Living/Working April 21, 2017

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Pot grower hopes to lead sector out of the shadows

B.C.-based company brings cannabis cultivation into new age with specialized greenhouses
The imminent legalization of recreational marijuana is about to push the cannabis industry into overdrive, says Dan Sutton, founder of Tantalus Labs. The company is preparing a 50,000-square-foot greenhouse facility in Maple Ridge | Rob Kruyt

With new federal marijuana legislation unveiled and recreational cannabis use in sight, the battle for legalized-market pre-eminence has begun.

And as marijuana production moves out of the shadowed corners of clandestine warehouse operation, new technologies are taking the business literally into the sunlight, making cultivation cleaner, greener and more sustainable.

Among the leaders in the sector is B.C.-based Tantalus Labs Ltd., a medical cannabis producer that cultivates sun-grown cannabis in specialized greenhouses.

Founded in 2012, the company has focused on reimagining cannabis growing methods and bringing marijuana production out of the era of bunkers and basements.

“We set out to build a cultivation methodology that was going to allow us to best optimize the environmental conditions for the cannabis plant,” said Tantalus Labs founder Dan Sutton. “There are a variety of different environmental parameters that affect plant health and at the core of it is light, water and nutrients.”

The Tantalus Sunlab facility in Maple Ridge is Canada’s first environmentally controlled greenhouse engineered specifically for cannabis. The lab is fed entirely by rainwater and uses a fraction of the electricity consumed by traditional indoor cannabis cultivation.

In its recently released Into the Light report, Tantalus claims that indoor cannabis cultivation uses close to 2% of Canada’s electricity. Converting cultivation to greenhouse agriculture could cut energy consumption nearly 90%, the company says.

More greenhouses are popping up as the stigma associated with cannabis production dissipates and growing operations become more visible.

The benefits of the greenhouse cultivation method are nothing new in Eastern Canada.

Ontario-based Aphria Inc. (TSX:APH) has been operating for years out of vegetable greenhouses transformed for cannabis production. Despite perceptions that the Canadian climate might not be suitiable for production, Gary Leong, Aphria’s chief scientific officer, says otherwise.

“We are in Leamington, Ontario; I would say that’s even a better area for growing because if you look on the map where Leamington is, it’s as far south as you can get in Canada,” Leong said. “We get all the temperate weather that you get in B.C., and it’s warmer here in the summer and there is far more sunlight in the summer here.”

Despite B.C.’s widespread reputation for cannabis production and favourable working climate, Ontario has 90% of Canada’s legal cannabis producers.

According to the Tantalus report, only nine of Canada’s 41 licensed producers of medical marijuana are based in British Columbia.

“Using Aphria as the example of the highest cannabis producer in greenhouses in Canada, their costs of production are fivefold lower than in growth rooms,” said Zamir Punja, professor of biotechnology and plant pathology at Simon Fraser University.

The Tantalus report estimates that 15,000 jobs could be created in one year if B.C. produced 40% of domestic cannabis in the new legal market.

Canada has 23 million square metres of industrial greenhouse space, a third of which is in B.C.

Sutton acknowledged that greenhouses, despite some exemptions, pay carbon taxes – yet taxation isn’t likely to scare marijuana growers.

“There is huge opportunity in cannabis. I believe there will be multiple multibillion-dollar firms in this market in the next 10 years, and we need to share the wealth with a generation of bright minds and keen insight.”

Sutton added that the industry is about to shift into overdrive.

“The legal regulated medical production of cannabis in Canada is only about 30 tonnes [annually], so if we are looking to displace the black market with regulated production, we need a 20-to-30-fold increase in our production footprint, and that could mean hundreds if not thousands of new firms coming into the regulated production space.”

Tantalus estimates that B.C.’s marijuana black market is worth $2.7 billion.

Next year will present significant opportunities as companies fight for position in the newly legal market, Sutton said.

He added that his company has its sights set on keeping on top of fast growth over the next 18 to 24 months while maintaining high product quality.

“In 10 years’ time, cannabis users, whether they be recreational or medicinal, are going to expect the same qualifications [of their product] which is the absence of pesticides, the absence of mould and mildew and a degree of consistency.”

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This infographic presents five ways to build brand loyalty and retain existing customers

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Home is where the art is: Urbanwalls

Local company designs removable decals that change the look of a room instantly
Add personality, style and excitement to your home decor with these move-and-remove-able alternatives to wallpaper | Contributed photos

My favourite aspect of modern decor is the appreciation for individuality and personality within design. Long gone are the days when everyone coveted the same style and strived to achieve a cookie-cutter aesthetic; now, we seek to share a little of ourselves within the designs we choose and source out brands and decor finds that grant us that freedom.

Established in 2007 by Danielle Hardy (a local graphic designer turned stay-at-home-mom- turned-creative entrepreneur), Urbanwalls has become an artistic outlet for people looking to explore unique decor within their spaces. The company designs easy-to-use, peel-and-stick  wall decals as an ideal (and totally move-and-remove-able) alternative to traditional wallpaper. Not only offering a huge library of their own designs, custom options are also available for the more adventurous client.

