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Week in Weed – May 18, 2024

This past week at StratCann, we looked at a new report from the OCS highlighting 2023 sales data in Canada’s largest province, the latest figures from Health Canada showing a continued decline in participation in the federal medical cannabis access channels, and the complexities of handling cannabis exports.

We also looked into two new minor regulatory changes: one in Alberta, where the AGLC is making changes to retail secure storage requirements, “simulated or actual mixing” of cannabis, and more; and one in BC, where the LDB will be making changes to how long they will hold older products before returning to the vendor. 

In financial news, we looked at new quarterly reports from Auxly, Organigram, MediPharm Labs, Delta 9, and Rubicon Organics.  

Lastly, we featured BC’s Island Genetics in our ongoing company profile series, with special thanks to cannabis nursery Life Cycle Botanics. 

In other cannabis news this past week

CTV News in Saskatchewan continued their coverage of efforts to increase THC testing among drivers in the province and the questions about the accuracy of said tests to determine impairment.

Police in Ottawa say they are stepping up enforcement against impaired drivers, including cannabis-impaired drivers

Bella Bella Investment Group Ltd’s application for a cannabis facility on Annacis Island in BC has been withdrawn

A US company, Ombra Group Inc., is developing a THC breathalyzer and working on clinical trials in Canada.

Aurora Cannabis announced the appointment of Rajesh Uttamchandani to the Company’s Board of Directors.

David Suzuki published a very broad general-interest opinion piece on Hemp at Rabble.

International cannabis news

The US Justice Department has formally moved to reclassify cannabis as a less dangerous substance. The formal rule proposal to the federal register begins a lengthy approval process, beginning with a 60-day public comment period before the change can take effect.

“This is monumental,” Biden said in a video posted to Twitter about the reclassification, which was first reported prior to the announcement by POLITICO. “Today, my administration took a major step to reclassify marijuana from a Schedule 1 drug to a Schedule 3 drug.”

Cannabis stocks also enjoyed another brief rally on the heels of this announcement.

Lastly, The Conversation asked the question: “How can we measure the size of Australia’s illegal cannabis market – and the billions in taxes that might flow from legalizing it?”

BC LDB warehouse making changes to improve product freshness

BC is updating its rules for how long cannabis can sit in its warehouse before it will be returned to the producer. 

In a notice sent out to producers on Friday, May 17, the British Columbia LDB wholesale division noted upcoming changes to the inventory thresholds for licensed producers. This means changes to the maximum storage time at the LDB distribution centre in Richmond and a new maximum age limit at the time of delivery to the LDB distribution centre. 

The stated intent of these changes is to improve product freshness. The change will also likely allow the LDB to maximize storage space in their 70,000 square-foot warehouse. There are more than 125 licensed cannabis producers registered to do business with the LDB.

Under the new rules, which the LDB will begin using in November 2024, cannabis flower, pre-rolls (including infused), and cannabis edibles products must be delivered to the LDB distribution centre within three months from the packaging date. Inventory of these products will be held for a maximum of six months from the date it is received by the LDB.

Other categories of cannabis products will be required to be delivered within five months from the packaging date. These categories will be held for a maximum of nine months from arrival at the LDB distribution centre.

Inventory that exceeds these timelines will be put on hold and returned to the producer. Any products that exceed the age limit at the time of delivery will be required to be pre-approved by the LDB demand planner.

Producers selling into BC must also provide the LDB with an estimated minimum shelf life before being registered for sale. Products with a Best Before Date or Expiry Date printed on the label must be delivered to the LDB with at least six months remaining until the stated Best Before or Expiry Date.

The BC Cannabis Customer Care Centre also recently updated their business operating hours, and are now closed on Saturday.

Medical cannabis registrations continue to decline in Canada

Participation in Canada’s cannabis for medical purposes access program continues to decline in the wake of legalization, with about 5,000 fewer medical client registrations and 1,200 fewer registrations for personal and designated cultivation. 

The newest figures from Health Canada show that the number of medical client registrations fell 2% from 188,301 in September 2023 to 183,909 in December 2023. The number of people who registered with Health Canada for personal or designated cultivation of cannabis for medical purposes decreased by 9% from 14,944 in September 2023 to 13,672 in December 2023.

The majority of the decreases in registrations for personal/designated production were in Ontario (564), BC (145), and Quebec (143). 

While declines in those accessing medical cannabis from licensed producers have been ongoing since mid-2019, in 2022, the number of designated and personal production licences issued began declining, as well.

Despite these declines in registrations, the amount of grams per day associated with these designated or personal production licences has continued to be much higher, a trend Health Canada says is “concerning.”

While the average amount of cannabis authorized under the medical cannabis access program has been between 2-2.4 grams a day, the average authorized amount for those growing medical cannabis for personal use was 33 grams a day at the end of 2023.

Health Canada’s concern with these high numbers is the potential for these licences to be used for diversion into the commercial black market rather than for their stated personal medical use. The number of medical professionals authorizing these designated and personal production licences has steadily decreased for several months, from a high of more than 2,000 in 2019 and 2020 to just under 1,000 at the end of 2023.

The number of healthcare practitioners associated with active personal/designated registrations who authorized amounts equal to or above 25 grams per day reached a new low of 222 at the end of 2023, down from a peak of nearly 500 in late 2020. 

Health Canada has been sharing data on the number of healthcare practitioners and the daily amounts authorized with these regulatory authorities since 2019 in an effort to address these higher-than-average authorizations. 

In 2020, the Saskatchewan College of Physicians and Surgeons levied a $15,000 disciplinary action against a Saskatchewan doctor found to be profiting from issuing medical cannabis licences in 2018. In 2021, a medical cannabis patient who had been authorized 100 grams a day had a court reject an allowance for the patient to possess up to 1000 grams in public at a time.

There were 4,879 healthcare practitioners associated with medical cannabis registrations made in 2023 with federally licensed sellers. There were also 941 practitioners associated with active personal/designated production registrations. Of these, 222 had authorized amounts equal to or more than 25 grams per day, while 13 had authorized amounts equal to or above 100 grams per day.

The majority (78%) of healthcare practitioners who authorized more than 25 grams of cannabis a day were located in BC and Ontario. All authorizations equal to or above 100 grams per day were in BC and Ontario.

Many national, provincial, and municipal politicians have long called for greater oversight of the designated and personal medical cannabis production regime, citing concerns with odour, light, crime, and more. 

Health Canada also allows for the import and export of cannabis for medical purposes under limited circumstances. There were 78,761.49 endorsed kilograms of dried cannabis and 7,078.90 litres of cannabis oil exported from Canada in 2023.

In total, there have been 186,394.55 kilograms of dried cannabis and 40,057.84 litres of cannabis oil exported from Canada for medical purposes since October 2018.

Rules for imports of cannabis into Canada are much more strict and limited to medical and research purposes. In 2023, there were only 0.94 kilograms of cannabis imported into Canada and 14.57 litres of cannabis oil, both for scientific purposes only. 

Since October 2018, Canada has brought in just 28.19 kilograms of cannabis from outside the country, and 28.84 litres of cannabis oil, both for scientific purposes only. 

Rubicon Organics reports Q1 loss after strong 2023

Rubicon Organics Inc. brought in nearly $9 million in net revenue in the first three months of 2024 while reporting a $1.7 million loss on operations and a $423,212 loss on adjusted EBITDA.

The certified organic BC cannabis producer reported net revenue of $8.9 million for the three months ended March 31, 2024, a 1% increase from the same period in 2023. This amounted to $2.4 million in gross profit.

With its Simply Bare, Wildflower, and 1964 Supply Co. brands, Rubicon is the number one premium licensed producer across all product categories, according to data from Hifyre. The company also sells cannabis under its Homestead and Lab Theory brands.

Rubicon also recently launched a line of full spectrum extract vapes in Alberta, BC, and Ontario.

Rubicon CEO Margaret Brodie attributes the “challenging” first quarter to “seasonality and the overhang of weak consumer sentiment from 2023.” The company expects improvements in Q2.

“I expect to recover from this temporary dip from our streak of positive Adjusted EBITDA in Q2. In Q1, a changing product mix reduced our gross margin, but this spring we’ve shifted focus to higher-margin products, expecting improved results in Q2 and beyond. Our Q1 working capital investment for product launches is expected to come to fruition delivering further net revenue growth starting in Q2. Additionally, our first-half results are influenced by the ongoing one-time ERP implementation.”

The company is also launching several new cultivars like BC Organic Zookies, BC Organic Power Mintz, BC Organic Fruit Loopz, and Blue Dream.

Delta 9 reports net income loss of nearly $5 million in first three months of 2024

Delta 9 Cannabis Inc. brought in $16.5 million in net revenue in the three months ending March 31, 2024 from its retail and wholesale cannabis businesses, but reported a net income loss of nearly $5 million.

The Manitoba-based cannabis company reported $2.4 million in revenue from wholesale cannabis sales into provincial markets and $14 million from its retail cannabis operations. Delta 9 operates 41 retail locations, 21 under the Delta 9 brand and another 20 retail cannabis stores under the Discounted Cannabis, Uncle Sam’s Cannabis, and Garden Variety brands.

Delta 9’s sales of merchandise and cannabis devices accounted for another $345,955 in revenue, along with $83,392 from B2B sales. It paid $583,235 in excise, up from $454,339 in the previous quarter and $589,267 in the same quarter in 2023.

The company reported no income from medical cannabis sales in the most recent quarter, up from a $266,000 loss in the previous quarter. 

The cost of sales during the first three months of 2024 was $11.8 million, or 72% of net revenue, down from $12.7 million in the first three months of 2023.

Gross profit, before accounting for changes in the fair value of biological assets, for the three months ending March 31, 2024, was $4.7 million (28% of net revenue) compared to $4.2 (25% of net revenue) for the three months ending March 31, 2023. 

Delta 9’s loss from operations for the first three months of 2024 was $3 million, up from $1.2 million for the first three months of 2023 but down from the $4.3 million loss in the last three months of 2023. Its net income loss was $4.9 million.

Adjusted EBITDA for the three-month period ending March 31, 2024, was $1,577, an improvement from the $475,595 loss for the three months ending March 31, 2023, but down from $1.5 million for the three months ending December 31, 2023.

The cost of sales on Delta 9’s $16.5 million in revenue in the first three months of 2024 was $11.8 million. Gross profit was $4.5 million, while total operating expenses were $7.4 million.

As of March 31, 2024, the company had negative working capital of nearly $38.7 million, compared to $27.8 million on December 31, 2023. Although Delta 9 expects to have enough cash to service its liabilities and fund its continued operating costs, if it cannot raise additional debt financing or equity in the current fiscal year, it reports “material uncertainty” over its ability to continue as a going concern.

As of March 31, 2024, Delta 9 was not compliant with its debt service coverage ratio covenant and working capital covenant. Continued non-compliance with these financial covenants in the credit facility could result in its debt becoming due and payable on demand. 

Delta 9 is authorized for sale in Manitoba, BC, Saskatchewan, Alberta, Newfoundland and Labrador, Ontario, Yukon, NWT, New Brunswick, and Australia. The company says it completed several shipments to Australia during the period ending March 31, 2023.

Delta 9 also operates distribution and cross-docking services for cannabis producers in Manitoba and operates a mobile cannabis store authorized by the province.

The company produced 1,129,626 grams of cannabis in the first three months of 2024, with a total cost per gram sold of $0.85 and an average selling price of $1.94. The total cost per gram includes Delta 9’s direct production cost per gram as well as its processing labour, packaging, bottling, and labelling costs.

“During the first quarter, we continued to focus on sustaining revenues across our core business units while optimizing our margins,” said John Arbuthnot, CEO of Delta 9. “We will continue our relentless focus on cost and operational efficiencies and strengthening our balance sheet to deliver sustained, profitable growth for our shareholders. We believe that we now have the necessary scale and platform to create sustainable shareholder value. We expect our Canadian retail network to continue to grow at a normalized pace while our internal focus on cost savings continues to produce tangible results. We look forward to updating investors on our improved performance throughout the rest of 2024.” 

MediPharm Labs reports continued growth in Canadian, international markets

Canadian-based medical cannabis company MediPharm Labs Corp. reported a 67% increase in revenue in the first three months of 2024 compared to the same period in 2022 but still had a $3.7 million operating loss for the quarter. 

Adjusted EBITDA also improved by 70% from Q1 2023, but was still a loss of $949,000. Despite these losses, the company reports a strong balance sheet with $17 million in cash as of March 31, 2023, noting that its losses have been declining nearly every quarter over the past two years.

Greg Hunter, CFO of MediPharm Labs, noted that “Q1 2024 was another step in the right direction towards profitability and becoming cash flow positive. Our revenue and adjusted EBITDA were both the highest in over 3 years. Revenue was $9.8 million or 67% higher than prior year and adjusted EBITDA loss was $0.9 million, which is $2.1 million better than prior year. Our cash burn was approximately $1 million, resulting in an ending cash balance of $17 million with less than $3 million of debt. MediPharm is in a strong financial position to capitalize on our strong suite of licences, global customer contracts, and assets as we strive for profitability in 2024.”

MediPharm Labs’ revenue for Q1 2024 was $9.8 million, with a gross profit of $2.6 million.

In Q1 2024, the company’s medical cannabis sales in Australia were $1.8 million, a 64% increase from the previous quarter, primarily due to MediPharms Labs’ GMP vape sales. In a conference call discussing their results, a company representative said that there are several non-compliant vapes on the market in Australia that are not meeting these GMP demands.

