Agriculture
Cannabis 2.0 offers window into pot returns policies and challenges
TORONTO — Soon after cannabis products started flying off shelves following legalization, Canopy Growth Corp. had an $26.9 million problem.
The Smiths Falls, Ont.-based company told investors and analysts during a November conference call to discuss its financial results that it was grappling with $20.5 million worth of product being returned from provincial retailers and bracing itself for another $6.4 million worth that was on the way.
In the previous quarter it had taken an $8-million writedown for unsold oil and gel caps.
The incidents are a peek into the little-discussed world of cannabis returns, where products are sent back to companies over everything from lack of sales, consumer complaints and quality concerns. Because companies and provincial cannabis distributors track returns differently and don’t always disclose data, it’s hard to know how common returns are, but experts say returns are more often an issue between retailers and wholesalers than consumer complaints.
Jordan Sinclair, Canopy’s vice-president of communications, wrote in an email that the capsule returns his company faced came because the products “didn’t catch on in the recreational market as quickly as we had anticipated in part due to slower store rollout.”
“We’re viewing these things as natural friction as consumers and retailers provide their feedback,” he said. “This is a new market and we are still learning about customer preferences and how they differ from province to province.
Some predict the number of returns like Canopy’s may be exacerbated by a predicted oversupply of legal cannabis and the second wave of products like pot-infused chocolates, cookies, soft chews, mints, tea and vapes to hit the market.
“We are in the process of seeing the first wave of returns,” said Robyn Rabinovitch, Hill+Knowlton Strategies’s business strategy consultant for cannabis clients, who has worked for CannTrust Holdings Inc. and TerrAscend.
“As we get into more robust offerings…and additional product categories, I think there is a risk of some of the slow-moving product on the 1.0 side being returned to licensed producers just to free up space at the retail and wholesale level.”
Rabinovitch has noticed that consumers are clamouring for products that have the lowest cost, but the highest potency. Their habits have sometimes left products with less than 12 per cent tetrahydrocannabinol — the cannabis compound producing a high — on shelves.
Greg Engel, chief executive of Organigram Holdings Inc., said he has yet to see anything that makes him feel product that isn’t selling will be returned to make up space. For now, he says industry returns have largely come from slow moving products.
“Now that next-gen products have launched many provinces and retailers are considering a SKU rationalization process to assess their current category mix,” he said. “Generally, these processes result in depleting existing inventory versus returns.”
But products returned because they don’t sell are only one part of the problem facing cannabis companies.
There have been recalls, like the voluntary one that occurred in November 2018, when RedeCan Pharm received complaints that some of their products contained mould.
Vaughan, Ont.-based CannTrust Holdings Inc. was subject to massive returns when millions in product was shipped back after it was disclosed the company grew some weed in unlicensed greenhouse rooms.
Cannabis stores across the country are also encountering situations when products arrived late to customers, shipments are undeliverable, items are damaged or not as ordered. Sometimes returns happen because buyers simply have had a change or heart about their purchase.
“I have heard there are some issues in quality with some licensed producers…but we don’t really get a lot a lot of returns,” said Marianella delaBarrera, WeedMD Inc.’s vice-president of communications and corporate affairs.
WeedMD returns are “atypical,” she said. The company only gets one or two a month and most come from products being undeliverable.
Recalls, empty containers and dry products make up the top reasons for returns related to quality at the OCS, said Bin Mathew, the agency’s quality assurance lead.
Between May 2019 and the end of January, the rate of return was 0.04 per cent, down from 0.27 per cent between October 2018 and May 2019.
“Being a new product and a new industry, we thought (we would see) high numbers,” Mathew said. “We’ve seen a significant decrease… it was a learning curve.”
Licensed producers are required to retain all returned products for two years for testing purposes, after which they are free to destroy it as long as no one is exposed to cannabis smoke in the process and two people are on hand to witness the event.
