This is lipstick Cladonia Lichen, one of my favorite 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.
As you walk through our islands forests of the BC coast, look down, you just might see the tiny forests with their gardens of wonder. These gardens usually grow on the fallen logs and in hidden corners of the forest. Surrounded by ferns, tree seedlings, and small plants. These gardens are a true wonder, so the next time you are in the forest and you see a fallen tree, look closely and you could see one of these gardens of wonder.
On the edge of the forest, look close 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.