In Australia, medical cannabis is governed under legislation called TGO93, explains MediPharm Labs President Keith Strachan in an email to StratCann. In March 2023, Australia made a change to that legislation, requiring all medical cannabis imports after July 1, 2023 to meet GMP manufacturing requirements.   

Although this change did result in many vapes being taken off the market in Australia, Strachan says that 10 months later there are still some non-compliant vapes in the market that he anticipates will be handled through industry and government oversight.

“This is a result of existing inventory shipping to Australia prior to July 1, 2023 and instances where we see a Canadian, international or Australian manufacturer with GMP certification taking a finished good and “GMP”ing it by passing it through their licence,” says Strachan.  

“The first non-compliant category of just existing inventory will be solved over time. The second category we see being solved with an Australian government and industry dependent solution.”

MediPharm has sold into 10 international markets, including Australia, Germany, and Brazil.

MediPharm is also expecting recent changes to Germany’s cannabis legislation to help continue driving international sales. The company’s sales of medical cannabis into the German market were $1.4 million, a 36% increase from the previous quarter. The majority of these sales (70%) were non-flower cannabis products, including oil, CBD isolate, and dronabinol, a synthetic form of THC.

MediPharm’s Beacon Medical GMBH facility in Potsdam, Germany, also hosted a successful audit at its German office in March, which allowed for the continued import, manufacturing and release of cannabis products. Beacon Medical is a wholly owned subsidiary of MediPharm Labs and holds several German GMP medical cannabis licences to import, wholesale, and distribute GMP cannabis products.

This audit was followed by EU GMP renewal inspections at their Canadian sites. MediPharm now has 14 product registrations under the Beacon brand in Germany, up from five in the previous quarter. All of Medipharm’s German cannabis sales are supported by its manufacturing sites in Barrie and Napanee, Ontario.

MediPharm is also the only purpose-built cannabis facility to have been inspected by the US FDA. The company holds a current Drug Establishment Licence from the US agency and has been referenced in US FDA Investigational New Drug Applications, an Abbreviated New Drug Application, and a Drug Master File. The Company has also sent several cannabis oil shipments for clinical trials that are DEA approved. 

In their recent year-end results for 2023, the company reported a net operating loss of $18.3 million, down from $29.5 million in the year prior. Loss on adjusted EBITDA in 2023 was $10.2 million, compared to a loss of $20.6 million in 2022.

Founded in 2015, MediPharm is a pharmaceutical company specializing in “precision-based cannabinoids,” and supplies the medical and non-medical markets in Canada with their Canna Farms and Harvest Medicine brands from their 2023 acquisition of Vivo Cannabis.

The company also supplies the Australia direct-to-patient and EU medical cannabis markets.

Editor’s note: This article has been edited to include comments from MediPharm Labs President Keith Strachan.

Featured image via MediPharm Labs

Alberta makes changes to retail secure storage, “simulated or actual mixing” of cannabis, and more

New cannabis stores in Alberta may have a chance to save money on their secure storage rooms after recently announced regulatory changes from the AGLC.

The changes were part of a handful announced by Alberta Gaming, Liquor and Cannabis on May 10. Retailers can also now use samples from producers in sensory containers in-store, along with changes to record-keeping for such sensory displays. The AGLC also removed a section of their provincial rules that had previously prohibited the “simulated act of mixing cannabis” in retail stores.

This last piece is a reference to a section from the provincial retail cannabis handbook that had previously prohibited the “simulated or actual mixing, application or consumption of cannabis with other ingredients or substances.”

A request from clarification was made to the AGLC on May 13. No reply was available as of press time.

The section this was removed from concerns what kinds of activities are permitted in cannabis stores. Previously, there were more restrictions on what types of activities can occur within a cannabis store other than the sale of cannabis. 

A source close to the issue explained to StratCann that while a store still can not be used for activities not related to cannabis (for example, hosting an art show or a yoga class), events or activities that are directly related to cannabis can now occur within the store. The section that had previously prohibited a cost being charged to the public, directly or indirectly, to attend an activity in a retail cannabis store was also removed as part of this recent set of changes. 

Most of the changes are just cleaning up aspects of the retail cannabis handbook but include the announcement that AGLC may now approve alternative construction methods to secure cannabis rooms.

As of January 2024, the AGLC no longer requires retailers to keep their products in locked display cases when the store is closed, however, these new changes can still mean significant savings for any future stores seeking to create a secure storage area. 

“We’ve been looking at the cannabis market to determine what’s working, what needs to be improved, and what’s redundant or unnecessary while protecting public health and safety,” said Dale Nally, Minister of Service Alberta and Red Tape Reduction at the time those initial changes came into force on January 31.

Nally has been one of the provincial government’s key voices on regulatory change for the cannabis industry through the Red Tape Reduction Act. Nally and other ministers and Alberta MLAs were also part of a recent provincial cannabis industry lobbying day on May 9 in Edmonton, put together by an Alberta-based consulting firm that works in the cannabis space. 

Alberta has led the country on several recent cannabis regulatory changes. In addition, in 2022, the province removed the requirement for window coverings for cannabis retailers and in 2023, Alberta began allowing producers to hand out samples at cannabis events

The AGLC also announced in late 2023 that the agency had reduced the SKU listing fee for cannabis producers. Previously $1,500, the reduced cost to list a new SKU to sell into the Alberta market is now $250.

Featured image via Spiritleaf

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Cannabis stores in Ontario sold nearly $2 billion worth of cannabis in 2023

Cannabis stores in Ontario sold nearly $2 billion worth of cannabis in 2023 to more than 10 million people, a 12% increase in sales from the previous year. This was the equivalent of 338 million grams of cannabis, a 23% increase from the prior year.

Ontario added 80 new licensed cannabis stores in this time period. The province authorized 276 new stores, a decrease from 497 added in 2022. Another 142 closed in 2023, up from 114 in 2022.

The new report from the OCS is the first of its kind from the agency since Q4 2022. The agency plans to update and publish its By the Numbers data report twice per year. 

“As the largest wholesale distributor of legal cannabis in the world, the OCS is proud to deliver comprehensive data aimed at informing Ontarians and supporting industry partners as we enable Canada’s largest and most vibrant cannabis marketplace,” said David Lobo, President and CEO of OCS.

Total cannabis sales in 2023 through authorized cannabis stores in Ontario were $1,941,213,130. The OCS shipped 94,507,896 units to some 1,700 privately owned stores from its distribution centre in Guelph, a 26% increase from 2022.

The average wholesale price of dried cannabis flower was $4.05 a gram, not including HST. As of December 31, 2023, there were 3,983 total active product SKUs listed by the OCS.

Dried flower and pre-rolls were the bulk of these SKUs (28% and 21%), followed by concentrates (infused pre-rolls, distillate, dabs, hash, etc) at 15%, vapes at 14%, edibles at 10%, extracts (ingestible oils, tablets) at 5%, beverages at 5%, and topicals at 2%.

The wholesale price of all cannabis flower, including pre-rolls, dropped compared to 2022, except for 7 gram SKUs, which increased by just 3%.

About one-fifth (20%) of Ontarians say they consume cannabis on a regular basis, with 27% indicating they consume occasionally. More than half (54%) report purchasing cannabis only from legal sources, while 39% report purchasing from legal and illegal sources. Just 7% say they only buy from illegal sources.

Nearly three-quarters (74%) of Ontarians say legalizing cannabis has been good for Canada.

There were nine product recalls for cannabis in Ontario in 2023, compared to six in 2022 and 10 in 2021.

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More losses for Organigram in newest quarterly report

Organigram reported another loss compared to the same period last year, according to the newest quarterly report for Q2 Fiscal 2024 ending March 31, 2024.

The Moncton, New Brunswick-based company reported $37.6 million in net revenue for the first three months of 2024, compared to $39.5 million in the first three months of 2023, a 5% decline. It also declined from $36.5 in net revenue in Q1 2024. Organigram attributes this decline to lower international revenue. 

The majority of sales were in the Canadian non-medical market (88%), while 6% were from the international market, and 1% were in medical sales in Canada. Another 5% of sales were related to other revenues. 

Revenue from sales of flower and oil on the international market for the six months ended March 31, 2024, was $3.2 million, compared to $16.6 million for the six months ended February 28, 2023.

Organigram also reports continued price compression, with the average net selling price of “recreational” non-medical cannabis flower dropping to $1.51 per gram in Q2 Fiscal 2024, compared to $1.81 per gram in the same period in Q2 2023. Sales of flower from all product categories in the non-medical market was 51% of the company’s total net revenue in the quarter.

Organigram sold 16,811 kg of dried cannabis flower in Q2 2024, an 18% increase from the same quarter in 2023.

Net loss for Q2 2024 was $27.1 million, a 262% increase from the $7.5 million loss in the same quarter in 2023, which the company blames on “lower unrealized gain on changes in the fair value of biological assets and change in fair value of derivative liabilities.” This is also an increase compared to the Q1 2024 loss of $15.8 million.

Adjusted EBITDA for Q2 2024 was negative $1 million compared to $5.6 million in Q2 2023, which the company blames on lower international sales compared to Q2 Fiscal 2023.

“Our higher international sales in Q2 Fiscal 2023 resulted in a comparatively lower adjusted gross margin rate in Q2 Fiscal 2024,” said Greg Guyatt, Chief Financial Officer. “However, we are expecting international revenue to continue along the growth trajectory we have seen over the last two quarters while lower cultivation costs, which we achieved beginning in Q2 Fiscal 2024, begin to flow through to our income statement in Q3 fiscal 2024. As we head into the second half of our fiscal year, we are on track to deliver full-year adjusted EBITDA that will exceed that of Fiscal 2023 and positive cash flow from operations before working capital changes.”  

Organigram completed its first bulk dried flower shipment to the German medical market in January 2024. The company also completed its first flower shipment to 4C LABS for distribution in the UK. In March, Organigram submitted a voluntary response to the Israeli government’s claims of “product dumping” from Canadian cannabis companies. Organigram maintains that it has not engaged in these practices. 

Organigram submitted its EU GMP certification application for its Moncton facility in Q1 2024 and expects to enter into an audit phase by the end of this fiscal year. 

The Company says it does not anticipate significant loss for non-performance, except potentially from outstanding receivables from one of its international customers, which is not named. 

In a call discussing the results, Organigram CEO Beena Goldenberg said:

“We signed two new supply agreements with medical cannabis suppliers in Australia and the U.K., all while exploring additional opportunities in entirely new markets for Organigram. Our international revenue saw significant decline versus Q2 fiscal 2023, driven by a large reduction in sales to Israel as we await payment of an outstanding receivable. We are working with our Israeli customer on a payment plan and are optimistic that we will resume shipments to Israel in due course. That said, we are very encouraged by our return to international sales growth over the last three quarters, supported by our new international customers.”

In March 2024, Organigram again received notice from Health Canada that its “edible extracts” lozenges sold as Jolts are an edible, not an extract, and are subject to the 10 mg THC limit for cannabis edibles rather than the 1,000 mg THC limit for extracts. 

In April, Organigram announced that its popular milled, dried flower brand SHRED has reached more than $200 million in annual retail sales.

The company has a cultivation and processing facility in Moncton, NB, a manufacturing facility in Winnipeg, and a cultivation facility in Lac-Supérieur, Quebec.

Featured image via Organigram

Auxly has best Q1 report ever, but still faces losses, growing concern

Auxly Cannabis Group Inc. had a great first three months of the year, with record revenue and margin and adjusted EBITDA in Q1 2024 compared to Q1 in previous years.

Despite this, the company still reported a net loss of $26 million for the three months ending March 31, 2024, an increase from a net loss of $10.2 million in the same period of 2023. The company attributes this increase in losses to the deferred tax expense on the conversion of Imperial Debenture into Shares, which was somewhat offset by improved gross profits and lower expenses. 

Revenue from sales of cannabis products in Q1 2024 was $38.4 million, up from $37.5 in the same period in the previous year. Excise on those sales was $13.1 million, compared to $13.6 million in Q1 2023. 

Auxly’s revenues for 2023 were primarily from dried flower and pre-rolls (59% of all sales). The rest of the sales were for cannabis 2.0 products (namely vapes, but also edibles, oils, and topicals). Most of these sales (approximately 76%) were in British Columbia, Alberta, and Ontario. 

Gross profit was $9.5 million, compared to $7.9 million in the same period in 2023. Adjusted EBITDA was $2.2 million, compared to just $138,000 in the first three months of 2023. 

Wages and benefits declined to $4.3 million for the first quarter of 2024, compared to $4.7 million for the same period of 2023. These decreased expenses were reportedly related to Auxly’s “streamlining of operations and support staff.”

“Following a transformative year for Auxly, we have maintained our positive momentum in the first quarter of 2024 and are continuing to achieve profitable growth,” says Hugo Alves, CEO of Auxly. “Q1 2024 was the best Q1 in Auxly history across key metrics of revenue, gross margin and adjusted EBITDA. Our commitment to product quality, innovation and distribution excellence drove our top-line sales growth year-over-year, and our continued focus on operational efficiency and prudent capital management helped us deliver another quarter of adjusted EBITDA profitability. 

“This is all thanks to the collective efforts of our talented and dedicated employees, who work hard every day to make quality products that help our consumers live happier lives. As we head into summer, we are excited to offer consumers new and innovative products to enjoy like our new larger Back Forty 0.75g pre-rolls, which will also be available to consumers in Quebec. We look forward to another quarter of sustainable, profitable growth and, as always, we will remain passionately committed to our consumers.” 

