BUSINESS
01/29/2018 08:33 EST | Updated 01/29/2018 21:25 EST

Ontario Minimum Wage Hike Driving Up Cost Of Cannabis, Pot Producers Say

One company says its costs will rise by roughly 10 cents per gram due to the provincial wage hike.

The Canadian Press
An Aphria worker look out over a crop of marijuana in an undated handout image.

TORONTO — It's not just coffee chains and restaurants under pressure from Ontario's minimum wage hike — marijuana companies say the higher provincial pay rate is driving up the cost to produce and sell cannabis products as well.

Aphria Inc. says if the new $14 per hour minimum wage had been in place during its latest quarter, this would have raised its all-in costs to sell dried cannabis by 12 cents, or nearly six per cent, from $2.13.

The Leamington, Ont.-based cannabis producer adds in recent financial documents that the mandatory 21 per cent pay hike from $11.60, which took effect Jan. 1, will add another $600,000 to its overall wage costs each year.

When the provincial minimum wage goes up to $15 in 2019, Aphria says it expects overall company wages to go up by another $300,000 per year.

More difficult to compete with other provinces: analyst

Newstrike Resources' chief financial officer Kevin Epp says the southern Ontario-based pot producer anticipates its all-in costs to sell cannabis will rise by roughly 10 cents per gram due to the provincial wage hike.

Beacon Securities analyst Vahan Ajamian says the higher provincial pay rate will make it more difficult for marijuana producers in Ontario and other provinces with rising minimum wages to compete with those in Quebec, where both labour and power costs are lower.

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