Canada's top wine region heading towards marijuana dominance

Tweed Farms greenhouse in Niagara-on-the-Lake, Ont. (Canopy Growth Corp.)

The Niagara region of southern Ontario is known around the world as Canada’s premiere wine destination. Over 2.4 million tourists visited the province annually for wine-related attractions, according to the Wine Council of Ontario’s 2016 annual report, with the majority of visitors coming to the Niagara region.

In amongst the rows of grapevines and fields of tender fruit, Niagara has also started to draw the interest of the cannabis industry as a hub for productions facilities.

Tweed Farms, a subsidiary of Canopy Growth Corporation (the largest-known licensed cannabis production facility in the world), is currently in the process of developing over one million square feet of greenhouse space in Niagara-on-the-Lake, Ont., the heart of the Niagara wine industry. According to Tweed, Niagara-on-the-Lake will be a key hub for the company.

“Our experience in Niagara-on-the-Lake has been incredibly positive,” Jordan Sinclair, director of communications for Canopy Growth Corporation said. “We started there with a 350,000 square foot greenhouse and we’re tripling the size of that footprint down there for that exact reason.”

Tweed Farm’s property in Niagara-on-the-Lake, Ont. (Canopy Growth Corp.)

As Tweed’s production facility is surrounded by existing wineries, right next to Coyote’s Run Estate Winery and Icellars Estate Winery, there is a growing concern in the Ontario wine community about the new industry acquiring prime agricultural land in the area in advance of the federal government’s July 1, 2018 deadline for the legislation of marijuana for recreational use.

Aaron Dobbin, president and CEO of the Winery & Grower Alliance of Ontario, wants to see that Ontario’s wine production isn’t hurt by the introduction of a new player to the region.

“At the end of the day, for our industry, when our industry grows we want to make sure that we have the grapes available to enable that,” Dobbin said.

Good for the grapes

Despite some concern in the region, agriculture and horticulture specialists are excited about the introduction of new crops to the area from a research perspective and for the overall prosperity of the area.

 “I think overall, diversifying the crop base is a good thing,” Jim Brandle, CEO of Vineland Research and Innovation Centre in Vineland Station, Ont., said. “It’s all new. New employment, new jobs, new production…new value, so generally it’s a good thing.”

According to Canopy Growth Corporation, the expansion of their Tweed facility in Niagara-on-the-Lake alone will create over 100 new jobs in the cannabis sector, with a priority to “contribute to the local economy in a sustainable way.”

“They’re going to use that land to the fullest in a different sort of way but it’s still an agricultural use and a pretty potentially high value one, so I say on balance there’s nothing wrong with that happening,” Brandle said.

First-quarter 2017 revenue for Canopy Growth Corporation was $15.9 million, a 127 per cent increase over the previous year. Largely attributed to the Tweed Farms greenhouse, the company harvested over five thousand kilograms of marijuana that quarter, representing a 196 per cent increase over first quarter 2016.

Getting schooled on marijuana

Following Tweed’s expansion plans in Niagara-on-the-Lake, Niagara College announced it would offer a Commercial Cannabis Production Graduate Certificate program, beginning in September 2018.

“We’re a pre-emptive college, and one of our key strengths is our ability to anticipate and respond to emerging industries, trends and labour-market needs,” Niagara College president Dan Patterson said in statement when the program was announced in early September.

Also recognized for their agriculture and viticulture programs, Niagara College’s decision to be the first school to offer a program in cannabis production will bring an influx of trained marijuana professionals to the area, making the region more desirable to cannabis production companies.

“We’re starting to see the second wave of the people who have seen what the earlier adopters have achieved and the success that they’ve achieved, and now they’re going out and trying to replicate that success for themselves,” Sinclair said.

Not welcome by everyone

Despite the excitement from researchers about the introduction of new crops, Tweed and its existing Niagara-on-the-Lake facility has not received a warm welcome from all of its neighbours.

“We were just down there on Wednesday, the smell is quite overwhelming,” Andrew Reynold, professor of viticulture & plant physiology at Brock University said. “People don’t want to walk out their door and smell a skunk every morning.”

Aside from the smell, there is increased concern about the amount and location of land that cannabis production companies can purchase in the area. In September, Niagara-on-the-Lake town councillor Betty Disero requested that the town council ask the Niagara region and the province to develop a policy to protect agricultural lands in the area from marijuana greenhouses.

Her initial motion was defeated but the town agricultural committee is gathering research and feedback on whether there will be significant impact to specialty crops in the region. Councillor Disero told Yahoo Canada Finance that the committee has approved a series of motions and they will be going to town council for approval on November 13.

“Provincial and local governments need to take into account the long-term potential for changes in land values and conversion of land uses that may impact other important sectors of the agri-food economy, like Ontario’s wine industry, “ Richard Linley, president of the Wine Council of Ontario said in an email to Yahoo Canada Finance.

The majority of land in the Niagara-on-the-Lake area is composed of class 1 and class 2 soils, which are top-quality farmlands. These prime agriculture areas are necessary for delicate wine grapes to grow. 

“If you’re going to put modern greenhouses on land that could be growing grapes…then basically that’s a loss of agricultural land in an area that’s unique in the country,” Reynolds said.

According to the Grape Growers of Ontario, the rich and fertile soil, paired with the moderate temperature in the spring and summer seasons, is what makes the Niagara region ideal for growing grapes for the purpose of wine production.

“Decision-makers also need to consider the impact of local cannabis production on agri-tourism and whether it would benefit the Ontario wine industry or serve as a detriment in Ontario’s designated viticulture areas,” Linley said.

Although agricultural land usage is a key priority for existing businesses in the region, Canopy Growth Corporation does not see acquiring land made up of high quality soil a priority.

Regulations will need to be more concrete on both federal and provincial levels of government, but existing agricultural businesses and cannabis companies will need to find a way to share common territory.

“We just want to make sure that we’re active member of the community and we’re recognizable so people can, if they have concerns, they can come and address them,” Sinclair said.

Download the Yahoo Finance app, available for Apple and Android.