Auxly’s brand portfolio includes Parcel, Back Forty, Foray, Dosecann, and Kolab Project. The company has secured listings and sold its cannabis products in all Canadian provinces, the Yukon, and the Northwest Territories. In May 2024, Auxly also launched its first branded product in Quebec, the new Back Forty large format 0.75g three-pack pre-rolls. 

The Company also conducts wholesale bulk sales of dried cannabis to different licensed cannabis producers in Canada.

Auxly’s cannabis operations are located in Charlottetown, PEI, as well as Ottawa and Leamington, Ontario. The company does not currently have any active international operations or partnerships.

On March 28, 2024, strategic partner Imperial Brands PLC, which previously invested approximately $123.0 million in Auxly in 2019, completed its planned Imperial Debt Conversion. As such, $121.9 million of the principal amount under the Imperial Debenture was converted at an exercise price of $0.81 for 150,433,450 common shares in the capital of the Company. 

In addition, $1.5 million of accrued interest was converted and issued, on a private placement basis, into 90,882,667 common shares in the capital of the Company at a price of $0.017. Imperial and Auxly amended the existing amended and restated investor rights agreement dated July 6, 2021, between the parties to, among other things, remove the existing requirement that Imperial will use the Company as its exclusive cannabis partner.

On February 1, 2024, Auxly also announced that it had signed a definitive agreement to an amendment and extension of Auxly Leamington Credit Facility, led by the Bank of Montreal as administrative agent. That deal includes terms to extend the maturity date by two years until December 31, 2025, with an option for Auxly Leamington to extend the maturity date for an additional year by making a $2.5 million principal repayment by December 31, 2025.

The deal also updates Auxly’s EBITDA and other financial and operational covenants for Auxly Leamington, increased quarterly principal payments throughout the term, with the obligations of Auxly Leamington under the amended and restated credit facility to continue to be supported by a $33 million limited guarantee by Auxly and a pledge by Auxly of all its securities of Auxly Leamington.

The company reports it will have insufficient cash to fund its operations for the next 12 months if its sales and margins do not improve or if its general and administrative expenses increase. Auxly’s “ability to sustain profitability and positive cash flows from operations is subject to material uncertainty that may cast significant doubt upon the Company’s ability to continue as a going concern,” reads the report. 

Should they be unable to generate enough cash flow from financing and operating activities, the carrying value of Auxly’s assets could be subject to material adjustments.

Week in Weed – May 11, 2024

This week, StratCann covered OCS’ announcement that it will be allowing farmgate stores to sell exclusive products and again asked where all the provincial cannabis tax revenue is going.

We also looked at a new lawsuit against the SQDC and a second round of raids at First Nations-owned cannabis stores in one BC community.

In financial cannabis news, SNDL, Village Farms, and Cronos released their Q1 2024 reports, and we shared our monthly cannabis jobs snapshot.

In other cannabis news…

One of the bigger stories this week was a rise in enforcement actions against cannabis consumers on the road in Saskatchewan

CBC ran an in-depth piece, noting that the number of Saskatchewan drivers caught behind the wheel with THC in their system was 20 times higher last year than in 2019, according to Saskatchewan Government Insurance (SGI).

Global News looked into the difficulty in accurately distinguishing between detection of cannabinoids and actual impairment, and the questionable accuracy of equipment like Draeger’s DrugTest 5000.

In related news, a PEI man found by police behind the wheel of a parked running vehicle and listening to the radio while more than four times over the legal cannabis limit has received a jail sentence.

CBC also looked at a recycling program for cannabis packaging in Ontario started by the owner of the cannabis store Green Light District in Windsor. The article also speaks with an employee at another cannabis shop who launched a petition calling on the OCS and AGCO to adopt a sustainable packaging and container return program. 

Aurora Cannabis announced its first shipment of three cultivars into New Zealand’s medical cannabis market.

Toronto’s Institute for Work & Health is hosting a webinar on May 14 on cannabis use and perceptions among Canadian workers after legalization, presenting data from 2018 to 2021.

The Canada Border Services Agency (CBSA) reminded people that they cannot order cannabis products from outside of Canada.

The BC Bud Corporation announced the appointment of Sean Flynn as its new Chief Commercial Officer, effective May 7th, 2024.

Carmel Cannabis received high marks from the Hamilton Spectator following a recent job fair.

Law 360 spoke with Kirk Tousaw and Russell Bennett about Manitoba’s new legislation to allow cannabis growing at home (subscription needed).

International cannabis

In the US, the AP reports that New York’s legal cannabis market has been hampered by inexperienced leaders who treated the state licensing agency like a “mission-driven” startup rather than a government office, according to an internal review released Friday.

New York’s Cannabis Director has been asked to step down as the Governor orders an overhaul of the state’s cannabis program.

A woman who arrived at Dublin airport from Canada with more than 12.5 kilos of cannabis in her suitcase has been jailed for four years. The 26-year-old was homeless in Toronto at the time of the offence in September and agreed to fly to Ireland with the cannabis in exchange for a payment of €3,000 (about $4,400 Canadian), a Dublin court heard.

SNDL reports first profitable quarter for cannabis production, increased losses for retail

SNDL Inc. reported net revenue of $71.3 million from its retail cannabis operations in the first three months of 2024 and $22.4 million from its cannabis production facility in New Brunswick, both up from the same quarter in 2023.

Although these figures represent growth compared to the same quarter in 2023, the company still reported a $1 million loss on its retail operation, up from a $78,000 loss in Q1 2023. 

However, it did report $1.1 million in adjusted operating income for its cannabis production operations, up from a $17.9 adjusted operating loss in the same quarter in 2023.

SNDL’s production facility is located in Atholville, NB, cannabis extraction processing and edibles production is in Kelowna, BC, and cannabis beverages are made in Bolton, ON. In 2023, it closed its facility in Olds, AB, a move the company says contributed to its increase in revenue. 

The increase in sales from its production operations is also attributed to increased production in Atholville. Provincial board revenue from cannabis sales was $14.5 million for the quarter, while wholesale revenue was $7.5 million.

SNDL’s cannabis retail wing is made up of its 63% ownership interest in Nova Cannabis Inc., operating 188 locations under four retail banners: Value Buds, Spiritleaf, Superette, and Firesale Cannabis. These 188 locations represent the largest holding of private retail cannabis stores in Canada, although this is only 9% of all retail stores in Canada.

As of May 9, 2024, there are 84 Spiritleaf locations in Canada (20 corporate stores and 64 franchise stores), four Superette stores, one Firesale store, and 99 Value Buds locations. The majority of these stores are in Alberta and Ontario. 

SNDL also recently agreed to assign its rights to own or operate four Dutch Love stores to Nova, expanding the Value Buds brand into the BC market.  

SNDL/Nova’s “proprietary data licensing program” generated $3.5 million in revenue in the first three months of 2024, an increase of 139% from the same period in the year prior. The data licensing program generated revenue of $12.3 million in 2023, compared to $4.2 million in 2022, a 193% increase year-over-year. 

The company has seen such growth in this program with its retail cannabis locations that it has expanded the program into its liquor retail segment.

In addition to owning the largest number of cannabis stores in Canada, SNDL is Canada’s largest private sector liquor retailer, operating 171 locations, mainly in Alberta, under its three retail banners: Wine and Beyond, Liquor Depot, and Ace Liquor.

Cronos’ losses continue to decline while domestic, export sales increase

The Cronos Group posted a net loss of $2.4 million in the first three months of 2024, compared to $18 million in the first three months of 2022 (all figures in US dollars). 

The company brought in $35.4 million, compared to $26.6 million in the same period in 2023, and owed $10 million in taxes compared to $7 million in Q1 2023.  

Net revenue of $25.3 million in Q1 2024 increased by $5.8 million from the same period in 2023, which the company attributes to higher cannabis flower and extract sales in Canada and higher cannabis flower sales in Israel.

Of the $25.3 million in net revenue in the first quarter of 2024, $18.9 million was sales in Canada, while $6.4 million was in Israel. Cannabis flower was $17.5 million, while cannabis extracts were $7.7 million. 

In May, Cronos also announced it had entered the United Kingdom medical cannabis market with its first shipment of flower under the Peace Naturals brand through its partner GROW Pharma.

The company ceased operations at its Winnipeg facility, Cronos Fermentation. The facility has been listed for sale since Q3 2023.

In Q1 2024, Cronos also released several new products into the Canadian market such as its new live resin vapes, several new edibles, a new cylindrical style pre-roll, as well as infused pre-rolls.

Throughout the first quarter of 2024, the Company expanded its brand and product portfolio in Canada.

Comprehensive loss attributable to Cronos Group was up from the same time in the previous year, though, from $16.8 million to $24.7 million.

Adjusted EBITDA was a $10.7 million loss in Q1 2024, declined from a $15.7 loss in Q1 2023 by $5.0 million. 

“Cronos achieved its highest quarterly net revenue from continuing operations on record at $25.3 million, up 30% year-over-year,” said Mike Gorenstein, Chairman, President and CEO of Cronos.

“The top line was propelled by 31% growth year-over-year in Canada and 27% growth year-over-year in Israel. Cronos’ strong first quarter results are a testament to our global team’s commitment to excellence, innovation and their ability to adapt to changing market conditions.” 

OCS to allow farmgate stores to sell exclusive products

The Ontario Cannabis Store (OCS) has plans to soon allow cannabis farmgate stores to sell cannabis products that are exclusive to their location.

In an announcement posted on Thursday, May 9, the OCS says the rule change will occur in late spring, creating new opportunities for cannabis farmgate locations. 

Ontario’s cannabis farmgate program issued its first licenses in April 2021, and since then has issued nine such licences across the province, with five in operation.

These new changes, says the OCS, will add value to its farmgate framework and “will help to create engaging destinations for consumers that elevate legal products above illegal alternatives.”

The OCS also plans to engage cannabis producers and retailers about the opportunities presented by this operating model and assess its impact.

One company that helped consult with the OCS on this new program, Sensi Brands, is excited by the opportunity to expand its unique offerings. Station House Cannabis is the retail location attached to Sensi Brands, a licensed cultivator and processor in St. Thomas, Ontario, who received their farmgate licence from the province in 2021.

Sensi Brands’ Founder & CEO Tony Giorgi says the new change will allow them to test out new cultivars and products through their farmgate store before launching them to a wider market, as well as providing a unique opportunity for their farmgate customers. 

“For us, we think it’s a huge win and another key step forward in favour of Ontario producers for those who have the ability to offer farmgate. This is a win for Ontario LPs. 

“It’s great to have this process to be able to innovate new products and introduce them into the marketplace very quickly before going through national commercialization.”

Giorgi says Sensi Brands now employs around 120 people, and the farmgate location has helped build their brand within the local community of St. Thomas.

“There’s a lot of value to the farmgate store as we’ve learned after running it now for three years. The ability to continue to educate and work within the community is really important.”

Ontario’s farmgate rules allow licensed cannabis producers to apply to operate an Authorized Retail Store at their production facility. These Farmgate Stores are licensed and regulated by the Alcohol and Gaming Commission of Ontario (“AGCO”) like any other retail cannabis store.

One key difference, however, is that these producers can sell products directly from their farms rather than first sending them through the OCS distribution centre. 

There are five cannabis farmgate stores open in Ontario: Thrive Cannabis, Kingston Cannabis, Level Up, Royal Cannabis Supply Company, and Station House Cannabis Co. There are four other locations that have received a Retail Store Authorization (RSA), but have not opened.

British Columbia and New Brunswick have also implemented their own farmgate programs. New Brunswick now has six such stores, while BC has only one currently.

Featured image of Station House Cannabis’ farmgate store in St. Thomas, ON.

Village Farms cannabis sales increase in Q1 2024, even as exports decline

Village Farms Inc, the parent company of Pure Sunfarms, sold more than $50 million worth of cannabis in the first three months of 2024, with an adjusted EBITDA of nearly $5.6 million after expenses.

This represents a 49% year-over-year increase compared to the $34.5 million in sales in the first three months of 2023, which the company says was primarily due to higher sales of its large format flower, pre-rolls, and milled products (77% of net sales). All figures are in Canadian dollars.

These sales figures come from Village Farm’s 100% controlling interest in Pure Sunfarms and a 70% interest in Rose LifeScience, which Village Farms says has a “substantial presence in the Province of Quebec as a cannabis supplier, producer and commercialization expert.”

Village Farms also has an 85% interest in Leli Holland B.V., which has received approval to build a cannabis greenhouse in the Netherlands. Village Farms says it expects production to begin later this year. 

“The Canadian excise duty is our single largest cost of participating in the adult-use (branded) market in Canada.”

Village Farms quarterly report

The net income from its Canadian cannabis operations for the three months ending March 31, 2024, was $1.15 million, compared with a net loss of $144,000 for the three months ending March 31, 2023. 

Village Farms’ sales of cannabis into the international market shrank by 11%, primarily due to a decrease in shipments to Australia. International sales were just 4% of net cannabis sales in this most recent quarterly report. 

Village Farms holds EU GMP certification from the District Government of Dusseldorf and began shipping its Canadian cannabis cultivars to Germany in the second quarter of 2023.

“The Canadian excise duty is our single largest cost of participating in the adult-use (branded) market in Canada,” says the newest quarterly report. 

For the three months ended March 31, 2024, the Company incurred excise duties of $20.5 million compared to $18.6 million for the same reporting period in 2023. The company attributes this to an increase in kilograms sold in the provincial (branded) channel in the first quarter of 2024 compared to the first quarter of 2023. 