Health Canada said since October 2018, the reported quantity of dried cannabis destroyed per month has averaged 11,152 kilograms. As the number of licensed cultivators has increased, the total weight of cannabis destroyed monthly has trended upward, but the percentage of crop destroyed has remained relatively consistent at about four per cent of licensed cultivators’ inventories.
Federal regulations allow companies to get rid of the substance by incinerating it or shredding it and mixing it with other types of inorganic material before composting or disposing of it through local waste removal services.
Companies are turning to third-party disposal companies to free up space or compost methods, a switch from earlier days of the industry, when Rabinovitch noticed a novel approach was popular.
“You would go purchase kitty litter. You would add water to the material and then be able to throw it out in traditional methods, confirming that no one would be able to dumpster dive and be harmed by the consumption of those materials,” she says.
“But kitty litter is not always the most efficient and cost effective method.”
This report by The Canadian Press was first published Feb. 9, 2020.
Companies in this story: (TSX:WEED, TSX:TRST, TSX:OGI, TSX:WMD)
Tara Deschamps, The Canadian Press
Why Canadians Should Care About Land Loss
Developments are increasingly taking over Canadian farmland. Farms once took up much of Canadian land. However, that case is not true today. Only about 5% of Canada’s land is considered prime farmland. This prime land borders one of Canada’s fastest-growing regions, and once suburban development overtakes it, Canadian farmers will have a challenging time providing food for the cities.
Farmers in Canada make their livelihood by planting, growing, harvesting and distributing food to the Canadian populations. Without land, both farmers and the rest of those living in Canada will not get fresh, Canadian grown produce.
Here are some reasons why Canadian farmers should care about land loss:
- Farmland Provides Food
While this is an apparent reason, it’s an essential one. Prime farmland in Canada produces food for major Canadian cities. As farmers continue to lose land, they have to rely on a smaller acreage to make the same amount of food — if not more — for the growing population.
Over the past 10 years, almost 1 million hectares of agricultural land has diminished due to development and growing populations. Agriculture continues to adapt to land loss. However, further technological advancements must first take place to grow enough produce vertically rather than horizontally.
- Land Preservation Will Help the Economy
Farmland preservations come with a wealth of economic benefits. Agriculture contributes to the economy through the following ways:
- Sales: For the economy to survive, there needs to be consumer demands and sales. Almost everyone purchases produce, so there will always be a demand for those goods. Without land to grow agricultural products, no sales will be made, and the economy could suffer.
- Job opportunities: Less than 2% of Canada’s population works in the agriculture industry. While it’s not much, that’s still over 750,000 people. Preserving farmland shows a commitment to the industry. Land loss would create job loss. However, maintaining the farmland — and even reclaiming it, along with pastures — could boost the sector and, therefore, the economy. It would provide unemployed people with job security.
- Secondary markets: Farmers are just one part of the food business. Because of farmers and farmland, secondary markets can thrive. These would include processing businesses, restaurants, schools, grocery stores and even waste management companies.
Canadian farmers should care about land loss because standing back and allowing companies to overtake the farmland could seriously affect the economy.
- Farmland Benefits the Environment
Wildlife often depends upon farmland for both food and habitat. Various types of farmland create diverse habitats for many different species. Without land protection, these habitats and food sources would be destroyed, leaving many animals without a place to survive. Many would have difficulty finding a native habitat.
Additionally, growing crops helps eliminate some of the carbon dioxide released into the air. Air pollution could decrease for Canadian cities as long as no more farmland is used for development.
One major problem occurring with Canadian farmland is desertification. This happens when the soil loses nutrients and becomes barren. The urbanization of Canadian farmland is the primary contributor to desertification, which speeds up climate change and harms the environment. Keeping farmland as-is will slow down climate change.
- Land Loss Affects Farmers’ Jobs
Perhaps the main reason why Canadian farmers should care about land loss is because their livelihood could be taken away. If they don’t have the means to keep up with technological advancements in the agricultural industry, they will not be able to continue their jobs if they experience land loss.
