This is lipstick Cladonia Lichen, one of my favourite lichens. The Lipstick Cladonia is actually a symbiotic growth of fungi and algae. It is found on dead wood, the base of trees, and on rocks. It grows in temperate to boreal regions all over the world.
On the edge of the forest, look closely at the fallen logs, and you could see minute forests of lichens that have small, grayish-green leaves. They cover the log with tiny upright spires that rise toward the sunshine and at the tip of each, you will see a beautiful red cap. This scene repeats itself all over the forests of Vancouver Island. This lichen is very pretty, keep your eyes open for them.