“The first quarter was an especially strong start to 2024,” said Michael DeGiglio, President and Chief Executive Officer of Village Farms International. “Canadian cannabis retail branded sales grew 28% year-over-year, all organically, as we led the top five LPs in market share growth, further narrowing the gap to number one, and achieving a new record in April. Our success in quality, innovation and brand building, together with the support of our provincial boards and retail partners, are driving these results as we delight our consumers.”

Village Farms also operates in the US cannabis market through its wholly owned subsidiary, Balanced Health, which develops and sells CBD-based products, including ingestible, edible, and topical applications.

Village Farms also operates several non-cannabis endeavours, including the marketing and distribution of tomatoes, peppers, and cucumbers in the US and Canada, as well as renewable energy. 

According to the cannabis industry data platform HiFyre, Pure Sunfarms is the fastest-growing producer among the top five cannabis producers in Canada.

Cannabis Jobs Update – May 2024

Want to work in Canada’s cannabis industry? There are always many different positions offered, from entry-level to executive, from Cultivation to Labs, from Budtending to Brand Reps; there’s an array of jobs available at any given time. 

Check out our May 2024 cannabis jobs roundup below for a small snapshot of the numerous positions available in Canada’s cannabis industry. 

Retail Cannabis

Cannabis retailer Farmer Jane Cannabis Co. is looking for a Marketing Manager for their store in Regina, SK.

Alberta’s Lake City Cannabis is also hiring

In Ontario, Sativa Bliss Cannabis is hiring Keyholders, an Assistant Manager, and a Store Manager for their new location opening in Mississauga. 

Canna Cabana is hiring a Retail Shift Leader in Tisdale, SK, a Retail Shift Leader in Calgary, AB, and a Retail Assistant Store Manager in Morden, MB.

Boss Cannabis in Port Coquitlam, BC, is hiring a Sales Associate

Public Sector

The Ontario Cannabis Store is hiring a Senior Communications Advisor.

The BC Liquor Distribution Branch (LDB) is hiring an Operations Manager at its Customer Care Centre for its cannabis operations in Burnaby, BC.

La Société québécoise du cannabis est à la recherche d’un Directeur Régional pour la région de Laval, Laurentides et Abitibi.

Cannabis Producers/Brands

Cronos Group is looking for a Production Manager and a Research Assistant at their Collingwood, ON facility. 

Cannabis processor Tricanna Industries Inc. is hiring a Sales Associate on Vancouver Island.

Weed Me Inc. is looking for a Territory Manager in Manitoba. 

Cannabis producer Motif Labs is hiring a Supply Planner for their facility in Aylmer, ON. Motif is also looking to hire a Distillation Technician at the same location. 

Heritage Cannabis is looking to hire a Brand Ambassador in Vancouver, BC. 

Auxley is hiring a Creative Lead in Toronto, ON.

Pure Sunfarms is looking for a Technical Development Manager in Delta, BC.

A hiring agency is recruiting for a member of the Production Team for a medical cannabis provider in Moncton, NB.

SNLD Inc is looking for a Production Labourer for its operation in Kelowna, BC.

And last but not least, Canopy Growth is hiring a Senior Regulatory Affair Officer in Ontario.

Week in Weed – May 4, 2024

May the Fourth Week in Weed Be With You.

This week at StratCann, we looked at the most recent quarterly sales report from the BC LDB for the first three months of 2024 and shared a guest post looking at how the recent news about what changes to US cannabis laws can mean for Canada.

We also looked at some of the clones and seeds available across Canada for home growers gearing up for the 2024 season, and an announcement from Apollo Green, who is making Humboldt Seed Company cultivars available to the international market.

In Manitoba, two businesses were caught off guard by the province’s recent “pause” on “controlled access” retail cannabis licences

In financial news, we looked at Cannara and Decibel’s most recent quarterly reports.

A court in BC rejected an appeal from a retail cannabis applicant who was denied by the community of Salt Spring Island.

And lastly, we shared our profile of BC’s Trichome Consulting Services.

In other cannabis news…

A graduate thesis paper from a student at the University of Saskatchewan compares edible cannabis regulations in the US and Canada through a lens of public health and safety.

New research from the University of Toronto says Cannabis users might not be as lazy and unmotivated as popular stereotypes suggest. Who’d a thunk! 

Canopy Growth Corporation is expected to receive approximately US $50 million in gross proceeds and exchange approximately C$27.5 million of existing debt maturing in September 2025 for a new senior unsecured convertible debenture as part of an exchange and subscription agreement with a single institutional investor.

Aurora Cannabis Inc. announced, along with MedReleaf Australia, the introduction of a new range of dried cannabis flower products for doctors to prescribe to patients in Australia.

Simply Solventless Concentrates Ltd. released its 2023 annual results, with net revenue of $6,191,646 and net and comprehensive income of $1,040,316. The company sells under Simply Solvents, Frootyhooty, Astro Lab, and Lamplighter. The company says it has now eliminated all long-term debt.

Organigram’s CEO Greg Engel wants the National Cannabis Working Group to push Ottawa to safeguard Canada’s cannabis industry.

Tilray announced the release of a range of new cannabis beverages in Canada.

SNDL Inc., through its joint venture with SunStream Bancorp Inc., intends to proceed with the acquisition of equity positions in US cannabis assets

The owner of an Indigenous cannabis shop called 8th Fire Co. in Georgina, Ontario will “vigorously defend” his case during an upcoming court session on May 8 in Newmarket. He is seeking to have his charges withdrawn and the cannabis and cash seized by police in a raid returned, as well as affirm what he says is his right as an Indigenous person to sell cannabis off-reserve without a provincial licence.

International Cannabis

The biggest news this week, though, was probably the confirmation that the US DEA will in fact be moving cannabis from Schedule I to Schedule III. The proposal must first be reviewed by the White House Office of Management and Budget, then undergo a public comment period and review from an administrative judge, which might take a while. 

The announcement caused pot stocks, including Canadian ones, to “jump”, as well as a big spike in headlines overplaying said “spike.” 

Manitoba businesses caught off guard by province’s recent “pause” on “controlled access” retail cannabis licences

Two Manitoba businesses say they were caught off guard by a recent change to the province’s cannabis store licensing program, impacting their business plans. 

In April, the Manitoba government said it was placing a temporary freeze on any new “controlled access” retail cannabis licences for at least six months while the new provincial government looked into the issue more. These licences for retail cannabis stores allow for cannabis to be sold in convenience stores and gas stations that carry other non-cannabis products.

The province currently lists 205 cannabis stores licensed. Eleven of these stores are “controlled access” stores. 

Edwardo Famakin, a spokesperson for Manitoba cannabis producer, WOWKPOW, says he and his partners were “blindsided” by the announcement as they were in the final stages of receiving approval for an agreement with Manitoba retail/gas station Domo to supply the chain with their locally-produced cannabis products. 

Famakin tells StratCann that WOWKPOW and Domo had been in talks with the provincial government about their plans to supply five gas stations in the Winnipeg area with cannabis products, and had expected some of the first licences to be issued in May of this year. 

Instead, he said he learned of the news that the province was pausing the program in media reports, rather than from the government—something that has left him and his colleagues confused. 

He says WOWKPOW signed an agreement in June 2023 with Domo to supply several of their locations with cannabis, an ongoing discussion he says Manitoba Liquor and Lotteries (MBLL) and the Liquor, Gaming and Cannabis Authority of Manitoba (LGCA) were aware of.

“We all had a big meeting about how we were going to do this,” explains a frustrated Famakin. “Then over the next 11 months we all worked together to get everything ready. So seeing this in the news instead of them informing us, it was gut wrenching. It threw us off.”

Now, he says the company is already having to lay off employees they had hired in expectation of this new agreement. 

“The directive I’ve provided to MBLL, through the board chair, is to put a pause on licences for controlled access in urban areas and cities. We do have concerns about the availability of cannabis for young people and we want to make sure that we’re making socially responsible choices. Widespread availability of cannabis outside of an age restricted area is a concern, and we want to make sure we’re balancing availability and social responsibility.”

Glen Simard, the Minister responsible for Manitoba Liquor and Lotteries Corporation (MBLL)

In a prepared statement sent to StratCann, Douglas and Kate Everett, the chairman and president of Domo Corporation Ltd., said the company was disappointed to hear of the pause on the issuing of licences for Controlled Access Cannabis Stores, a change they blame on lobbying from Manitoba’s Retail Cannabis Council, an organization representing some cannabis stores in the province.

“After a year-long extremely detailed application process, Domo was in the final stages of obtaining Controlled Access Retailer Licences for our five stores when [the] Government derailed the process. We feel it is particularly unfortunate that the Manitoba Government is favouring large out of province chain retailers instead of local Manitoba-based cultivators, distributors, and retailers.”

Some cannabis retailers in the province have in the past expressed concern about such licences. Melanie Bekevich, owner of Mistik Cannabis in Winnipeg and a member of the Retail Cannabis Council of Manitoba (RCCMB), told StratCann earlier this year that the organization had met with the Manitoba government to express their concerns with how these licences are being issued. 

“In their review process they should have consulted their regulatory bodies to see the impact of their decisions for stakeholders who had been working with them the entire time. For existing applications already in the system, to just end it without any type of communication or forewarning, is striking.

Edwardo Famakin, WOWKPOW Cannabis

“The RCCMB is pleased that the Minister has been responsive to the industry’s calls for a review on the controlled access licence category,” said Bekevich. “This category was intended to provide access to legal cannabis for rural and remote communities, but we’re seeing most of these licences in Winnipeg and Brandon. A review of the category could ensure controlled access licensing is being used in the spirit of its original intent. The Minister will need to find a balance between limiting exposure of minors to cannabis sales and access for rural remote communities.”

Steven Stairs, the chairperson of the Cannabis Business Association of Manitoba, questions the pause, arguing that Manitoba needs moore access to legal cannabis, not less.

“Why put a moratorium on the Controlled Access licenses? If anything, we need more of these in urban areas to combat the black market. Recent police reports have shown that the black market cannabis industry is selling cannabis through small corner stores and bodegas. Pausing the ability for these types of stores to become legal licensed stores only enables the black market to continue selling out of these locations across the city without obstruction.”

Famakin, at WOWKPOW, says one of his frustrations is that the new provincial government, which replaced the previous government in an election in 2023, had not contacted stakeholders like WOWKPOW or Domo to let them know about the changes in advance. 

“In their review process they should have consulted their regulatory bodies to see the impact of their decisions for stakeholders who had been working with them the entire time. For existing applications already in the system, to just end it without any type of communication or forewarning, is striking. I don’t think there’s just cause for the pause. Manitoba producers need more places to sell Manitoba products.”

Glen Simard, Manitoba Minister of Sport, Culture, Heritage and Tourism, as well as the Minister responsible for Manitoba Liquor and Lotteries Corporation (MBLL), told StratCann the “pause” on such licences was in urban areas and was based on concerns with young people being able to potentially access cannabis in less-than-secure retail settings.

“We know that when legalization took place, that this was a new and emerging market. As with liquor and lotteries, our focus is on ensuring social responsibility,” Simard tells StratCann. “We want to make sure that people are accessing cannabis in a safe and reliable manner.  What we see now is that consumers don’t struggle to access cannabis. With over 200 stores in Manitoba, people in urban areas have access to cannabis.  

“The directive I’ve provided to MBLL, through the board chair, is to put a pause on licences for controlled access in urban areas and cities. We do have concerns about the availability of cannabis for young people and we want to make sure that we’re making socially responsible choices. Widespread availability of cannabis outside of an age restricted area is a concern, and we want to make sure we’re balancing availability and social responsibility.”

“I’ll be frank,” he added, “we’re not hearing an overwhelming desire from Manitobans to see cannabis available in convenience stores. That’s why we’re taking the time to do a review and get this right. People would expect this on the liquor side, where we’ve always considered market viability when looking at liquor retail licences.”

Simard also says the new provincial government has no plans of changing Manitoba’s private retail cannabis model into a publicly-owned retail model, despite some claims from the opposition. 

“One important side note: We’re not looking to bring cannabis sales under public ownership and are committed to working with our existing retail partners to ensure a continued focus on social responsibility.”

Featured image via Google Maps

Related Articles

Cannabis sales continue to cool off in BC for second quarter in a row

Cannabis sales declined in BC in the first three months of 2024 compared to the last three months of 2023 but still showed year-over-year growth.

Sales through the Province’s direct delivery program also shrank for the second quarter in a row from their highest point in Q2 2023.

Wholesale grams of cannabis sold in BC (from the LDB to retailers) in January, February, and March 2024 were up 20.9% compared to the same period in 2023. Wholesale sales dollars were also up 10.3% compared to the previous year.

All figures are for wholesale sales through the LDB, including direct delivery. 

Despite this year-over-year increase, wholesale dollars on cannabis sales through the Liquor Distribution Branch (LDB) declined slightly in the most recent quarter compared to the two previous quarters. 

Wholesale cannabis sales were $132 million in Q4 2024, down from $136.7 million in Q3 and $137.1 in Q2.

This decline is due to the continued lower cost of cannabis, again down in the most recent quarter to a new low of $3.92 for all cannabis and $3.21 for dried flower. 

The number of retail stores in the province increased again in the most recent quarter, up to 501, a net increase of five from the previous three months at the end of 2023. The Metro Vancouver area gained five stores compared to the previous quarter (Zone 1), Vancouver Island (Zone 2) gained four, the interior lost four, while northern BC stayed steady with 66.

Dried flower and pre-rolls are still the majority of sales in dollars sold (32.5% and 21.1%). However, for several quarters in a row now, inhalable extracts, including products like vape pens and extracts and infused pre-rolls, have been higher than dried flower sales alone, at 35% of wholesale sales in Q4 2023.

