Nfld. & Labrador

Province reaches 20-year agreement with cannabis supplier in Burin

Oceanic Releaf will convert a former fish plant in Burin to a 60,000-square-foot cannabis facility. The deal includes zero upfront cost to the province's taxpayers.

No taxpayer dollars fronted to Oceanic Releaf for 60,000-square-foot facility

Cannabis will soon sprout from an abandoned fish plant in the small town of Burin, on Newfoundland's Burin Peninsula. (Adrian Wyld/Canadian Press)

The former fish plant in Burin has extended its life by at least 20 more years, thanks to a new deal struck between the provincial government and private company Oceanic Releaf to supply cannabis for two decades.

The deal also includes two retail licences to operate a pair of storefronts in the province, with no upfront cost to taxpayers and remittances on taxes paid by the retail shops over the next 10 years.

Oceanic Releaf will use the 60,000-square-foot facility to produce 1,000 kilograms of cannabis in the first year after construction is completed in 2023, and 4,000 kilograms each year after that.

The company's CEO, Taylor Giovannini, said they are close to finishing the first phase of the fish plant retrofit, with about 15,000 square feet completed.

"We'd love to serve the Burin Peninsula. Our whole goal was to employ as many people down here as possible," Giovannini told CBC Radio's On The Go.

All together, the project is expected to employ 76 people in direct, indirect and induced jobs. The province hopes it will add $24.6 million to the provincial gross domestic product and $3.2 million in wages annually.

While the full scope of construction won't be completed until 2023, the company hopes to produce cannabis by next spring. 

Giovannini said the company is in talks with the Newfoundland and Labrador Liquor Corporation. The first storefront is still to be determined, but she said the first shop could be on the Burin Peninsula, where she is from. She said she will work with the provincial government to open as many stores as she can, after the first two are up and running.

"We plan to have a retail store open by the end of 2020," she said. "We'll be across all the stores, all the licensed retailers here in Newfoundland and Labrador." 

Oceanic Releaf's products will also be available through the NLC's cannabis website, Giovannini said. 

Tax breaks

According to a news release from the provincial government, Oceanic Releaf will get a 10 per cent break on taxes owed to the Newfoundland and Labrador Liquor Commission from sales in the company's two retail stores, along with a five per cent reduction for online sales and a three per cent reduction for cannabis sold in other retail stores it supplies.

Bernard Davis, minister of tourism, culture, industry and innovation, on Monday justified the tax break by saying the provincial government is trying to grow the industry. 

Minister of Tourism, Culture, Industry and Innovation Bernard Davis said the provincial government's approach to the cannabis is to help grow the local industry. (CBC)

"It's an important investment in trying to get regions in our province active and employed," Davis said.

"In this case, the Burin Peninsula with Oceanic Releaf, is going to employ some 23 people for a period of 20 years commitment, in which case they would receive remittances back on products that are sold within the province that they have grown in the province."

Davis said the remittance cap is set at $8.4 million, which is amount the company would have to kick in.

Pressed further by reporters, Davis said if the industry doesn't get developed, there's no tax revenue from it.

"If Oceanic Releaf, in this particular case, never developed a property there would be no revenue coming in," he said. "So what we're doing is we're taking a portion of their revenue that they're bringing into this province through sales of only cannabis to Newfoundlanders and Labradorians, not the export market, which is what we're developing the industry for." 

The supply agreement also includes Delta 9 Cannabis Inc., a company based in Manitoba that will serve as a consultant to Oceanic Releaf.

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