from Ecuador and Colombia.
So the sight of a cannabis company waving the big cheque could be a blessing.
“Some growers may have been wondering about closing up and then someone offers you cash deal to sell your place. It’s like, ‘Thank you very much. It could not have come at a better time,’ ” said VanderHout. VanderHout, who owns a large greenhouse cucumber business in the Hamilton area, said growing marijuana is very different from growing vegetables, requiring a retrofit of lighting and heating, a different growing medium and enhanced security. Most greenhouse facilities have already switched from soil-based to hydroponic production, which is common in the cannabis sector. VanderHout said the cannabis operations will put more strain on an already tight supply for skilled tradespeople, including electricians, irrigation specialist and software programmers. “These people supporting the greenhouse industry are very busy. Their business is booming. It’s a big draw on a small sector,” he said. Niagara College has started a program in commercial cannabis production to meet the anticipated labour needs of the budding industry. Vanderhout said cannabis will take over some of the greenhouse space now devoted to food production, but he is confident that will be replaced in the long run because demand for greenhouse food is still strong. “We may not even see a decline (in vegetable and flower production), but the growth may be reduced.” Charlebois said all the investment surging into marijuana production may siphon off financing needed by traditional farming, because cannabis is expected to be much more lucrative.
“It has become difficult and tighter to satisfy the financial institutions because the benchmark seems to be cannabis,” he added. Charlebois said one big advantage for cannabis producers is that, unlike greenhouse vegetables and flowers growers, they do not face competition from imports. There are no legal imports of cannabis, at least for now, so Canada will have to produce its own crop. But when the smoke clears, he said, cannabis production may not live up to the hype.
“At the end of the day, farmers are price-takers and that reality catches up to you no matter what you are growing ”
Some growers may have been wondering about closing up and then someone offers you cash deal to sell your place.