Sales of 3.5 gram SKUs of dried flower declined by 33.2% year-over-year (YOY) and 24.8% by grams sold. They declined from the previous quarter as well. Meanwhile, 7, 14, and 28 gram SKU sales increased YOY by 50.9%, 32.6%, and 15.1%, respectively. 

Despite these YOY gains, sales of 7 gram SKUs declined slightly from the previous quarter, though 14 gram SKUs remained stable from Q3 2023, and 28 gram SKUs increased slightly. 

Edibles were 5.4% of total sales in Q4 2023, cannabis beverages were 1.9%, and topicals were a half percent. The most popular beverages continue to be carbonated drinks by a wide margin (89% of units sold). The most popular edibles continue to be gummies/chews, also by a wide margin (91.2% of units sold).

Disposable vape pens continue to show significant market growth, with $2.4 million in sales in Q4, showing a 91.9% YOY increase and a 72.2% increase in units sold. Despite this increase, disposable vapes accounted for just 5.2% of sales and 6.2% of units sold in this category.

The province sold about 10,000 more disposable vape pens in Q4 compared to Q3. Vape cartridge sales showed modest increases both YOY and compared to Q3.

With just over 1 million units sold in Q4 2023, “other inhalables”, which includes infused pre-rolls, showed considerable YOY growth in sales and units sold (37.9% and 30.9%) but declined slightly from the previous quarter. 

This category was also the highest percentage of units sold in the most recent quarter, compared to 40.8% for cartridges.

Resin and rosin sales increased 41.8% (sales) and 53.8% (units sold) YOY and showed modest increases from the previous quarter, while shatter stayed relatively level YOY and wax decreased by 100% (to zero).

BC sold just over seven thousand units of cannabis seeds in the first three months of 2024. 

In the topicals category, sales of balms increased by 41.4% YOY and 18.1% in units sold, while declining for both from Q3. Creams, lotions, massage oils, lubricants, and other topicals continued declining YOY and quarterly. 

Bath products had a 9.1% increase in sales YOY but a 19.7% decrease in units sold. Sales and units sold in this category were much higher in Q3, potentially related to holiday shopping.

Direct Delivery

Sales through BC’s direct delivery program, which allows certain BC producers to ship products directly to retailers rather than going through the Province’s central distribution warehouse, showed the second consecutive decline in wholesales and grams sold (and equivalent).

There were 602,525 grams sold through this distribution model in Q4 2023 and $2,978,775 in wholesale sales. This is down from 702,478 grams sold in Q3 ($3,167,450) and 821,718 grams sold in Q2 ($3,777,539), the high water mark in both categories since the program began in Q2 2022.

Bucking the trend in overall sales, though, the price per gram of dried cannabis flower sold through direct delivery increased to $4.42 a gram compared to $3.93 per gram in Q3 and $4.18 per gram in Q4 2022. 

Flower and pre-rolls are the majority of sales in this sales channel by sales and units sold. 

Direct delivery sales of edibles and beverages showed a 90% increase YOY, with a fourth quarterly decline with 2,705 units sold in Q4 2023, compared to 3,439 in Q3, 3,806 in Q2, and 5,209 in Q1. Despite these declines, in terms of dollars sold, this category still increased in the first three months of 2024 compared to the previous three quarters.

Dried flower sales increased slightly from Q3, but were lower than in previous quarters. The province sold more units of pre-rolls in Q4 2023 compared to the previous quarter, but brought in less in sales. 

No plants were sold through direct delivery in the first three months of 2024, compared to 102 sold in the first three months of 2022. There were 236 cannabis plants sold through direct delivery in Q2 2023 (July-Sept) for a total of $5,741. In Q1 2023, there were 2,342 cannabis plants sold for $58,597. The LDB has no sales figures for plants in Q3 2023.

The full quarterly report can be read here.

Salt Spring too small for two cannabis stores, proposed location inappropriate, say residents, council

A BC court has ruled that a community’s rejection of a retail cannabis licence was not unreasonable following an appeal by the retail applicant. 

The appeal was before the Supreme Court of BC in relation to a 2022 application for a cannabis store to operate with a provincial licence in the Village of Ganges on Salt Spring Island.

In a town hall meeting on June 22, 2023, the applicant, Canna Northwest Enterprises Inc., had their application denied by the Salt Spring Island Local Trust Committee (LTC) based on its location’s proximity to schools, a public library, and a public park.

The applicant appealed the decision, seeking a judicial review with the court, arguing the decision was unreasonable and was based on protecting another previously approved cannabis store. 

Several attendees at the town hall meeting expressed concern with both the location of the proposed store and concern that the small community did not need more than one cannabis store. Another store, The Harvest Moon, had been approved by the LTC in April 2020 and is located about one kilometre from the new applicant. Employees of The Harvest Moon spoke out against the new application in the town hall alongside other community members.

In 2021, Salt Spring Island’s population was listed as about 12,000.

The Licensed Retail Cannabis Council of BC (LRCCBC) also provided a submission to the LTC, which, while not taking a specific position on the application, referred to factors such as the inability of regulated retailers to differentiate themselves through pricing or marketing; the problem of excess concentration of retail operations in given locations; and “exceptionally low” profit margins.

The location of the proposed store was previously home to an unlicensed cannabis store: in 2019, Leaf Compassion Cannabis applied for a licence. At the time, there was no opposition to the location by the community, with the local Advisory Planning Commission recommending that the LTC support the application. 

However, once the supported application was forwarded to the provincial government for approval, the BC Liquor and Cannabis Regulation Branch (LCRB) did not approve the licence. Leaf Compassion’s website now redirects to an unregulated online cannabis store called Barely Legal.

Applications for retail cannabis licences in BC must be approved by both the province and the municipality. 

Arguing for the licence, the applicant’s principal, Mr. Chouinard, submitted a petition to the LTC in support of the application with 90 signatures. Chouinard argued that he was not made aware of concerns regarding location prior to the town hall meeting, was not given notice that the application would be discussed during the town hall, and was not given a meaningful opportunity during the meeting to address the issue of location.

The ruling Justice in the appeal countered these points, noting that concerns with the location had been communicated to the applicant, and that he had had the opportunity to attend any town halls where his application was discussed. 

In his final ruling, Justice A. Saunders ruled that the council’s denial of the application was not unreasonable, and the petitioner was not deprived of procedural fairness.

Featured image via Google Maps

Canada’s cannabis industry at risk of losing first-mover advantage to US

This week’s announcement that the Biden Administration will move ahead to reclassify cannabis to a much less restricted drug class and ease federal restrictions could be the ray of sunshine the benighted Canadian sector has been waiting for.

Despite becoming legal in 2018, Canada’s pot industry has stalled thanks to over-regulation and the federal government’s decision to avoid tweaking an onerous taxation policy or provide any substantial support to hundreds of businesses led by well-intentioned Canadian entrepreneurs willing to take on this new, green frontier. Challenging business conditions, bad financial decisions, and an unforgiving investor base have seen the space generate massive losses and layoffs.

The US is now poised to reschedule cannabis to a Schedule III drug—it will no longer keep company with heroin, LSD and peyote, substances deemed to have no accepted medical use and a high potential for abuse. This will mean that cannabis will be treated like a therapeutic or even a medical drug, where research and development can now be pursued without the threat of incarceration. 

This presents a unique opportunity that Canada’s no-longer nascent cannabis industry may be well-positioned to take advantage of.

The US will now need to follow in Canada’s footsteps in establishing a medical cannabis regime to allow for cannabis products to come to market. Canadian regulations, albeit not perfect, have been carefully developed to abide by international standards and protocols, implemented and amended to foster a market that generates roughly $5 billion annually.

The Canadian government needs to move rapidly to influence Washington to adopt as much from the Canadian medical regime as possible to support the flow of capital, trade, and research across the border.

US investors, previously prohibited from wading into Canada’s cannabis market thanks to its federal illegality south of the border, should now be welcomed with open arms into Canada. Upon crossing the border, their dollars will find an industry that knows how to produce high-quality products with low-cost manufacturing.

Our market is also a gateway to Europe, Israel and Australia, as many Canadian companies have invested heavily in their facilities in order to achieve the required accreditation to export cannabis products to those countries for medical purposes.

As well, with Mexico also establishing a liberal cannabis policy, cross-border trade is now an option for cannabis products, such as CBD or low-potency ingestibles, between all three major North American markets. Academic institutions can now work alongside industry with no fear of punishment to pursue more ways this plant can be processed and developed into a wide variety of therapeutic products that can easily participate in clinical trials and pursue obtaining full FDA approval.

Positioning cannabis as a viable ingredient in the future of pharmaceutical medicine unconstrained from US federal restrictions could be the root of a multi-billion dollar industry—a promise that can now soon become reality.

None of this can happen unless the Canadian government shifts from its hands-off approach to the cannabis sector, which it legalized with a stroke of a pen over five years ago and has done little since to support.

Canada has a critical window to get its regulatory and policy house in order. While there are several issues to take under consideration, namely excise tax amendments and implementing a more progressive export policy, Canada should not take this moment for granted.

With the US pot market set to explode, Canada would be wise to avoid blowing this opportunity up in smoke.

~Ivan Ross Vrána and Nathan Mison

Ivan Ross Vrána is the Managing Partner at Diplomat Consulting and Nathan Mison is the Founder and President of Diplomat Consulting. Both have spent decades working with government and industry in regulated markets, including cannabis. 

Apollo Green makes Humboldt Seed Company cultivars available to international market

Canadian cannabis producer Apollo Green is making eight cannabis cultivars available to international markets through its partnership with US-based Humboldt Seed Company. 

The eight selected “breeder cuts” will be available to researchers, licensed commercial cultivators, and home growers in markets where Canadian cannabis companies are authorized to export, including Germany, Portugal and Australia.

Exports are expected to begin in May through Apollo Green’s Canadian federal cannabis license, and all shipments will have a Canadian phytosanitary certification.

The curated, breeder-verified selection includes triploid genetics such as OG Triploid and Donutz Triploid, as well as Humboldt’s own Blueberry Muffin. Also available are All Gas OG, Golden Sands, Guzzlerz, Jelly Donutz, and Orange Creampop. Humboldt says these cultivars represent the top .01% of its California pheno-hunting program.

“Access for all to quality genetics has been our core focus since the beginning,” said HSC Co-founder and Chief Science Officer Benjamin Lind. “Our science-based approach to breeding aligns perfectly with Apollo Green’s high standards, and we are excited to be able to extend these hand-selected cuts to a wider audience, especially at this pivotal time when we’re seeing positive regulatory changes globally.”

Oisin Tierney, Apollo Green’s Director of Business Development, said, “California has long been recognized for setting industry standards, and we are proud to play a role in bringing these esteemed genetics to cultivators worldwide. The triploids are especially noteworthy in terms of the unprecedented potential for enhanced plant vigour, higher yields, shorter flowering times and superior returns for solventless extraction.”

Other Canadian cannabis companies have partnered with cannabis breeders and seed sellers from abroad. Dutch Passion, an Amsterdam-based seed company, has seeds for sale in Canada, and BC-based Nymera partnered with California’s Humboldt Seeds in 2021. 

In 2023, Eco Canadian Organic Inc., a New Brunswick cannabis producer, teamed up with the Netherlands’ Green House Seed Co. to offer exclusive seeds through Canada’s medical cannabis program.

Through their partnership with Purple City Genetics, Apollo also offers clones/cuts for Personal Production Licence holders in Ontario and Quebec and is encouraging the OCS to allow direct-to-consumer sales for clones as well.

There are currently more than a dozen cannabis companies offering cannabis seeds for those authorized to grow medical cannabis, and nearly two dozen offering clones/starts.

Cannara Biotech reports increased net loss in Q4 2024

Quebec-based Cannara Biotech Inc. saw gross cannabis revenues before excise taxes increase to $26.3 million in Q2 2024, up from $15.9 million in Q2 2023.

The cannabis producer owns and operates two cannabis facilities in Quebec located in Farnham and Valleyfield. The facilities have the combined potential to produce approximately 33,500 kg of cannabis per year, a 50% increase in production capacity over the prior year. 

The company sold under the brands Orchid CBD, Nugz, and Tribal in Quebec, Ontario, Saskatchewan, Alberta, and British Columbia in Q2 2024. In March 2024, Cannara received permission to list products in Manitoba, which it expects to launch in Q3 2024. In April, it launched products in Nova Scotia. 

In Q2 2024, Cannara generated $19.7 million of net revenue, a gross profit before fair value adjustments of $7.1 million or 36% of net revenues, an adjusted EBITDA of $3.5 million or 18% of net revenues, a net loss of $3.4 million, free cash flow of $1.2 million, and a loss per share of $0.04. The company trades on the TSX Venture Exchange under the symbol “LOVE,” the OTCQB under the symbol “LOVFF,” and the Frankfurt Stock Exchange under the symbol “8CB0.”

Cannara reported $7.5 million in excise taxes on its $26.3 million in gross revenue from cannabis operations for the three months ending February 29, 2024, and net revenue of $18.7 million. Net loss was $3.4 million in Q2 2024 compared to $618,055 in Q2 2023. 

Adjusted EBITDA increased by 8.7%, from $3.2 million in Q2 2023 to $3.5 million in Q2 2024. Free cash flow for Q2 2024 increased to $1.2 million from $(1.3) million in Q2 2023.   

