During the California gold rush, those who sold picks and shovels often did better than the gold seekers themselves. Now, during Canada鈥檚 green rush鈥攚ith the legalization of cannabis growth, sales, and consumption鈥攊s it possible those who provide the infrastructure for marijuana cultivation and sales will do better than the growers and retailers?
There鈥檚 definitely a frenzy, with newly minted companies dealing in cannabis having posted unrealistic market capitalizations. In October, for example, Ontario medical marijuana company Canopy Growth briefly had a value of US$20 billion before settling down to merely silly values.
The size of the entire Canadian marijuana market鈥攍egal and illegal鈥攊s estimated at CAN$7.17 billion (more than $5.3 billion) in 2019, according to. Legal sales are expected to make up more than half of that total, with the biggest market expected in Ontario (36 percent), followed by West (28 percent). For those keeping score, that total value is just tad less than what cannabis investment adviser Arcview Group estimates for the currently fragmented U.S. market for legal marijuana products.
In October, Ontario medical marijuana company Canopy Growth briefly had a value of US$20 billion before settling down to merely silly values.
Intriguingly for contractors, Canada鈥檚 new law mandates that grows occur indoors. However, 鈥榠ndoors鈥 encompasses everything from fully powered hangars to DIY-esque 鈥榟oop houses.鈥 The New York Times opened one of its stories about legalization discussing cannabis neophyte Hamed Asi鈥檚 鈥渧ertical farm鈥 in a former Nestl茅 factory southeast of Ottawa. It described 鈥済arage-sized containers at one end of a cavernous warehouse鈥 housing 鈥渞ows of marijuana plants stacked atop each other, basking in the unearthly glow of grow lights.鈥
A little over two-fifths of 鈥渋nvestment鈥 spending on cannabis pre-legalization,, went to construction (about CAN$55 million). Another third went to machinery and equipment.聽
Yet that鈥檚 not where most construction observers have focused. According to Deloitte, 鈥淥ne of the biggest concerns about cannabis legalization isn鈥檛 in the opportunities it creates, but in the effect, a THC-infused workforce will have on the industry.鈥
鈥淲e鈥檝e been paying attention to this for a couple of years,鈥 Chris Atchison, president of the British Columbia Construction Association, told ConstructConnect. 鈥淲e take the approach that every employer and employee have the right to a safe workplace and many big companies have a drug policy in place already.鈥
Such proactivity is smart. 鈥淢any employers,鈥 wrote the Human Resources Professionals Association in 鈥渁re expecting the occurrence of workplace accidents to increase, especially in safety-sensitive industries. Indeed, over half of HRPA member respondents indicated that they were concerned with employees operating motorized vehicles.鈥
For its part, the government鈥檚 Task Force on Cannabis Legalization and Regulation, which issued in 2016, looked deeply into how cannabis use might affect employees. The task force itself included longtime Vancouver engineer George Chow and saw consultation with Alberta Construction Association, Construction Labour Relations and its related affiliates in Alberta and Saskatchewan, and the Construction Owners Association of Alberta.
The report particularly concentrated on 鈥減eople working in safety-sensitive positions, such as health-care workers, law enforcement personnel and employees in transportation, construction or resource extraction industries.鈥 The task force noted that while Canada does not permit mandatory drug testing, 鈥渂ona fide occupational requirements鈥 might create a space for such testing to occur, such as seen now by a handful of few private-sector companies and the Canadian military.
