Nanaimo, B.C., gets a boost from the next big thing: medical marijuana

Canadian cities looking for ways to jumpstart economic growth should maybe take a lesson from Nanaimo, B.C., which says it is reaping the benefits of a growing medical marijuana plant that opened last year.

It’s nice to have options when the local Target or Future Shop closes it’s doors, and you’ve have to think the packing room at the Tilray plant in Nanaimo has a more convivial scent than traditional retail. Okay, cheap pot joke there, but city officials say that Tilray, which started production last April, does a lot more than just serve as a punch line.

According to a report by the city’s economic development corporation, Tilray is already one of the top employers in town, with about 140 workers, and has supported a total of 395 direct and indirect jobs through its construction and operation so far.

“The employment positions created by Tilray include PhD research scientists, patients advocates, security personnel filled by former RCMP officers, professional managers, manufacturing executives, botanists and horticulturalists,” the report says.

The initial investment in the plant of $26.9 million, meanwhile, has generated $48.1 million in total economic output.

Growth potential

So, it’s not quite like a new Toyota plant dropped in the middle of town, but this is a growing industry. Already Tilray has plans to ramp up the business to as much as five times the current size, which would make the company the largest private sector employer in the region.

Now sure, this does seem like a B.C. thing, and more than that a Vancouver Island thing, as from afar, the island seems like a western utopia where all things are possible.

But the medical marijuana production boom is a real thing following new Health Canada rules last year that open up the industry to private producers. Since then, hundreds of small companies have scrambled for licenses, several have announced stock listings, and greenhouses are spring up across the country.

Depending who you ask, its either the next big thing, or the next dot-com bust.

“We’re talking multibillions in revenues in the coming years,” says Jacob Securities analyst Khurram Malik.

The most recent numbers from Health Canada projects the number of medical users to grow about five-fold to 450,000 by 2024. Malik sees the 2014 numbers closer to 825,000 due to the increased ease of getting a prescription, and the expected migration of users who currently grow their own to using licensed distributors.

“Buying it from a… facility is more often than not cheaper, more convenient and legal than buying on the proverbial street corner,” he says.

And of course, with a federal election this year, the possibility exists that a new government could move to legalize recreational marijuana (the Liberals are definitely on board). If that happens, Malik says it would still take years to pass the federal and provincial legislation needed to open up the market. In the U.S., Colorado and Washington State are already there, although things are muddied by federal prohibitions on the drug.

But it seems clear that Canada’s headed in that direction, and it stands to reason that when it happens, the licensed producers will see demand go up even more.