“This past quarter, despite a challenging market environment, Cannara continued to demonstrate continued positive execution towards becoming one of the leading cannabis companies in Canada,” said Zohar Krivorot, President & CEO. “With our tenth grow zone now operational, our annual production capability has increased to 33,500 kg, underlining our dedication to increasing capacity to meet the growing market demand for our product. 

“Our footprint is expanding robustly across Alberta and BC, bolstered by the introduction of new SKUs and the approval from the Manitoba Liquor & Lotteries Corporation, paving the way for a stronger market presence in Q3 2024. The outpouring of positive feedback from our diverse clientele across Canada reaffirms our success in delivering unparalleled premium quality at affordable pricing. My gratitude goes to our dedicated team, whose relentless pursuit of operational excellence positions Cannara on our strategic objective of becoming Canada’s premier cannabis producer.”

Decibel reports net loss of $1.8 million in 2023, increased revenue from exports

Decibel Cannabis generated a net loss of $1.8 million in 2023, from $177 million in net sales, with adjusted net income of $8 million, according to its most recently released financial report

The cannabis producer reported that its net revenue for the three and twelve months ended December 31, 2023, were $27.7 million and $116 million, respectively. 

These figures represent an 8% and 46% increase from the same reporting periods in 2022, driven largely by increased demand for cannabis derivative products, the expansion of Decibel’s manufacturing capacity, the launch of the Vox and General Admission Edibles brands, and branded sales to Israel.

Adjusted EBITDA for the same periods was $5.1 million and $25.9 million, respectively, a decrease of 34% and an increase of 49% over the comparative periods. 

Decibel’s net recreational sales in Canada for the three and twelve months ended December 31, 2023, were $24.8 million and $105.8 million, respectively: an increase of 15% and 54% over the same reporting periods in 2022.

International sales for the three and twelve months ended December 31, 2023, were $1.4 million and $3.7 million respectively, compared to $1.9 million in the three and twelve month comparative periods for 2022.

The company also notes that its sales into the Israel market may be impacted by the ongoing Israel-Hamas war and domestic challenges in Israel, such as possible measures to curb international shipments of cannabis to the country.

Decibel recently signed a supply agreement with a new Israeli cannabis company, with the potential for an annual commitment of 1,000 kg of cannabis. 

The company also reports that an Israeli customer defaulted on its payments for cannabis, leading Decibel to provision $1.6 million of receivables, which it is currently pursuing. 

In March of 2024, Decibel expanded its export footprint when it completed its first cannabis export to Australia, and says it has received its first purchase order for vapes to be exported to Australia.

Decibel operates three facilities: one in Creston, BC, one in Battleford, SK, and one in Calgary, AB.  

The company has entered into supply agreements for derivative products with Alberta Gaming, Liquor and Cannabis (AGLC), the Ontario Cannabis Retail Association (OCRA), the British Columbia Liquor Distribution Board (BCLDB), the Manitoba Liquor & Lotteries Corporation (MBLL), and Cannabis New Brunswick. Decibel is also registered as a cannabis supplier in Saskatchewan.

Decibel has two cannabis derivative product brands: Pressed by Quest and General Admission. It also has four dried cannabis brands, with two positioned as premium brands, Qwest and Qwest Reserve, and two positioned as core-segment and value-segment brands, Blendcraft by Qwest and General Admission.

The company sold its control of cannabis retail chain Prairie Records to Fire and Flower Inc., a wholly owned subsidiary of 2759054 Ontario Inc. d.b.a. FIKA, for $3 million. Prairie Records has six cannabis retail stores in operation in Saskatchewan and Alberta, three in each province. 

Earlier this month, BC-based We Grow BC Ltd and Alberta-based Westleaf Labs, now operating as Decibel Cannabis, filed a notice of civil claim in a BC Supreme Court for $834,901, arguing that BC-based Seven Elk Shipping’s actions resulted in the seizure of their product by US border officials.

“The Company’s fourth quarter financial results delivered another year of growth across all metrics and I look forward to working with the team to continue to build on this success,” said Benjamin Sze, Decibel’s new Chief Executive Officer.

Cannabis growers gearing up for spring

With this year’s outdoor planting season rapidly approaching, home cannabis growers will once again be looking for seeds and clones for their gardens.

Traditionally, many growers begin their seeds around April 20, planning to move them outdoors after the last frost dates in late May or early June. 

Those who want to grow monster plants may start as early as possible, while those just growing a few plants on a balcony or in their yard can wait until early June before putting any plants outside. Starting seeds indoors several weeks beforehand and then slowly acclimating them to the outside will help extend your growing season a bit.

Roots on a clone at Hidden Harvest

In Canada, cannabis seeds are available for sale in every province which allows home growing and provides Canadians with ever more choices and varieties. Although seeds are often easily found outside of Canada’s regulated commercial market, through both personal seed-swapping and extra-legal commercial operators, Canadians have begun to have an array of options within the legal market in the last few years. 

Several seed producers have a variety of seeds, including autoflower and feminized, for both indoor and outdoor use. Cannabis clones/starts have also become more available in the last few years, with more farmgate stores offering them for customers, as well as some traditional retail outlets. 

As an example from one of Canada’s larger provincial markets, BC’s most recent quarterly report shows the number of packages of seeds sold doubled in the past year. However, sales in dollars increased only about 10%, attesting to a greater variety and lower consumer prices. 

Collier Quinton at Weathered Islands Craft Cannabis, a cannabis nursery and micro cultivator on Texada Island in BC, says when it comes to outdoor cannabis cultivation in Canada, you want to find genetics that fit your specific northern microclimate. 

“You definitely want to choose something that is for Canadian climates. What’s nice about our seeds is that ours are designed for outdoor growing conditions. They are mould resistant, they finish early, and are fairly pest resistant.”

“Our seeds are bred outdoors, so we are using known outdoor winners. We specialize in outdoor, which is important if people want to make sure that the seeds are finished in this climate.”

On the opposite side of the country, Rod Wilson of Hidden Harvest cannabis nursery operates a farmgate store, Klonz, in Moncton, New Brunswick, where they have been supplying clones to the local market since 2023.

This year, they are also supplying them to the market in PEI, which is currently offering pre-orders of clones through its provincial stores until May 8.  

Tanner Stewart of Stewart Farms, another micro producer with a farmgate store in New Brunswick, is also in his second year of selling clones. It’s been a way to offer even more of a value-add for their customers who make the journey to the farmgate store. 

“For a small craft grower with world-class genetics, selling clones allows us to deeply engage with the local growing community,” says Stweart. 

“We choose quicker finishing genetics, alongside a range of flavour and cannabinoid profiles. We believe one of the most important things small-scale outdoor growers should look for in their clones is variety. You only get one outdoor season, so why not grow four different strains? In my opinion, nothing teaches you about growing cannabis faster than growing multiple varieties at the same time. In real-time, you get to see the contrast between smell, shape, size, and nutrient demands.”

Cannabis seeds can be purchased in most provincial markets, except for Quebec and Manitoba, which have banned residents from growing cannabis. A bill was recently tabled in Manitoba to repeal the ban but has yet to make its way into law. If and when it does, the province says the MBLL will notify its cannabis supplier network and issue a “call for listing” for cannabis seed products.

Featured image from Stewart Farms

Week in weed – April 27, 2024

This week from StratCann, the Manitoba NDP have tabled a bill to repeal the ban on growing cannabis at home and are “pausing” controlled-access retail licences for at least six months (there could be more on this next week).

We also shared a Canadian study looking at genetic markers for cannabis breeding, spoke with the Canadian Hemp Trade Alliance about the Farm Products Council of Canada seeking industry feedback on the Industrial Hemp Promotion-Research Agency, and reported on Indiva’s 2023 annual report.

The OCS released its Social Impact Report, and Health Canada issued a recall for an ounce sold in BC discovered through HC’s Cannabis Data Gathering Program.

The BC government says they have inspected 20 of their government-run BC Cannabis Stores to ensure they check IDs, with two subsequent enforcement actions.

US-based Curaleaf Holdings closed on the acquisition of Ontario’s Northern Green Canada, and a judge has postponed the BZAM/Final Bell trial.

In other cannabis news

A new study involving a McGill University researcher looks at how a mixed policy approach can control increases in cannabis consumption and combat the illegal market.

A budtender in Ontario is calling on the OCS and AGCO to adopt a sustainable packaging and container return program similar to Ontario’s The Beer Store. 

Hill Times ran an article on taxes and regulations with extensive quotes from Paul McCarthy from C3 and Beena Goldberg from Organigram. There’s nothing new here we haven’t heard for years now. 

On 4/20, CHCH News spoke with Romaine Francis at Sessions Cannabis, Oliver Coppolino from Cabbage Brothers, Aaron Lomax with Noods, and Daniel Bear from Humber College.

The same day, Prince George shut down a street in the downtown core for a street party and farmers market style cannabis event that was by all accounts a huge success. MyPGNow spoke with Alannah Davis from Dabble Cannabis Co. Liberal MP Patrick Weiler and others were in attendance, as well.

Canadian Running ran a piece on how cannabis may benefit runners

Canadian Cannabis sales declined (not seasonally adjusted) in every province except Nova Scotia in February. Sales figures for Canada in February 2024 were lower than they have been since February 2023.

Radio Canada spoke with Adam Greenblatt about the recent expert panel report on the Cannabis Act.

Greenway Greenhouse Cannabis Corporation announced that its cultivation facility in Leamington, Ontario, received CUMS-GAP and GACP certification

In law enforcement news, the OPP arrested six and seized 15,000 cannabis plants in a raid of a facility in Niagara.

A paper published in the journal ACS Omega has found that some cannabis rolling papers contain high levels of heavy metals

US-based Grön edibles, which sells in Canada through Indiva, told Benzinga that Canada is a much easier country to operate in than the US, given the national nature of legalization here compared to the state-legal only approach in the US. (archived link because of all the awful pop-ups on Benzinga. Sheesh).

In international cannabis news

US-based MedMen Enterprises Inc. announced that it made an assignment into bankruptcy pursuant to Canada’s Bankruptcy and Insolvency Act on April 24, 2024. The company lists several Canadian creditors owed nearly $1 million.  

New York just licensed a formerly illicit cannabis shop, contradicting several past warnings from the state government.

In an evolving story, New Mexico Gov. Michelle Lujan Grisham criticized the US Department of Homeland Security Secretary Alejandro Mayorkas’ response to cannabis seizures by border patrol agents in the state.

And finally, a new study challenged the stereotype that chronic cannabis users are lazy and unmotivated. The research surveyed 260 frequent users and found no significant drop in their motivation or effort levels while high compared to when sober.

OCS published its Social Impact Report

The Ontario Cannabis Store’s (OCS) Social Responsibility Strategy has distributed and invested over three-quarters of a million dollars and provided more than two dozen equity and access grants in its first three years of operation. 

The results of the program were shared in the OCS’ new Social Impact Report, published on April 26, to highlight the progress of the program since its launch in 2021. The agency’s first multi-year Social Responsibility Strategy is scheduled to run from 2021-2024. 

In April 2023, the OCS also launched its Social Impact Fund, which is dedicated to funding community projects and research initiatives that resonate with one of OCS’s three key pillars of social responsibility. Those pillars are

  • Sustainability: Establishing a Foundation for Sustainability.
  • Inclusion: Supporting a Diverse & Inclusive Industry.
  • Knowledge: Advancing Cannabis Knowledge & Promoting Responsible Consumption.

The OCS also launched its “Good All Around” social impact platform in 2023, with a goal of connecting Ontarians to the benefits and contributions of the legal cannabis framework.

Through these programs, the OCS has distributed $500,000 in funds to six organizations through the Social Impact Fund, $319,000 towards supporting Black-led initiatives, and $60 million back into the marketplace through OCS’s new fixed markup pricing structure and margin reduction.

The provincial agency also distributed 18 grants worth $56,500 to enhance the presence and participation of Black, Indigenous, and people of colour-owned cannabis businesses at industry events, mitigating cost and other participation barriers. It also provided another eight grants to increase industry event presence and participation of small Ontario-based cannabis businesses totalling $14,800. 

In addition, it provided an 8% wholesale rate adjustment on all cannabis products sold to authorized cannabis stores operating on First Nation reserves, and estimates it saved the industry around $10 million due to OCS’s insurance policy revision in 2022 to allow for easier access to the marketplace.

The OCS also provided 31 CannSell training vouchers prioritizing individuals who identify with equity-deserving and 2SLGBTQ+ groups. CannSell is a training program approved for legally authorized cannabis retailers in Ontario.

“The OCS has a mission to enable Canada’s largest and most vibrant cannabis marketplace through great customer experiences – including promoting safe access to legal cannabis, educating on responsible consumption, and fostering a legal industry that reflects the population it serves,” says OCS president and CEO David Lobo.

“The Social Impact Report isn’t just a reflection of what we have achieved; it is a testament to our entire team’s commitment to environmental sustainability, diversity and inclusion, and improving cannabis literacy through education.”

The report also notes that the OCS has partnered with Climate Smart and initiated a Life Cycle Assessment. Climate Smart training focuses on how to understand, measure, and reduce emissions. According to the report, a Life Cycle Assessment is a scientific methodology used to analyze the environmental impacts associated with all the life cycle stages of a product.

The OCS’ Life Cycle Assessment is based on a standard unit of 3.5 grams of dried cannabis, looking at the overall carbon footprint from seed to sale. 

In 2024, OCS is developing its next Social Responsibility Strategy (2025–28).

