Nfld. & Labrador

Government subsidizing big cannabis at expense of its people, say opposition

Opposition parties are criticizing the Liberal government's latest corporate deal for legal cannabis, for allowing the company — with Liberal ties — to keep some tax money.

Third deal involves shareholder married to president of Liberal Party

Atlantic Cultivation broke ground on its new cannabis production facility on Kenmount Road in St. John's on Thursday. (Auxly Cannabis Group/Twitter)

Opposition MHAs are criticizing what they call more subsidies to a company with Liberal ties, on the heels of the province's third major deal to grow and sell cannabis locally.

"It's yet another example of government subsidizing large corporations at the expense of the citizens of Newfoundland and Labrador," said Jim Dinn, NDP MHA for St. John's Centre. 

St. John's-based Atlantic Cultivation, in partnership with B.C.-based Auxly Cannabis Group, has a deal to supply cannabis, build a $37-million cannabis production facility in St. John's, and operate five new retail stores — promising hundreds of jobs as well. 

You're looking at $130 million taken out of the provincial economy that could be used for other services.- Jim Dinn

The company "will be eligible for reduced monthly remittances to the Newfoundland and Labrador Liquor Corporation on sales of its cannabis old in the province, up to the confirmed eligible expenditures of up to $37 million for 10 years, which is related to the construction cost of the production facility," a spokesperson for the Department of Tourism, Culture and Innovation said in an email Thursday afternoon. 

Dinn said the government is giving "large, shiny corporations" an advantage, because other large companies — like beer producers or local independent cannabis companies — "don't get these deals to kick start their operations."

NDP MHA Jim Dinn says the government is subsidizing big corporations at the expense of local companies. (Mark Quinn/CBC)

"Bit worrisome I guess. It's the third one, in recent memory, totalling $130 million," said Lloyd Parrott, PC MHA for Terra Nova and critic for the department, of the deal. 

This latest deal follows the same model for cannabis production and sales with Biome Grow, which can keep up to $52 million, and Canopy Growth, which can keep up to $40 million

"You're looking at $130 million taken out of the provincial economy that could be used for other services, for education, health care, our seniors," Dinn said, with Parrott echoing that sentiment. 

Where's the RFP?

In this deal, the government was clear that Tom Collingwood Sr., Cynthia Crosbie, and Christopher Hickman of Marco Group — which appears to be involved in the construction of the new facility — are the three shareholders of Atlantic Cultivation.

Crosbie is married to John Allan, the president of the Liberal Party, and is a cousin of PC leader Ches Crosbie. 

"You know the old adage, you can't pick and choose your family, and obviously she's married to the president of the Liberal Party. We wish her luck as an individual, and it has no bearing on our leader," said Parrott. 

It is a fair, open and transparent process that is understood by those in the industry.- Christopher Mitchelmore

But Parrott is concerned about what he calls a lack of transparency to the process, as there was no request for proposals for these deals. 

"It gives [the Liberal government] the ability to choose the winners and losers, and it's quite apparent with the names on this list it's friends that are being chosen, not winners or losers."

PC MHA Lloyd Parrott says the government is choosing its friends to benefit from cannabis production and supply deals. (Mark Quinn/CBC)

Dinn said the NDP is always concerned "as to who's profiting from government subsidies and investment."

'Fair, open and transparent': Mitchelmore

"A request for proposals (RFP) process would limit when government could receive and evaluate proposals and would limit the ability for companies, especially local companies, to be able to set up cannabis production facilities in Newfoundland and Labrador," said Minister Christopher Mitchelmore in a statement Thursday afternoon.  

Tourism, Culture Industry and Innovation Minister Christopher Mitchelmore says there is no request for proposals process for these cannabis production and supply deals. (CBC)

He said the current process allows any company to enter negotiations with the government at any time, as long as it meets the necessary requirements. 

"It is a fair, open and transparent process that is understood by those in the industry," said Mitchelmore, who has repeatedly said the deals ultimately benefit the province. 

Atlantic Cultivation broke ground on the new facility on Kenmount Road on Thursday, the day after the deal was announced. 

Read more from CBC Newfoundland and Labrador

With files from Mark Quinn

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