Aphria Inc. said in a CBC report
that, if the newly introduced $14 per hour minimum wage during its latest
quarter, its effect would have increased its all-in costs to sell dried
cannabis by 12 cents, or nearly six percent, from $2.13.
The cannabis manufacturer calculated that
the compulsory 21 percent
hike from $11.60 to $14 per hour—which took effect from Jan. 1—would
add another $600,000 to its overall wage bill each year.
“If this increase had been in effect in the
current quarter, the company’s ’all-in’ cost of sales of dried cannabis per
gram would have increased by approximately $0.12 per gram,” said the Leamington,
Ont.-based company in recent financial documents.
Aphria said that when the provincial
minimum wage goes up to $15 on Jan. 1 2019, it equally expects overall company
wages to increase by another $300,000 per year.
With an increase public interest for
healthy cannabis products from companies like “Cannabidiol Life”, Kevin Epp, chief
financial officer of Southern Ontario-based weed producer, Newstrike Resources
Ltd., said that it's also experiencing market pressure.
Epp also expects its all-in costs to sell
cannabis increase by roughly 10 cents per gram due to the provincial wage hike.
Epp also added that the province has both
relatively high labour and electricity costs, which will likely affect producers'
decision making when establishing a new facility.
“For a while, you could probably absorb it
by having reduced margins,” Epp said. “But eventually, in any competitive
industry, costs have to be passed through or people would exit the industry.”
Beacon Securities analyst, Vahan Ajamian,
said the increase in provincial pay rate will make it more challenging for
marijuana producers in Ontario and other provinces with rising minimum wages to
compete with those in Quebec, where labour and power costs are lower.
However, not every marijuana producer in
Ontario is struggling with the hike in minimum wages—at least for the meantime.
Chief executive officer of Beleave Inc.,
Andrew Wnek, said that its relatively small scale operation consists majorly of
specialized workers earning more than the minimum pay.
He also notes that, as the Hamilton,
Ontario-based weed producer grows in size—and extra harvesting staffs is
required for larger facilities; a higher minimum wage will seep in.
“There’ll be an impact for sure,” he said. “But, again, for the smaller LPs at this point in time, they won’t see that until they get into the larger facilities.”
Mathieu Blake - Internet Entrepreneur, loves technology, sports, the Montreal Canadiens, Poker, Poker chips, current events and travel. You will often find him Writing about different topics that interest him on websites and blogs. To submit an article, contact the website directly.
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