The brand has partnered with a handful of local creative influencers like Leah Alexandra, Erin Sousa and Monika Hibbs to create collaboration collections that are also for sale. My favourite endeavour that Urbanwalls has embarked on is The Creative Collection, through which the brand is partnering with different local artists to create their own collections. One of my favourite artists, Dana Mooney, will be kicking off The Creative Collection, which is set to launch in the next few months.

How did you get started in your decal design business and what led you to where you are now? 

In 2009, after the birth of my second son, I was searching for a creative outlet where I could put 10 years of graphic design and print experience to work. As a stay-at-home mom with a husband who often travelled, I didn’t have a ton of spare time … but I did have nights and a rather large cutter taking up space in the garage.On a whim, I decided to design a few wall decals - decals that I would actually want to hang in my own home, nothing tacky or dated. After experimenting with the cutter to create my own designs, I listed a few on Etsy. Maybe others were searching for a way to make their homes a little brighter, their spaces more individualized? I woke up the next morning with my first sale and I thought, “Well … I guess it’s time to invest in some vinyl.”

Fiddle Fig Leaf Tree - Leah Alexandra Studio

If you could describe your artistic style in one word, what would it be?

Freeform - this is the complete foundation of Urbanwalls. There are no rules. With each install we create for content, or a customer creates in their own space, the finished product always looks unique and different. It’s what we pride our business on: being your own designer!

Do you have any predictions for the future of your industry? 

I want our business to be a source of inspiration and practical help. So many people that follow along say "I could never do that" or "I'm not creative enough," and I think that our decals can be something that brings out the creativity of DIY’ing your perfect space. Thanks to the online world (hello, Instagram), inspiration is always around the corner, and more people will be looking for DIY décor solutions, which our decals fit perfectly into.

Gold Palm Fronds and Irregular Dots - Sparkle Media Office

How would you describe Vancouver’s artistic/creative community?

I love Vancouver because it’s filled with amazing people [who] love to collaborate and see the value of working together to make a project amazing. When everybody comes together and brings their gifts and talents to the table, magic happens and everybody walks away a winner. Vancouver is filled with people that value collaboration over competition.

Vancouver Westender

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CETA set to radically redraw Canada’s dairy industry landscape

Canada's cheese processing sector faces some dramatic changes.

We’ll soon find out who gets to import tasty, inexpensive European cheese under the newly ratified Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union.

There’s some debate about how farmers and cheese makers should be compensated under CETA. But what should matter most is to whom Ottawa will grant permission to import tariff-free European cheese. As the July 1 implementation looms, a decision on import quotas is expected soon following months of highly politicized consultations.

Canada has agreed to import 18,500 tonnes of European cheeses annually by Year 6 of CETA. That represents 2% to 3% of our domestic market. It might not seem like much, but given our highly protectionist supply management, in which Canada produces all of its own milk, CETA creates a significant breach.

Since the trade deal was first signed in 2014 by the former Conservative government, the quota-based dairy sector has been anxious. Ottawa still has offered no clear plans to make the Canadian cheese sector more competitive in response to high-quality European cheese imports.

Last fall, Ottawa announced two programs to make our dairy sector more CETA-ready: $250 million to make farms more competitive and $100 million to improve processing facilities. The most recent federal budget didn’t add anything.

When it signed the trade deal, the former Conservative government promised billions in compensation, raising expectations. So last fall’s funding was a disappointment for the sector, which needs much more.

According to some reports, the cost of milk production in Canada is almost double what it is in the United States. And, subsidies aside, many European dairy farms are more competitive than our farms.

Beyond the meagre financial supports, a clear road map to make our dairy sector more competitive is urgently needed. Such a plan should include a simple change in the Canadian Dairy Commission’s pricing formula to compensate farmers. Rewarding high performers should be key. Stragglers should be encouraged to exit the industry. Even the Dairy Farmers of Canada admits farms are falling behind.

With CETA, we can no longer afford to have farms view supply management as agricultural welfare.

We should consider internal quotas for external markets. This plan was once rejected by the World Trade Organization, but Canada could have a much stronger argument now to grant quotas to highly entrepreneurial, innovative farmers wanting to develop new markets abroad. It’s worth making such a bold move to make Canada a world-class agri-food player.

However, the federal government’s best tools to offset CETA’s negative impact are import quotas, which we should expect soon. Under the deal, Canada will allocate annual cheese import licensing quotas. But who among grocers, processors, artisan cheese makers, dairy farmers and restaurants will get licences to import?

We know that at least 30% of the quotas will be available to new entrants every year. The rest is up for grabs. Canadian importers must apply every year. Applicants need to live in Canada and be active in the Canadian cheese sector. The eligibility is very broad.

Many of the licences should go to those most affected by CETA. Priority should be given to small dairy processors, mostly family-owned fine cheese makers. Farmer-owned co-operatives should also be considered, given their links to production.

If this isn’t done right, the dairy processing sector could suffer, because CETA makes it very vulnerable. Many great Canadian artisan cheese makers could disappear.