The full report can be read here

Farm Products Council of Canada seeks industry feedback on Industrial Hemp Promotion-Research Agency

The Farm Products Council of Canada is seeking industry feedback on its regulatory impact analysis statement (RIAS) for the creation of the Canadian Industrial Hemp Promotion-Research Agency.

People in the industry can provide feedback on this proposal until 11:59 pm EST on May 20.

The proposal has been in the works for nearly seven years and was first submitted to the Farm Products Council of Canada (FPCC) in October 2017. On August 6, 2021, the Minister of Agriculture and Agri-Food then approved FPCC’s recommendation to establish a Promotion-Research Agency under Part III of the Farm Products Agencies Act.

“Developing industries like hemp require research and standards development that is very difficult to fund.”

Ted Haney, Canadian Hemp Trade Alliance

As the Canadian hemp industry is still being established, the Farm Products Council (FPC) argues that there is a need for a “coordinated national approach to funding research and marketing activities on projects that are priorities for the hemp value chain actors and build on current Canadian expertise and resources.”

The Canadian Industrial Hemp Promotion-Research Agency Proclamation will, if created, provide the PRA with the authority to:

  • develop a levies order;
  • establish and collect a levy on interprovincial, imported and exported farm products;
  • research and improve production methods and product quality; and
  • advertise and promote consumption of farm products in both domestic and international markets.

A 0.5% levy would fund the PRA. The Hemp Producers Committee estimates that the projected PRA revenue would be primarily generated from domestic levies, with the initial levy revenue forecasted to be around $200,000. This could increase to around $400,000 as the industry grows. 

Ted Haney, the president and CEO of the Canadian Hemp Trade Alliance, says this is nearing the final stage of a process that started some twelve years ago when Canada’s nascent cannabis industry sought to address the challenges of researching and developing new products and marketing them to other industries and consumers alike. 

“Hemp producers began this process because they wanted to create and resource a fund that would allow producers to participate fully in the development of the industry,” he explains. ”Developing industries like hemp require research and standards development that is very difficult to fund. 

“It’s research, standards development, and promotion and market development. That’s what this will support in future years, at a level much higher than the industry has been able to generate in the past.”

As the hemp industry in Canada continues to mature, the ability to make it viable for more farmers and processors in Canada offers a chance to see the market expand several times over. 

“The fundamental value of hemp producers being able to participate in the development of their own industries cannot be overstated. It’s how we’re going to open the building materials market, it’s how we’re going to advance health claims, it’s how we’re going to penetrate the global processed foods ingredients markets, it’s how we’re going to expand into international markets. All of these are central to how an industry grows and develops. And all of that in turn will remove real and perceived obstacles to growth, and that in turn will bring more investment to our industry.” 

Haney says he expects the changes to be finalized and posted in the Gazette II later this year, and that the new board could be selected with the new group getting started by 2026. 

The recent expert panel report on the Cannabis Act, which also encompasses hemp regulations, included a recommendation that Health Canada, in consultation with Agriculture and Agri-Food Canada, establish and support an expert advisory body to conduct a timely review of the regulation of industrial hemp and make recommendations about the most appropriate regulatory framework. 

The Canadian Hemp Farmers Alliance and Canadian Hemp Trade Alliance both engaged with the expert panel on the issue.

Some facts about hemp in Canada

  • The seeded area of hemp in Canada in 2023 was 55,400 acres
  • Over 90% of the current industry is based in Alberta, Saskatchewan, and Manitoba, and production has been increasing in Ontario, Quebec and New Brunswick. 
  • The number of Canadian industrial hemp licences grew from 542 in 2018 to over 900 in 2022
  • Sales of hemp in Canada were estimated at $525 million in 2022, with $84.2 million in exports (over 90% went to the United States) and $2.9 million in imports (mostly seed and oil from the United States).
  • As of March 2022, there were 33 Indigenous-owned or affiliated hemp licence holders across Canada

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Indiva reports net revenue of $37.6 million in 2023, despite losses due to HC’s lozenge determination

Ontario’s Indiva reported net revenue of $37.6 million in 2023 as part of its most recent quarterly and annual report for 2023, an 11.3% year-over-year increase.

This increase in revenue was primarily due to the increase in the company’s edibles sales, which were $32.7 million, or 87.2% of sales. This was despite what Indiva says was a $4.6 million loss in revenue due to lower sales from its Wana Sour Gummies and the loss of lozenge revenue following Health Canada’s determination that such products were not compliant. 

On May 30, 2023, Indiva and Canopy Growth Corporation entered into a contract manufacturing agreement whereby Canopy received control of all distribution, marketing, and sales of Wana branded products in Canada, and Indiva received the exclusive right to manufacture and supply those branded products in Canada to Canopy for a period of five years.

Losses from lozenges reduced Indiva’s net revenue in Q4 2023 by greater than $1 million compared to Q4 2022.

Still, the company says these losses were offset by growth in its Pearls by Grön brand line and the introduction of its No Future gummies and vapes, which accounted for greater than $6.7 million of incremental revenue in the quarter. Net revenue from No Future gummies in the last fourth quarter of 2023 was greater than 200% of the loss of Indiva’s lozenge revenue.

Increased profits also came from an 11.3% year-over-year decline in operating expenses, which the company attributes to lower marketing and sales expenses, lower research and development expenses, and lower share-based compensation.

Indiva’s EBITDA was $1.6 million, or 4.2% of net revenue in 2023, compared to a loss of $4.8 million in 2022. Adjusted EBITDA increased to a profit of $2.4 million compared to a loss of $1.5 million in the previous year, attributed to higher sales, improved margins, and lower operating expenses.

The company also wrote off $500,000 worth of old cannabis, as well as lozenges, which could not be sold following Health Canada’s determination that they were edibles, not “ingestible extracts”

Since then, Indiva launched its 55-and 25-packs of Blips, an “ingestible extract” in Alberta and BC, with the Ontario launch slated for June 2024.

Comprehensive net loss for Indiva in fiscal year 2023, excluding one-time expenses and non-cash charges, was $4.4 million, compared to a loss of $8.4 million in fiscal year 2022.

Indiva’s edibles enjoy a significant market share across several provinces, with around 25% in Ontario, Alberta, and BC in the fourth quarter of 2023, based on figures from data platform Hyfire.

Using those same figures, Indiva says its Pearls by Grön gummies ranked as number two in the edibles category based on sales with a 14.5% share and ranked as number one with a 17.4% share based on units sold in Q4 2023. 

Its No Future gummies, launched in late Q3 2023, ranked as the seventh most popular edible based on sales and ranked fifth based on units sold.

Indiva’s Bhang chocolates represented 32.6% of cannabis chocolate sales in the same time period, ranking as the top-selling product in this category based on units sold and second based on sales. 

In 2023, Indiva began supplying Tilray Brands, Inc.’s medical platform with Indiva products and signed a non-exclusive agreement with Valiant Distribution Cannabis, a subsidiary of Canna Cabana Inc., for the distribution of its products in the province of Saskatchewan. 

In 2023, Indiva also amended the terms of its existing non-revolving term loan facility with SNDL Inc. and entered into a supply agreement with SNDL whereby SNDL would supply Indiva with certain distillate products exclusively. 

Indiva reports that it expects net revenue and margins to decline on a sequential basis in Q1 2024, which it attributes to seasonality, and remain flat year-over-year, but also expects to generate record net revenue and record EBITDA in 2024.

Manitoba to pause issuing controlled access retail cannabis licences 

The Manitoba government says it will be placing a temporary freeze on any new licences that allow convenience stores to sell cannabis.

Following the tabling of legislation that proposes to repeal the province’s ban on growing cannabis at home, Glen Simard, the Minister responsible for the Manitoba Liquor and Lotteries Corporation, told media that the province will be pausing the issuance of new licences for “controlled access” cannabis stores in the province for at least six months.

A representative for Simard’s office confirms that the government is seeking to pause the issuance of new licences while it studies the issue further. 

Such controlled access licences for retail cannabis stores allow for cannabis to be sold in convenience stores and gas stations that carry other non-cannabis products. According to provincial rules, businesses holding a controlled-access licence may allow young persons to enter the store, but cannabis must not be visible or accessible.

The province currently lists 205 cannabis stores licensed in the province, with 122 of them in Winnipeg. Eleven of these stores are “controlled access” stores. 

Some cannabis retailers in the province have in the past expressed concern about such licences. Melanie Bekevich, the owner of Mistik Cannabis in Winnipeg, and a member of the Retail Cannabis Council of Manitoba (RCCMB), tells StratCann the organization had met with the Manitoba government to express their concerns with how these licences are being issued. 

“The RCCMB is pleased that the Minister has been responsive to the industry’s calls for a review on the controlled access licence category,” says Bekevich. “This category was intended to provide access to legal cannabis for rural and remote communities, but we’re seeing most of these licences in Winnipeg and Brandon. A review of the category could ensure controlled access licensing is being used in the spirit of its original intent. The Minister will need to find a balance between limiting exposure of minors to cannabis sales and access for rural remote communities.”

Raj Grover, the CEO of High Tide Cannabis, which operates three Canna Cabana cannabis stores in the province, says he hopes the review provides better guidelines for these types of licences. 

“We applaud Manitoba’s new NDP government for confirming today that it will place a six-month moratorium on new controlled access cannabis retail licences,” says Grover. “These licences were intended to provide access to legal cannabis in rural communities without an established legal retail cannabis store; however, many of the controlled access licences were granted to convenience and grocery stores within downtown Winnipeg. We hope that the six month review will help establish important guardrails to ensure that these licences are limited to under serviced communities only, as was originally intended.”

Manitoba NDP table bill to repeal ban on growing cannabis at home

In an announcement in the House today, Matt Wiebe, Minister of Justice and Attorney General of Manitoba, announced the provincial government would be lifting the province’s ban on people growing cannabis at home.

Bill 34, The Liquor, Gaming and Cannabis Control Amendment Act, was tabled today. It proposed to repeal the province’s ban, allowing Manitobans to grow up to four plants per household, per federal regulations.

The Manitoba NDP, led by leader and now-premier Wab Kinew, formed a majority government in an election in October 2023, defeating the Progressive Conservative government in power since 2016.

“Manitoba will now align with federal legislation on cannabis by allowing people to grow up to four plants per residence,” said Wiebe in a press release. “This amendment is a direct response to Manitoba consumers and was one of our campaign promises. This bill will provide Manitobans the opportunity to grow their own cannabis as long as it is done in a safe and secure way. The regulatory framework will prioritize public safety, with a focus on protecting youth and ensuring cannabis plants are not accessible to young people.”

Then-Premier Brian Pallister said at the time that banning the home cultivation of cannabis would protect children and undermine the illicit market. Quebec and Manitoba were the only provinces to challenge that authority, banning home growing entirely, as did the Territory of Nunavut. 

While Quebec’s rules implement fines for those found growing cannabis, Manitoba’s ban creates criminal penalties and a $2,542 fine for growing non-medical cannabis in a residence in Manitoba

Quebec’s ban on growing cannabis at home was challenged in the courts, making its way to the Supreme Court, which upheld the province’s right to do so. 

In 2023, a Manitoba court also ruled that the province’s ban on growing cannabis at home could stay in place after facing a similar challenge. The organization that challenged the law recently filed another appeal in March 2024. 

The Manitoba law has been challenged in court by resident Jesse Lavoie, who argued the provincial ban was unconstitutional and an overreach of provincial authority.

“We are incredibly pleased with the Manitoba NDP’s decision to bring our laws into alignment with the Cannabis Act and the rest of the country,” Lavoie told StratCann. “It’s been a long journey for TobaGrown to reach this point, and we couldn’t have done it without the support of the Manitoba cannabis community. As soon as these changes become law we will be notifying the Courts that we are dismissing our lawsuit. Thank you, Premier Kinew and Manitoba NDP.”

The Manitoba government is also looking at a temporary freeze on new controlled-access stores cannabis store licences. More info on this change soon.

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Curaleaf Holdings closes on acquisition of Ontario’s Northern Green Canada

US-based cannabis company Curaleaf Holdings Inc., has closed on its acquisition of Northern Green Canada. This Canadian licensed cannabis producer focuses primarily on EU-GMP product certification for the international market.

First Licensed in April 2018, North Green Canada (NGC) is based in Brampton, Ontario and operates a medical cannabis platform, and has sold into recreational markets. The majority of the company’s sales in recent years have been through the export market. 

NGC has supplied high THC, non-irradiated cannabis flower to the German, Australian, Israeli, and New Zealand markets. The acquisition gives Curaleaf more opportunities to advance on the international stage. NGC has supplied Curaleaf’s German Brand Four20 Pharma.

“We are thrilled to welcome NGC formally to the Curaleaf family of global brands,” said Boris Jordan, Founder and Executive Chairman of Curaleaf. “This is an incredibly important deal for our international expansion strategy, as we’ll be able to bolster our supply of high quality EU-GMP certified flower immediately to key European markets as well as enter the fast-growing markets of Australia and New Zealand.”

In its most recent quarterly filing, Curaleaf reported net revenue of $345.3 million and a net loss attributable to Curaleaf Holdings, Inc., excluding discontinued operations, of $57.7 million.

In 2020, NGC put out a press release saying they were the first privately-owned Canadian licensed producer of cannabis to have EU GMP certification and referred to sales in Germany and Israel, as well as pending agreements in the final stages of completion in the U.K., Poland, Denmark, Portugal, Australia and New Zealand. 

Curaleaf is listed on the Canadian Securities Exchange under the symbol CURA and trades on the OTCQX market under CURLF.

Featured image via Google Maps.