Agriculture is an essential industry. Not everyone can pick up the skills needed to grow their own food, and so many people depend upon farmers for nutrition and goods.
Take a Stand to Preserve Farmland
Farmland is a worthwhile and precious resource for many people. Reduction in farmland acreage will hurt Canadian farmers and the rest of the population, the economy and the environment. Taking steps to prevent more land loss can slow the rates of destruction and keep natural habitats thriving for both humans and animalls.
Click here read more stories by Emily Folk.
I’m Emily Folk, and I grew up in a small town in Pennsylvania. Growing up I had a love of animals, and after countless marathons of watching Animal Planet documentaries, I developed a passion for ecology and conservation.
Canadian Agriculture More Energy Intensive, More Efficient
It’s no secret that agriculture has contributed to climate change through various means. For example, you may know that livestock generates greenhouse gas emissions due to how farms process it. That said, it’s now clear that farmers have found sustainable ways to offset those contributions. In Canada, it’s all about energy use.
Here’s how Canadian farmers have become more efficient as they raise crops and livestock, setting a standard the world should follow.
Energy Demand and Consumption Have Fluctuated
The demand for energy has increased across the agricultural sector as a whole. However, it’s key to note that farmers have begun to use less energy despite that fact. That points to more efficient practices. The farmers who complete their work productively save time, money and energy. As a result, Canadian workers have reduced their energy consumption per dollar by 17%. That’s thanks to sustainability.
The most common energy sources include fuel, gas and electricity. It’s how farmers use those resources that counts. Combined with technology choices and new practices, it’s clear that efficiency is more achievable than ever.
What Contributes to This Phenomenon?
It’s crucial for people in agriculture to explore eco-friendly alternatives. The grasslands that many western Canadian farmers cultivate contains excess carbon, so you can imagine what the country as a whole holds underneath its surface. Farmers have now adopted new methods to adjust how they harvest their crops. These systems are better for production, as well as soil and seed health overall.
The agriculture industry has gone through many changes, too. There are fewer farms — but those that still operate have employed agricultural technology to be as efficient as possible. These tools include different equipment that cuts down on time to increase proficiency. Plus, it’s now more common to use solar power as an alternative to traditional energy solutions.
Why Accuracy and Precision Matters
It’s a lot easier to be energy efficient when you don’t waste your resources. The means farmers practiced before they used specific innovations often created a time deficit. If you have a smaller machine, you likely need to do twice as much work. However, when you have access to equipment that fits your field, you don’t have to be as wasteful. The accuracy and precision created by technology make this a reality.
Soil Conservation Is Led by Ranchers
Many farmers have looked to ranchers for help. It’s a native part of ranching to preserve topsoil and other elements that are inherently sustainable. As a result, it seems like ranchers have been leading the charge against climate change for decades. The tactics they use to avoid tilling soil, for example, help preserve the amount of carbon that lies underneath the Earth’s surface.
The “no-till” practice is efficient in its own right. Rather than till your soil to plant a new crop, you simply leave behind what’s already there. This method is much better for soil nutrition, and it can keep carbon exposure at bay. As a result, you have much fewer carbon emissions. In general, the idea of soil conservation isn’t a new one, but old tricks can still work alongside modern technology.
The Future of Agriculture in Canada Looks Bright
If farmers continue on this path, it’ll be clear that climate solutions are at the forefront of their minds. These efforts create more benefits for them as they save time and money. Plus, there’s always the responsibility of maintaining the planet’s health. After all, without a strong ecosystem, agriculture would suffer. Through means that are more accurate and conservative, Canadian farmers have been able to become more efficient. Click here read more stories by Emily Folk.
I’m Emily Folk, and I grew up in a small town in Pennsylvania. Growing up I had a love of animals, and after countless marathons of watching Animal Planet documentaries, I developed a passion for ecology and conservation.
