The economic roller-coaster of a small Ontario town fuelled by chocolate and cannabis

SMITHS FALLS, Ont. -

A small eastern Ontario town that was once known as the province's chocolate capital is preparing for the sweet return of Hershey's. 

"It's like an old friend coming home after being gone for 15 years," said Smiths Falls Mayor Shawn Pankow.

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That return is the latest in a slew of changes around a facility that has been essential to the town's identity and economic prosperity.

For 45 years, Hershey's operated a factory in the community of around 9,000 people, which is located about 75 kilometres southwest of Ottawa.

There was an image of a chocolate bar on the water tower. School groups making field trips to the capital to see Parliament often sweetened the deal with a stop at the Hershey's visitor centre.

The factory employed about 400 locals, including Richard Kirkwood, who worked there for 35 years.

"It was a good place to work. It paid my mortgage for 30 years," he said, reminiscing about family barbecues, Christmas parties and track and field days organized by the company.

But that all changed in 2007 when Hershey's outsourced the jobs to Mexico and closed shop.

Kirkwood said he was among the last to be laid off, but the suddenness of the closure left many people in the lurch. "Now I don't have a paycheque, I'm not buying a new car, I'm not buying a new home. I'm just buying what I have to have."

"The town was hurting," Kirkwood said.

"We saw decline in our population, decline in our tax base, decline in revenues coming into our town," said Pankow, who was first elected in 2010. "It left a real gap (that) took us a while to recover from."

The town went through an identity crisis, too.

"It's like, who are we now, if we're not Hershey town?" Pankow said of the time.

The legalization of recreational cannabis in 2018 brought on a brief economic high after Canopy Growth Corp. moved in to 1 Hershey Drive.

Canopy, best known for its Tweed brand, is one of Canada's largest licensed cannabis growers. Its opening initially brought tourists from all over to see the so-called cannabis capital of Canada.

Tweed sign with 'Here's to future growth' at 1 Hershey Drive in Smiths Falls, Ont. (Nate Vandermeer/CTV News Ottawa)

Tweed hyped up its opening, hosting an event on Aug. 25, 2018, featuring one of its most famous partners: Snoop Dogg. Sean Lawrence remembers locals looking on from their porches as the rapper smoked a blunt, months before the company started selling the cannabis-infused products it was making at the factory.

"There was an awful lot of hype in the cannabis industry," said Lawrence, now the president of Smiths Falls chamber of commerce board. "I think people felt that it was going to take off more than it actually has."

A look at Smiths Falls’ new medicinal marijuana production facility housed in the old Hershey chocolate factory

But he said strict government regulations on legal growers have hampered the market.

In February Canopy laid off 800 employees, around 35 per cent of its workforce, and announced it would sell the factory. Tweed will still employ just over 175 people in Smiths Falls at another facility.

It announced last month that it would sell the 700,000-square-foot facility back to its original owner for around $53 million.

That has set the stage for a reunion, but the chocolate-maker is returning to a town that is very different from the one it left.

A growth in small businesses, population and housing has made the town less dependent on a single employer, said Lawrence.

"We've had a real economic boom in this town," he said.

Smiths Falls has long endured boom-and-bust cycles, going back to the 19th century.

It was an important transportation hub in eastern Ontario after the construction of the Rideau Canal. The waterway that links Ottawa and Kingston was completed in 1832.

Smiths Falls also saw the rise and fall of steam engine railway transportation. It was chosen as the regional headquarters for the Canadian Pacific Railway's main line in 1885, and the Canadian Northern Railway built a second line through the town in 1912.

But that good fortune came to a close with the rise of diesel engines and cars, putting the brakes on the railway repair, maintenance and service business.

After decades of decline, the town was stabilized by the opening of a centre for developmentally disabled people in 1951, which at its peak housed around 2,500 people and employed over 800.

The facility was abandoned in 2009 and was later named in a class-action lawsuit against two Ontario psychiatric institutions accused of abusing former residents. Former residents of the Rideau Regional Centre in Smiths Falls and the Huronia Regional Centre in Orillia settled the case for $32.7 million.

On a recent sunny Wednesday, the town's heart of Beckwith Street was busy, with people stopping in at restaurants, cafes and shops.

Some of those are among the 43 new businesses that opened in 2021 and 2022, according to the municipality's business survey.

Between 2016 and 2021 the town's population grew by more than five per cent, and its median household income went up by nearly eight per cent. Unemployment has also lowered.

Municipal tax revenue increased by around 50 per cent over the last eight years, while the average annual tax rate hike was approximately 1.5 per cent. Its annual budget this year stands at $20.5 million.

Pankow said more than 500 new residential units have been developed since the 2021 census data was gathered, partially thanks to the urban exodus sparked by the COVID-19 pandemic, which saw city-dwellers from Ottawa and Toronto settle into smaller communities.

Smiths Falls, Ont. Mayor Shawn Pankow (centre) and city officials pose for a picture with Hershey chocolate products after Hershey Canada purchased 1 Hershey Drive from Canopy Growth. (Dylan Dyson/CTV News Ottawa)

Lawrence said the sale of the old chocolate factory solidifies the recent growth, and he thinks Hershey's is back for the long term.

Though details about the company's reopening plans are scarce at the moment, optimism for the town's future has never been higher.

"Let's get the town back up and running again, and let's get the smell of chocolate back in the air," said Kirkwood.

This report by The Canadian Press was first published Sept. 17, 2023.