British Columbia

Vancouver Island cannabis growers high on legal pot prospects

Licensed medical marijuana producers on Vancouver Island are already angling for expansion into a legalized recreational market as proposed new rules take shape.

Multi-billion-dollar recreational market beckons to medicinal marijuana companies

Tilray president Brendan Kennedy says the company will enter the recreational marijuana market but with a different brand and product than its medical marijuana line. (CBC)

Licensed medical marijuana producers on Vancouver Island are already angling for expansion into a legalized recreational market as proposed new rules take shape.

The Task Force on Cannabis Legalization and Regulation recommended this week keeping a separate framework for supplying recreational pot to Canadians.

Meanwhile, two of the three dozen companies licensed to supply medical marijuana to Canadians are already laying the groundwork for diversification into the multi-billion dollar recreational market.

​Executives for Tilray, based in Nanaimo, B.C., and United Greeneries Ltd., in nearby Duncan, endorse the task force's main recommendations, including a minimum age of 18 for purchase of pot, a ban on advertising and sales through stand-alone outlets or mail-order.

Brendan Kennedy, president of Tilray, said the company will expand into recreational marijuana, but it won't be a simple matter of ramping up production.

Different branding for recreational pot

The company, which distributes its medical marijuana by mail, exports to Australia, New Zealand and Europe.

"We would enter the recreational market but we would enter it using a different brand than Tilray," Kennedy said.

"Similar product, similar production staff," he said, but "a completely different brand targeting adult consumers."

In contrast with Tilray's established business, United Greeneries Ltd. received customs clearance this week for its first one-kilogram shipment of cannabis seeds imported from Europe.

United Greeneries expects to start selling rooted cuttings of 30 different cannabis varieties by next April to retailers and individual consumers.

A 'first mover' into new market

United Greeneries just received its license in June to cultivate medical marijuana, but the company already has ambitious plans to become a "first mover in the Canadian recreational market," according to a release from its Australian parent company,  MMJ PhytoTech Limited.

"Commercially for Canadian companies, this means a tremendous opportunity," United Greeneries CEO Andreas Gedeon told On the Island host Gregor Craigie.

He called the task force recommendation to allow every adult Canadian to cultivate four plants of their own "a huge step."

Tilray's president says the biggest challenge will be transitioning the supply of recreational marijuana from the illegal market to a regulated legal market. (Darryl Dyck/Canadian Press)

Gedeon said it will be a huge challenge for Canadian companies but also a challenge to meet the demand for legal pot.

"The entire infrastructure for this recreational market needs to be built from scratch," Gedeon said.

For its part, United Greeneries aims to scale up production from 7,500 kilograms of cannabis by 2018 to 60,000 kilograms by 2022.

Black-market transition biggest challenge

Tilray's president says demand for recreational pot is already being met by the black market, and that's the biggest challenge.

"That market is roughly 70 times the medical market," Kennedy said. "So we're not worried about the medical market eroding.

"The real challenge is how that black market will transition into a fully regulated, restricted, taxed recreational market."