Consumers shouldn’t expect price breaks, however. Cheese has always been expensive in Canada, yet consumers have continued to buy it. Retailers could decide to sell more products at lower prices, but that’s highly unlikely.

What will change, however, is the variety of products. European cheeses will set new flavour benchmarks for consumers. As a result, Canadian cheese makers will face a different, more demanding consumer.

And if import quotas fail to support Canada’s dairy processing sector properly, cheese prices could go up.

Any way you cut it, Canada’s cheese sector is in for some dramatic changes. 

Sylvain Charlebois is dean of the faculty of management and a professor in the faculty of agriculture at Dalhousie University.

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Supply shortage at the heart of city’s affordable housing crisis

Does the city have enough zoned land, and if so, why do prices keep increasing? Should we rezone more land along transit lines?

Affordability or price is the result of the interaction between supply and demand. If demand exceeds supply, then price has to go up.

Demand will be spurred by:

•a robust economy in B.C. – the province’s gross domestic product has increased annually since 2011;

•positive provincial net in-migration – interprovincial from January to June 2016 is 13,164; international for the same period is 18,565, an annual equivalent for total immigration of 63,458;

•increasing rental rates, which make home ownership a more logical alternative – according to University of British Columbia Prof. Tom Davidoff, “Between April and August 2016, rents for both one- and two-bedroom units increased 15%.” According to RentBoard.ca, the average city of Vancouver listed monthly rent for a one-bedroom unit is $2,006 and two-bedroom is $2,841;

•continued low mortgage rates – 2.66% fixed-rate for three years with CIBC;

•population growth – City of Vancouver states current population is 631,486, a 4.4% increase from 2011 census; and

•wealth transfer – $197 billion in equity for properties owned by those over 55 in Greater Vancouver.

Analysis from Urban Analytics Inc.’s Michael Ferreira showed that sales exceeded new units coming on stream in 2016 in all municipalities. Demand was always ahead.

The company also prepared an analysis of changes in supply and the effect on price first-quarter 2015 to first-quarter 2016 for townhouse, low-rise and highrise. Supply dropped between 63% and 80%. Price rises during that period were between 15% and 40%. Projects sold faster than supply was added, which caused a price escalation. Demand was increased by “urban refugees” moving east to find accommodation they could afford. Vancouver supply dropped by between 80% and 89%, depending on type and area.

A study of the number of units sold to determine a fall or rise in demand is impeded by any restriction on supply. Few units available; few sold. Evidence of rising price is a better determinant of demand.

In Vancouver for 2016, multi-family building permits were 462 per month, but encouragingly, the number is well above the five-year average (2010 to 2014) of 297 per month. In 2015, it was 479 per month. It is encouraging that for the first two months of 2017 the number was 701 per month. That said, a recent Goodman Report noted that “11,784 market rental units, making up 105 buildings, are under construction, approved or proposed throughout Metro Vancouver.” Hence a number of units processed by the city could be rental (no city data available) and will put further pressure on the city building permit approvers for condominium projects, potentially reducing the number of new condo buildings being approved.

Urban Analytics estimates that there will potentially be 3,500 units coming on stream in 2017 in the city, which is 292 per month, significantly below the last two years when demand exceeded supply.

Nineteen new condominium projects totalling 1,727 units were launched in 2016 on Vancouver’s west side. By the end of December more than 75% were sold. In East Vancouver, 99% sold out of 341 on the market, and in downtown 94% of 876 units released were sold.

A 25% drop in new listings for January-February 2017 (475 per month) compared with the same period in 2016 has further tightened the situation for new condominiums.

The average number of new Multiple Listing Service listings in each month for the city of Vancouver for 2012 to 2016 from the Greater Vancouver Real Estate Board was 692. The 2016 figures are skewed due to a significant fall-off after the announcement of the foreign-buyers tax.

The number of listings is falling. If demand continues or even drops slightly, the city still has an equilibrium problem. It is apparent from these statistics that there is insufficient supply, and that is why prices are rising. Currently zoned properties would permit 40,837 multi-family units to be built. Based upon projected city permits of 4,000 per year, this is 10 years’ supply. There are also a further 35,420 designated units yet to go through the rezoning process.

The city has, in theory, lots of supply, but it becomes supply only when it is built.

Supply availability assumes that:

•building permits are approved;

•zoned land owners want to sell;

•current use is no longer highest and best use; and

•there is demand for units in zoned areas.

Or, in a nutshell, there must be desired sites available. If not, supply will be restricted. Furthermore, if the city does not approve more permits annually, then supply will continue to fall behind.

The evidence points to insufficient available supply in Vancouver. Lack of supply and an imbalance with demand will continue to inflate prices. It is irrelevant what the capacity might be, if there are no appropriate sites available. Supply in the city is unable to meet demand, and hence the addition of more units, that are economically viable, is a necessity. Density on transit lines is an acceptable and sustainable model. It gives city residents many benefits and places the burden of cost on those who benefit. But regardless, city hall must approve more condominium units. 

Peter Austin is principal of Austin Real Estate Consultants, a company that specializes in property tax assessment reviews and appeals and appraisals.

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