Pubdate: Mon, 11 Dec 2017
Source: Globe and Mail (Canada)
Copyright: 2017 The Globe and Mail Company
Author: Mark Rendell
Page: B5


In October, marijuana industry heavy hitter Aurora Cannabis Inc. spent
$3.85-million to acquire BC Northern Lights Enterprises Ltd., a
Vancouver-based company that manufactures refrigerator-sized "grow
boxes." The miniature nurseries, loaded up with high-powered lights,
ventilation systems and hydroponics equipment, are designed to hold
four to 18 marijuana plants and made specifically for the home-growing

BCNL, which has been around for nearly two decades, has been selling
boxes to medical-marijuana users since limited home growing became
legal in 2001 for patients with government-approved growing licences.
With the federal government legalizing recreational cannabis use this
coming summer, BCNL's chief executive officer, Tarren Wolfe, is
expecting an avalanche of new customers. "I believe [the number of
home growers] is at least going to double when the doors open," he
said. That could mean tens of thousands of new hobby horticulturalists
looking for an easy way to cultivate.

In the overall context of Canada's ballooning cannabis market, it's
unlikely that home-grown marijuana will ever make up more than a small
portion of consumption. The federal government's draft marijuana
legislation has capped the number of plants recreational users can
grow at four. Quebec has already given a firm no to any recreational
home growing and challenges related to the sometimes unruly
medical-marijuana home-growing market could invite further

But even with these caveats, companies that have long worked in the
world of hydroponics - the technique of cultivating plants indoors
using artificial light and water-based nutrients - are expecting to
benefit from a wave of DIY enthusiasm.

"There will be a huge influx of people just trying it out for the
first time," said Justin Cooper, co-founder of Surrey B.C.-based
nutrients manufacturer and hydroponics wholesaler Green Planet
Wholesale Ltd. "It will be like beer and wine: you can brew your own,
which most people don't do. But the ability to go brew your own has
also led to the craft industry, and that's now a huge component of the
beer industry."

Green Planet is scaling up its manufacturing and distribution capacity
to meet the expected demand, Mr. Cooper said. He sees his company
doubling in size within the next 24 months, from around 75 employees
to around 150. Part of that growth will be driven by supply contracts
with licensed producers, he said. But supplying home growers could
"easily be 50 per cent of our business," he added.

Whether this demand will be seen at the level of storefront
hydroponics retailers is less clear, according to Trevor Wilkinson,
owner of Toronto hydroponics store Grow It All Inc.

"I think in the short run we'll see an increase in demand, as it will
be a novelty," Mr. Wilkinson said. "Eventually it will die down,
because it will be a lot more convenient to just go out and buy your

Recreational legalization also has a potential downside for retailers,
Mr. Wilkinson said. With cannabis-related products no longer taboo,
specialized hydroponics shops, which have weathered years of
restrictive regulation and public unease, could suddenly be undercut
by big-box retailers.

"In the [United] States, Home Depot is already selling lighting
equipment. Scotts Miracle-Gro has purchased General Hydroponics,
they've purchased Botanicare … and they've gone out into large-box
stores down in all the states that are legal," Mr. Wilkinson said.
"That's going to happen here for sure."

He's hoping that the "mom and pop" nature of his business will help
maintain a viable customer base. "People come here because they can
get some advice on how to do things," he said.

As with other parts of the emerging cannabis market, the big winners
will inevitably be the companies able to navigate the highly regulated
field. Both BCNL and Aurora are betting that tight restrictions around
electrical safety, moisture and scent suppression and security, will
play in their favour.

"I have a feeling … that they're going to make it mandatory that
anybody who wants a licence to be able to grow their own also has to
provide a CSA approved box." said Mr. Wolfe, referring to the Canadian
Standards Association, which certifies electrical appliances are up to
a certain standard. "Currently, we are the only producers of that on
the market."

That edge was on the mind of Cameron Battley, executive vice-president
of Aurora, who described the BCNL purchases as part of the company's
effort to create "a fully integrated" cannabis company. Unlike other
licensed producers that avoid encouraging the home-grow market, lest
it cut into demand for finished product, Aurora's acquisition of BCNL
suggests a more optimistic vision of how companies can make money off
individual producers.

"They're not short-sighted," Mr. Wolfe said. "Aurora can supply the
customer with everything from start to finish … They can sell [home
growers] live clones, they can still supply the seed, they can supply
the nutrients, they can supply the growing appliance. And then, if
that customer wants to try different strains before they make up their
mind on what they're going to grow, they can try the end product
through them as well."
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MAP posted-by: Matt