Operating a cannabis nursery in Canada isn't an easy task. Even though there's a federal legal framework, each of the 13 provincial and territorial jurisdictions has its own excise stamp program and regulations—just like each state in the United States. This means that if a nursery, or any licensed cannabis business for that matter, wants to operate nationally, it would need to manage each of those jurisdictions. "I cannot imagine a small company like Hidden Harvest operating nationally, the bureaucratic burden requires a tremendous amount of resources," says Rod Wilson, founder of Canada's first licensed retail nursery. "This burden has little to do with the nursery business aspect itself; even though this is farming, it's hard work, the toughest and least enjoyable part is the regulations, the reports, and the never-ending audits."
The challenges of running a nursery business in Canada
Hidden Harvest operates in three different market segments: B2B, selling cannabis clones to other licensed cultivators; B2C, a walk-in retail shopping experience at the nursery; and B2B2C, supplying clones to the three Maritime provincial distributors of New Brunswick, Nova Scotia, and Prince Edward Island for their retail customers. "To participate in the three market segments, we maintain five cannabis licenses from three government entities: Health Canada, the Canadian Revenue Agency, and the New Brunswick Government. These entities require monthly reporting and can audit us at any time. "
Another challenge concerns the shipping of the clones, as delivery needs to happen on time to avoid additional costs. "Cannabis clones don't travel well, especially during Canadian winters. Heated transportation is a necessity, which is very costly," he points out. He recalls one of the first orders the company received. "From a micro in Ontario, in 2021. The shipment went overnight air, and the shipping cost was ultimately higher than the actual cost of the clones." This presents a significant barrier to establishing a genuinely national cannabis nursery business.
Seeds are much easier to ship but hardly offer the same stability and consistency as clones. Rod explains that the company also has a tissue culture lab where they rejuvenate cultivars. However, the majority of their clones come from mother plants. "We will produce and sell over 20,000 clones this year," he points out. Cuttings from mother plants are placed in high-pressure aero-cloners. Once the plantlets have developed roots, they are transplanted into coco, where they finish the rooting process. The common denominator is cleanliness and strict adherence to standard operating procedures (SOPs).
"There's the fun aspects of cutting and transplanting clones, where you're always tending to these little plants to give them their best possible start to life. However, much of our time is spent washing and sterilizing pots, trays, and equipment. There are a lot of tedious processes that go into this, but this is farming after all."
Ensuring high quality clones
Attention to cleanliness and hygiene is paramount for any cannabis nursery. If clones get infected or infested and symptoms do not appear early, they may ruin an entire licensed producer's cultivation. Everyone in the industry is very aware of the dangers of hop latent viroid, and infected clones and seeds are one of the main vectors of this viroid. It's not uncommon to hear a story about a grower having to destroy their entire cultivation as the dreaded viroid spread unchecked—a story Rod himself has heard occasionally.
"First, we do a hydrogen peroxide wash before germinating any seeds. Then, we only use nematodes and beneficial insects—we are actually in the process of growing our own beneficials. On top of that, we have very strict restrictions on who gets into the nursery," he points out. The short answer is nobody except employees and the occasional government auditor. "We get lots of requests for tours from growers who'd like to see our operation, but that's just something we cannot do."
Of course, every grower needs to adhere to the highest hygiene standards when it comes to cultivation, but for cannabis nurseries, things are much more complicated. After all, if a cannabis flower has bugs, the final customer won't see them. If, on the other hand, a cannabis starter plant has bugs, the grower in question won't add it to their cultivation.
The location of Hidden Harvest also helps keep pests at bay. "We are in an industrial park," Rod explains. "Not only are we allowed to grow indoors here, but we are surrounded by miles of asphalt and concrete. There's no farm or fields around; bugs don't like to hang around here."
A competitive market
Clean starting material, as intensive as it can be, isn't the only thing necessary to succeed in the nursery space—one has to follow market trends and supply growers with the genetics consumers seek. "For large LPs, it's all about THC," Rod says. "Right now, they want at least 25% THC. If we do pheno hunting and nothing tests 25% or higher, I don't even contact the big producers."
There's more nuance regarding micro growers or even home growers. "Not all growers are searching for high THC cultivars. Some grow cannabis as a hobby or because they like the flower color or the fragrance/taste. Micro producers, on the other hand, also want high THC, but they also look for something with a peculiar fragrance or flavor, a sophisticated terpene profile, and such."
Currently, Rod says there's a glut of cannabis on the market, which compresses the price and makes the Canadian cannabis market very competitive—especially when cannabis companies are limited in their advertising and marketing efforts.
"It's difficult to connect with consumers because we are restricted in what we can advertise, the type of packaging we can use, and so on. With all the taxes and fees we have to pay, I'm pleased with how diversified our business is. We are advocating to be able to add locally produced consumable cannabis products to our Farmgate retail shop menu—that would add a whole other revenue stream and improve our sustainability."
"We've expanded our revenue potential by selling soil, coco, growing equipment /accessories, and beneficial insects. I believe that allowing farmgate retailers like Hidden Harvest to sell cannabis products from local growers wouldn't just support the industry by opening up new revenue opportunities—it would also offer customers a wider choice of locally grown products at farmgate shops."
For more information:
Hidden Harvest Inc.
555 Edinburgh Drive, Unit 4, Moncton, New Brunswick E1E 4E3, Canada
1-506-854-4769
[email protected]
klonz.ca