How Cannabis Can Boost Rural Economies Across Canada

byErik McLaren5 minutes

In 1963, chocolate giant Hershey’s opened a factory in Smith Falls, Ontario. The company operated there for 45 years, but closed down in 2008 to move to Mexico to take advantage of cheaper labour costs.

That betrayal left Smith Falls hurting. Hershey’s had for decades been one of the town’s largest employers. But factories shutting down had become part of life. RCA Records and Canadian Wire and Cable both shut down in Smith Falls fairly recently, but Hershey’s was especially painful. The hurt feelings weren’t hard to spot, as the already cash-strapped municipality shelled out enough money to repaint the water tower that once said, “Chocolate Capital of Ontario.”

The empty Hershey’s factory languished for several years after 2008. Now, the old chocolate factory is home to the largest cannabis company in the world.


First LP Makes Its Home in the Empty Hershey’s Factory

Canopy Growth was the first licensed producer (LP) in Canada, and it took up residence in Smith Falls largely because of the empty Hershey’s factory. Canopy felt it was the perfect size and setup for a marijuana corporation looking to expand.

While Canopy is the largest company of its kind, it hasn’t completely replaced other industrial operations in Smith Falls. Canopy employs about 700 people, but many of those aren’t in Smith Falls. Hershey’s employed thousands at its height. Even still, Smith Falls has thrown its entire weight behind the cannabis industry.

Smith Falls Embraces the Marijuana Industry

In January, at the Rural Ontario Municipal Association (ROMA) meeting, Ontario Premiere Kathleen Wynne specifically cited Smith Falls as an example of a rural community on the rise. Smith Falls Mayor Shawn Pankow said in a release, “This is all very encouraging when we are in the process of seeking provincial grants for the redevelopment of Beckwith Street and are supporting [Canopy’s] vision of opening a retail store at its production facility here.”

Smith Falls City Council has also said that it’s looking to expand the small town’s place in the cannabis industry. On the Smith Falls website, pharmaceutical manufacturing is listed as a key business. “In 2014, Canada’s largest medicinal marijuana industry [Canopy Growth Corporation] opened in Smiths Falls. The Town is looking to become an industry cluster by expanding its pharmaceutical manufacturing industry.”

While pharmaceutical manufacturing sounds broad, there are virtually no other pharmaceutical manufacturers in Smith Falls, other than Canopy.

Why LPs Are Choosing to Call Rural Communities Home

While Canopy and Smith Falls have a unique relationship on a much larger scale, smaller LPs are popping up all over Canada, most of them in rural communities. Rural areas offer benefits to LPs that urban centers can’t. Chief among these benefits are physical space and oftentimes a community nearby looking for work.

It’s difficult to know for sure how many LPs have brought new jobs for people in rural communities. LPs typically don’t make a show of where they grow cannabis for security purposes. And since the industry is so new, and expanding so quickly, it’s hard to grasp how large the effect has been so far. In January of last year, there were 38 LPs in Canada. Now there are 97, with 53 in Ontario alone.

While this explosion is going to benefit rural areas the most, it will take a few years before data can pinpoint any real benefits. But whatever benefits there are, rural communities should expect the industry to continue to grow.

Plus, it’s possible that government regulations may force all cannabis LPs to operate in rural areas even more so than they currently are now. An Ontario member of Provincial Parliament floated the idea of restricting cannabis manufacturing facilities to rural areas in Northern Ontario where there’s a need for new jobs.

Not All Good News for Rural Canadians With Marijuana’s Legalization

The economics of marijuana will undoubtedly benefit rural communities all across Canada, but people in those areas who use cannabis, rather than work in the industry, may not get to experience any of those perks.

Derrick Renaud lives outside of Sudbury and uses marijuana to treat anxiety, though he doesn’t have a prescription. Since dispensaries started to open near him, he’s been able to visit them and buy his cannabis there. However, when adult-use legalization hits, most of these gray market dispensaries will be forced to close.

This is because the Ontario Government plans to sell cannabis strictly in government-owned stores that will be called the Ontario Cannabis Store (OCS). Initially, the province will open 40 OCSs, most of them around big city centers. The plan to supply rural Canadians with Cannabis will be through an order online mechanism of the OCS.

“If I run into any problems with the OCS, whenever it opens, I’m sure I’ll find some other way to get what I need,” says Derrick.

A Looming Legal Battle Between Indigenous Groups & the Government

Cannabis access in rural communities may be an issue. However, the government already has experience delivering marijuana to rural areas through Canada’s medical marijuana program. But in indigenous communities, there may be more unprecedented problems.


Like many rural communities, indigenous and First Nation reserves are looking to cannabis to get an economic shot in the arm. Several LPs have partnered with indigenous communities to set up operations, but some indigenous community leaders are hoping to get a larger slice of the pie when adult-use legalization goes into effect.

While producing cannabis isn’t a point of controversy in indigenous communities, who has the right to sell it is. First Nations-owned dispensaries have appeared on different reserves across the country. In Ontario, where only the OCS will be able to sell cannabis, these dispensaries will likely be shut down along with every other dispensary in the province.

But these First Nations dispensaries have a potential legal claim to sell marijuana that some dispensary owners and communities are looking to pursue. Because of the unique provisions in treaty agreements, indigenous communities have the option to assert sovereignty over the cannabis trade.

The legal battle that’s looming may shape much about the rural cannabis trade. Since indigenous communities are far from urban centers, First Nations dispensaries may be a relief for some people who live far away from any planned OCS.

Rural Communities Still Set to Benefit Most From Cannabis Legalization

Despite the issues facing indigenous communities and other problems rural areas may face, cannabis’s positive impact on rural Canada will only continue to grow.

Smith Falls is the best example of the cannabis industry’s ability to turn a town around, but as the industry expands, this story is sure to repeat itself all over Canada.

Photo credit: art_inthecity