Mar­i­juana: pain or gain

The Compass - - Editorial - Pat Cullen Pat Cullen is a jour­nal­ist who lives in Car­bon­ear. She can be reached at 596-1505 or

Now that recre­ational mar­i­juana will be le­gal in a day or so, there seems to be no short­age of com­pa­nies hop­ing to be­come our new sav­ior by set­ting up cannabis-grow­ing fa­cil­i­ties within the prov­ince.

It would be ac­cept­able if they were lo­cal com­pa­nies keep­ing their prof­its in the prov­ince, to ben­e­fit the peo­ple of the prov­ince. But it is hard to stom­ach Canopy Growth Cor­po­ra­tion, de­scribed as the largest cannabis com­pany in the world, traded on both the New York and Toronto Stock Ex­changes, com­ing here and work­ing out a deal with the pro­vin­cial gov­ern­ment that en­ti­tles them to a max­i­mum of $40 mil­lion in tax-re­mit­tances from the hard-work­ing peo­ple of New­found­land and Labrador. It is money we will never see be­cause Canopy wants to get back some of its in­vest­ment in the pro­duc­tion fa­cil­ity they are build­ing in the White Hills area of St. John’s. And we will even­tu­ally pay the price.

Me­dia re­ports say the plant will cost $55 mil­lion and be fully op­er­a­tional by 2019. It will pro­duce 12,000 kilo­grams of mar­i­juana a year , 8,000 of which will be sold within the prov­ince — the re­main­der out­side. It will cre­ate 145 per­ma­nent jobs and main­tain its in­vest­ment in the prov­ince for at least 20 years, per­haps even per­ma­nently. But are the prom­ises of this com­pany, head-quar­tered in Smiths Falls, Ont. enough to war­rant the $40 mil­lion tax-break we are giv­ing. That’s $40 mil­lion that will never go into our gen­eral rev­enue. It will never make any im­prove­ments to our ed­u­ca­tional, health care and cor­rec­tional sys­tems. It is gone, swal­lowed up in ex­change for a pot plant and 145 jobs.

And what sort of jobs will Canopy CEO Bruce Lin­ton and his team of­fer? Will they be well-pay­ing jobs with ben­e­fits or min­i­mum-wage po­si­tions that of­fer lit­tle more than a pal­try pay­cheque — the sort that cre­ate more so­cial prob­lems than they solve? My re­peated phone calls and emails to his com­pany in­quir­ing about the types of jobs he will bring to the prov­ince were sim­ply ig­nored.

A story in the May 7 edi­tion of The Tele­gram says 60 peo­ple will be em­ployed in Canopy’s re­tail out­lets. It is be­lieved to own six or eight of th­ese through­out the prov­ince un­der the ar­range­ment with the Ball gov­ern­ment. Th­ese stores will be sub­ject to the li­cens­ing and reg­u­la­tions of the New­found­land and Labrador Liquor Cor­po­ra­tion, the pro­vin­cial Crown cor­po­ra­tion which also con­trols the prov­ince’s dis­tri­bu­tion of mar­i­juana.

In his email to me, In­dus­try Min­is­ter Christo­pher Mitchel­more men­tioned “re­mit­tances” as par­tial re­turn for Canopy’s in­vest­ment in the pro­duc­tion plant and the jobs that go with it, but there was no talk of taxremit­tances or tax-cred­its. That is, how­ever, what they are.

Per­haps to make this deal more palat­able, he wrote “… the es­ti­mated tax rev­enue from labour is $51.87 mil­lion over 20 years.” That in­cludes the “pro­vin­cial por­tion of in­come tax” from the peo­ple work­ing there, ad­di­tional rev­enues that will be gen­er­ated when th­ese work­ers spend within the prov­ince, as well as pay­roll tax.

The en­tire ar­range­ment, in­clud­ing ink­ing the deal with Canopy Growth be­fore a request for pro­pos­als was made, has the op­po­si­tion par­ties see­ing red.

By way of ex­pla­na­tion, Mitchel­more said there was no li­censed pro­ducer of cannabis in the prov­ince and it was nec­es­sary to have a “safe sup­ply” in ad­vance of the fed­eral gov­ern­ment’s le­gal­iza­tion date. But NDP Leader Gerry Rogers said gov­ern­ment could have got­ten a sup­ply from lo­cal pro­duc­ers, even if they had to set up a part­ner­ship with out­side in­ter­ests. She is en­raged that peo­ple’s money is used to pro­vide recre­ational mar­i­juana, adding, “every penny of profit will be sucked out of this prov­ince.”

PC Leader Ches Cros­bie dis­missed the ar­range­ment with Canopy Growth as a “sweet­heart deal”… which in­cludes a hand­out of $40 mil­lion in tax­payer money to an On­tar­i­obased cor­po­ra­tion.” He too said it was money that could be used for health care, ed­u­ca­tion or help­ing pay down the debt.

As for the request for pro­pos­als, Cros­bie, like Rogers, was crit­i­cal of the closed deal which shut out po­ten­tial lo­cal pro­duc­ers.

“…An open RFP for sup­ply should have been is­sued, giv­ing all stake­hold­ers a chance to ben­e­fit. In­stead, we have seen a need­less hand­out to Canopy Growth to set up here,” his email read.

Then there is the 75-25 tax­a­tion split be­tween the prov­inces and Ot­tawa. It will hardly be a wind­fall for us. Pro­vin­cial Fi­nance of­fi­cials ex­plained that Ot­tawa’s “…por­tion of the ex­cise tax rev­enues will be capped at $100 mil­lion an­nu­ally for the first 2 years, with any ad­di­tional funds above that cap re­dis­tributed to the prov­inces based on their share of sales in a given year.” With a pop­u­la­tion of around 525,000 and a high pro­por­tion of se­niors, our share of sales will prob­a­bly be at the bot­tom.

There is also that pesky taxbreak to Canopy Growth to con­sider. Once again, we come up short. This fis­cal year the Fi­nance de­part­ment pre­dicts we will re­ceive $5.8 mil­lion from the sale of mar­i­juana. The rev­enues, of­fi­cials ex­plain, are based on fis­cal year pro­jec­tions and we are now half­way through this one.

The CBC quoted Fi­nance Min­is­ter Tom Os­borne in an April 16 news re­port as ex­pect­ing $4 mil­lion to be spent on im­ple­men­ta­tion, leav­ing us with a net rev­enue of $1.8 mil­lion. Of­fi­cials in his de­part­ment project rev­enue for fis­cal 2019 to 2020 at $17 mil­lion.

We are now see­ing com­mer­cial grow-ops try to es­tab­lish all over the area, hop­ing to em­ploy peo­ple in places that have been eco­nom­i­cally hard-hit. What a pity our lo­cal pro­duc­ers were ini­tially shut out and Canopy Growth was asked to move in and set up in St. John’s, an area de­scribed by Gerry Rogers as “hav­ing the high­est em­ploy­ment rate in the prov­ince.”

There is a short­age of le­gal recre­ational pot through­out Canada and our lo­cals could have helped fill that gap. But they were never given the chance. And we, the masters of mis­man­age­ment, never seem to learn our les­son.

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