Some elements of construction might eventually land in these special categories. 鈥淔or example,鈥 reads the final report, 鈥渁 zero-tolerance policy could be applied for those who operate heavy machinery or conveyances.鈥澛
The Canadian Centre for Occupational Health and Safety,, notes that tests showing the presence of cannabis in the body aren鈥檛 the same as tests showing impairment鈥攁 fact that unions, occupational safety agencies, and human rights groups will certainly remember. In lieu of an impairment test, the center suggests a sort of 鈥榚yeball exam鈥: 鈥淓mployers should consider if there is a risk to the individual鈥檚 safety or the safety of others. For example, while impaired, Does the person have the ability to perform the job or task safely (e.g., driving, operating machinery or equipment, use of sharp objects)?鈥
And bosses can鈥檛 just ignore the problem. Canadian law mandates that employers have the 鈥渄uty to inquire.鈥 This mean, in short, if the employee鈥檚 performance suggests they might be high on the job, employers must 鈥渋nitiate a discussion with the employee about a need for accommodation of a disability.鈥
Employers might take solace in the opportunities that cannabis creates for new construction or conversion of existing facilities. Legalization creates the possibility of scale and financing in cannabis construction as well as market advantage over growers operating in the United States. Even in U.S. states with legalization on the books, the federal prohibition keeps commerce tamped down. 鈥淭he American marijuana farming scene,鈥, a law professor at Concordia University, 鈥渉as been dominated by small outdoor farmers and modest indoor warehouse growers. The alternative鈥攍arge, market-share-dominating companies鈥攚ould attract the attention of federal authorities.鈥 Canada鈥檚 national law eliminates such impediments while adding some of its own.
As long as Canadian cannabis needs to be kept inside鈥攁t least when grown by commercial interests鈥攖here will be opportunities to build, or possibly retrofit, existing cavernous spaces.
As long as Canadian cannabis needs to be kept inside鈥攁t least when grown by commercial interests鈥攖here will be opportunities to build, or possibly retrofit, existing cavernous spaces. The obvious and usually cheaper space is the greenhouse. It partially reduces the need for lighting (but generally not all, especially in higher latitudes).
Greenhouse design, alongside the lighting, HVAC and irrigation needs, are obvious areas calling for expertise, Security is also a concern though. While farmers can raise corn, barley, and hops for making alcohol, tobacco for smoking, and even hemp for rope, recreational marijuana produces a readily consumable and highly valuable product ready to be ripped off. Even in rural outposts like Tiverton, along Lake Huron, surrounds Supreme Pharmaceutical鈥檚 medicinal pot greenhouse complex.
Indoor commercial production may not be mandated forever. The government鈥檚 task force argues that outdoor grows are environmentally smarter. 鈥In order to limit the environmental impact of the cannabis industry, outdoor production should be permitted with adequate security requirements. Encouraging responsible environmental practices through less reliance on indoor lighting, irrigation networks and environmental controls (i.e., heating and cooling, humidity controls) can contribute to substantially reducing the environmental footprint of cannabis production facilities.鈥
Home growers鈥攑ioneered of indoor growing鈥攁lso have infrastructure needs. The task force recommends home 鈥渟afeguards鈥 to prevent children鈥攐r thieves鈥攆rom accessing home grows. 鈥淢easures that have been adopted in other jurisdictions,鈥 it reports, 鈥渋nclude lockable spaces for indoor production, securely fenced areas for outdoor production and ensuring plants are not visible from the street or from adjacent dwellings.鈥
Selling marijuana also creates potential opportunities: 鈥Current and likely cannabis consumers expect to purchase the majority of their products at physical retail locations,鈥 says Deloitte. The cannabis shopping experience will likely develop its own style and security needs, although a walk through Vancouver鈥檚 downtown shows that cannabis stores鈥攇ranted, unpermitted ones鈥攐ften just pile into empty storefronts without much purpose-built effort apart from signage. Of course, not all provinces will allow privately run stores. Much like Canada鈥檚 famously variable alcohol laws, cannabis sales will vary from private outlets to government stores to online depending on the province.
As with most rushes, bust may follow the boom.
One government rule, though, might offer the biggest windfall for construction: tax money. Ottawa taxes marijuana at $1 per gram (or 10 percent of the final retail price, if that鈥檚 higher), keeping a quarter of that and giving the rest to the provinces. Infrastructure could be a net beneficiary. In the States, for example, New York City officials are looking at cannabis taxes to repair the subway system. 鈥淭o be able to tie these things together is something that could be highly impactful and potentially transformative,鈥 the city鈥檚 council speaker Corey Johnson told The New York Times.
As with most rushes, bust may follow the boom. Sean Williams at the Motley Fool financial website estimates Canada may produce up to 3 million kilograms of pot by 2020. Since most estimates put annual demand at a fifth of that, it鈥檚 a good thing those picks and shovels can be used for other projects.
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