Judge postpones BZAM/Final Bell trial

The judge overseeing the proceedings between BZAM and Final Bell has postponed the date for a trial between the two companies following last-minute information presented to the court. 

On Friday, April 19, Final Bell requested an adjournment of the trial following the disclosure of additional documents from BZAM late in the day on April 18. The trial had initially been scheduled for April 22 and 23.

Final Bell argued that the additional documents “fundamentally changed” the case, requiring more time and information through discovery and leave to file an amended opening statement.

Although BZAM argued the additional information in the documents was not significant, the judge reluctantly agreed to adjourn the trial of this issue, which had been previously rushed to address the timely nature of BZAM’s CCAA filing in February.

The new information provided by BZAM challenged claims made by Final Bell regarding how much excise tax BZAM owed at the time of their arrangement to acquire Final Bell Canada.

“I noted above that I granted the adjournment reluctantly, and I say this for a number of reasons, including the fact that the disruption to the Commercial List schedule is significant and the potential ramifications of an adjournment on the parties to this issue, and on other parties and stakeholders in this CCAA proceeding, could be significant,” wrote Justice Osborne in their ruling. 

“I have reminded all parties that there could well be material cost consequences resulting from this claim and the adjournment. I have also made it very clear to the parties that there was significant disruption to the schedule of the Commercial List to free up the two days next week, on an emergency basis, and I was not at all certain that two consecutive days could be accommodated again, at least before the summer.”

The judge also agreed that once all additional production is made and examinations have been completed, the court-appointed monitor in the case may request a brief conference when the judge can reschedule the case. 

A service list posted on April 20 lists creditors such as Health Canada, the CRA, the Alberta Gaming, Liquor, and Cannabis Commission (AGLC), The government of British Columbia, The government of Quebec, The Saskatchewan Liquor and Gaming Authority, Revenue Quebec, Alberta Ministry of Justice, Alberta Ministry of Treasury Board of Finance, Saskatchewan Ministry of Finance, the Bank of Montreal, Auxly Cannabis Group, Organigram Holdings, Pax Labs, the Ontario Securities Commission, and others.

Tether’s signature sampling events head to Calgary and Kelowna

Since legalization, we have seen cannabis events play an integral and multifaceted role in shaping the trajectory of the Canadian cannabis sector. Sampling events, in particular, have grown in popularity, fostering a more informed and empowered industry. 

These educational events provide a unique and cost-effective opportunity for brands to showcase products and unique selling points to those who influence consumer purchasing decisions. For retailers and Budtenders, these events offer a chance to explore new products and understand emerging trends in the market, enabling personalized recommendations to consumers and empowering them to make informed choices about which products to stock.

Ahead of StratCann’s Growing Relationships Events, Tether, a Canadian Budtender community of over 5,000, is breaking into two new markets and bringing its signature sampling events to Calgary, AB and Kelowna, BC.

Tether stands out in the industry for its commitment to learning directly from the source: Budtenders. Through annual surveys reaching over 200 individuals across Canada, Tether diligently gathers insights and feedback from Budtenders, allowing the organization to continuously refine its events and offerings to national brands. 

By harnessing these insights, Tether enables brands to tailor their strategies, products, and messaging to resonate with this influential segment of the cannabis community, ultimately fostering stronger partnerships and driving collective growth within the industry.

Five ways cannabis events strengthen the industry

1. Retailer Engagement

In a sector where sensory experience and product effects play a pivotal role in sales, brand education and product knowledge are essential. At Tether’s upcoming sampling events, brands are afforded a golden opportunity to spotlight their offerings directly to retail buyers.

In Tether’s recent 2023 survey, Budtenders indicated that they want to learn directly from brands, with their primary source of education being through brand ambassadors and LP reps (up 31% from last year).

2. Education Through Sampling

Budtenders are influential individuals and play a crucial role in enhancing the consumer experience. Sampling events provide a channel to get product directly into the hands of Budtenders, enabling them to become valuable brand advocates. 

Tether’s survey results indicate that sampling has become a powerful tool for education, evident in the 15% rise in Budtenders turning to events like those in Calgary and Kelowna for education and seeing over 95% of Budtenders surveyed wanting to try products firsthand. 

Maximizing the potential of educational sampling involves encouraging Budtenders to actively share their insights and experiences through product reviews, feedback surveys, and social media platforms.

3. Making Connections

Tether’s sampling events extend beyond product showcases; they serve as platforms for networking, business expansion, and meaningful dialogue. The Calgary and Kelowna events will each see over 200 Budtenders, retailers, industry professionals, and community members, aiming to build sustainable business relationships.

For brands, participation offers a chance to expand their reach and strengthen their industry presence. Retailers seize the opportunity to broaden their product offerings and invest in their sales team’s growth. 

Tether facilitates these connections, providing insights and marketing solutions for brands of all sizes. These events are designed to forge lasting connections in the cannabis industry while supporting the growth of retail environments.

4. Industry Progression

Provincial regulations regarding outdoor consumption areas are continuously evolving, presenting promising opportunities for hospitality and tourism. As these regulations become more accommodating, they pave the way for the establishment of cannabis-friendly consumption venues and events. Regulated sampling events are also integral to this process, playing a pivotal role in legitimizing the industry and dismantling social stigma. 

While these changes may seem small, they represent significant strides toward reducing stigma and creating a more welcoming space for cannabis enthusiasts and the industry as a whole.

5. Community Building

Beyond business, the Calgary and Kelowna sampling events will help build community. Cannabis enthusiasts, advocates, and entrepreneurs will come together to share their passion and celebrate progression. In Tether’s latest survey, over 90% of Budtenders express interest in attending events within the cannabis community, with 86% prioritizing building relationships with fellow Budtenders.

Tickets to Tether’s Calgary Sampling Event on May 5 can be found here. Tickets to the Kelowna Sampling Event will be released soon.

Learn more about Tether and its upcoming events at

Content sponsored by: Tetherbuds

Week in Weed – April 20, 2024

The big news that wasn’t news this past week was that the Federal Budget 2024 did not include any changes to cannabis excise rates, a move that wasn’t surprising to anyone following this website, despite the silly predictions by some Pubco CEOs.

We also looked at some of the realities and complexities of cannabis exports.

In a story we’ve been quietly following for several weeks, Manitoba is expected to table legislation that will lift the province’s home grow ban soon. The news is still not confirmed.

Stats Canada released some cannabis data snippets just in time for 4/20, which show that two out of every five dollars spent on legal cannabis in Canada went to government coffers

Avant Brands shared their newest financial report with $1.2 million in net income. 

BZAM and Final Bell are set to face off in court next week, and We Grow BC Ltd. and Westleaf Labs are taking a shipping company to court after it had cannabis seized at the US border

Another cannabis patio space in BC has opened in time for 4/20, and a former Aurora Cannabis CIO faced questions in a House Committee.

In other cannabis news

The folks at the Deep Dive called out what they deem as hypocrisy from well-compensated corporate execs decrying the lack of excise tax reform, noting Tilray’s president and CEO brought in more than $15 million in wages, stock options, bonuses, and other compensations in 2023, while Canopy’s CEO brought in nearly $6.5 million.

Motif Labs announced the opening of its new manufacturing, distribution, and packaging facility in London, Ontario. The 75,000-square-foot site will help support Motif’s brands like BOXHOT, DEBUNK, Boondocks, and Rizzlers.

Mississauga-based dispensary The Woods Cannabis is offering free delivery on all of their products ordered from their online store on 4/20.

City council in Timmins, ON approved a request from local cannabis store Casa Bliss to close a nearby parking lot for two hours on Saturday for a 4/20 celebration.

Leafly and Uber Eats Canada pushed a campaign promoting some of the “Dopest cities” in BC as a way to highlight that Uber Eats offers cannabis delivery in the most bestest province. 

Canadian chain Pizza Pizza also ran a 4/20-themed promotion for their pizza “pre rolls,” leaning heavily on the hot, cheesy innuendo. 

Lifeist Wellness Inc. announced a shipment of cannabis products to Australia, including vape carts plus two extracts from its own Roilty brand. 

Winnipeg police raided several foster homes operated by Spirit Rising House following allegations that the operator was giving cannabis to children in the care of Child and Family Services, reported CBC/Radio-Canada.

CAA Manitoba released results from a survey looking at people who consume before driving. According to the survey, 61% of cannabis-impaired drivers in Manitoba wait less than three hours before getting behind the wheel.

The Vancouver Park Board is closing a parking lot and bathrooms in an attempt to dissuade people from attending the annual 4/20 event on Sunset Beach.

The BC “Craft Farmers Cannabis Summit” is happening over the 4/20 weekend in beautiful Prince George. Over in Ontario is the Niagara Falls 420 Expo at the Niagara Falls Convention Centre.

And finally, Manitoba’s Delta9 Cannabis Inc announced the third anniversary of the launch of their mobile cannabis store. Delta 9 has plans to attend between 8–10 events in the 2024 season.

BZAM/Final Bell trial set to begin next week

A trial between two cannabis companies, one which recently filed for bankruptcy after acquiring the other, is set to begin on April 22.

In late 2023, Final Bell Holdings International, a hardware, packaging, and brand development company serving the cannabis industry, entered into an agreement to sell its Final Bell Canada operation to Canadian cannabis company BZAM. 

Following that deal, BZAM then filed for CCAA protection in February, a move Final Bell says contradicts assurances BZAM had given the company prior to signing the agreement. 

That deal saw BZAM acquiring Final Bell Canada by issuing $13.5 million in equity in BZAM and granting Final Bell $8 million in promissory notes. At the time, the deal was said to make BZAM the fifth-largest Canadian LP.

Final Bell reacted to BZAM’s announcement by saying it believes that the company’s initiation of CCAA Proceedings constituted an “improper use of creditor protection legislation to evade its creditors, defraud shareholders, and facilitate a related party going private transaction at an unjustified discounted value in order to circumvent a customary going private transaction requiring shareholder and creditor approval.”

On April 16, Final Bell’s written opening statement was shared online, detailing their side of the case, which will be heard in court. In that statement, the company contends that the representations BZAM made to Final Bell during the due diligence process were inaccurate.

This includes claims that BZAM had access to several million in financing from a creditor without reason to believe its main creditor would not continue to extend credit to BZAM. It also contends that BZAM under-reported the amount of money the company owed in back taxes by several million dollars.

BZAM disputes these characterizations for its part, saying it had no idea its credit would not be extended. It also contends that its tax liability did, in fact, increase by $2.7 million from December 5, 2023, to February 15, 2024 (from around $6.4 million to about $9 million), providing a 1,400-page response showing internal emails and their finances.

Cannabis producers take shipping company to court over products seized at US border

Two cannabis producers are taking a shipping company to court, alleging the company attempted to take the cannabis over the US border, resulting in the seizure of 151 kilograms.

BC-based We Grow BC Ltd. and Alberta-based Westleaf Labs, now known as Decibel Cannabis, filed a notice of civil claim in a BC Supreme Court this month for $834,901, arguing that BC-based Seven Elk Shipping’s actions resulted in the seizure of their product by US border officials.

The notice of claim contends that We Grow BC and Westleaf Labs contracted the shipping company in January 2023 to deliver their cannabis within Canada, with specific instructions not to enter the US. 

Then, in May, according to the notice of claim, Seven Elks took possession of several pallets of cannabis in Port Coquitlam, BC, for transport to We Grow in Creston, BC and from Delta, BC, to Westleaf’s facility in Calgary. 

The claim contends that on May 17, the day Seven Elk took possession of the product, the company attempted to cross the border at the Peace Arch crossing in BC, where the cannabis was seized by US authorities. US customs then destroyed the products, or at least refused to return them to any of the companies. 

We Grow BC and Westleaf Labs argue that the value of the product was $834,901, which Seven Elk charged $11,901 to deliver. 

The two cannabis companies allege Seven Elk’s actions constitute a breach of contract, which has damaged their reputations. 

The lawsuit contends that Seven Elks acknowledged in written communications to We Grow and Westleaf its fault in respect of the seizure but has “refused or otherwise failed to compensate We Grow or Westleaf for the losses arising from the seizure.”

We Grow BC and Westleaf Labs formally announced their collaboration in 2019, combining the BC cultivator’s operations and Qwest brand with the Alberta processor retail and distribution network. At the time, the two companies characterized the deal as creating one of the largest craft producers in Canada.

Seven Elk’s website is no longer active. These allegations have not been proven in court. 

More outdoor consumption spaces are opening in BC

Following BC’s announcement earlier this year that certain businesses could open patio space to cannabis consumption, a handful of cannabis stores and other businesses in the province have taken action. 

The Billy Miner Ale House and Cafe in Maple Ridge recently advertised a new outdoor consumption space in partnership with a local cannabis store, Cheeky’s Cannabis. Both businesses are owned, at least in part, by parent company, Springs Group.

“When I first heard about the amendment, I thought this just makes sense. They already have the space, they have these pubs where people are smoking. Why not enhance the smoking patios and become a little more like a lounge, set some games up, make it more appealing to this generation.”

Laura Rowse, Cheeky’s Cannabis

Laura Rowse, the co-owner of Cheeky’s Cannabis, which also has a location in Vancouver’s Kitsilano neighbourhood, says the partnership with the Billy Miner will serve as a sort of pilot project to assess consumer demand and troubleshoot any challenges. She came up with the idea following BC’s announcement in February that locations like pubs and cafes that have patio areas where customers can smoke tobacco can also now allow cannabis consumption.

If it goes well at the first location, Rowse says she hopes to expand to another pub in Maple Ridge, as well as a new location in Mission near a new store they plan to open in the future. The current and proposed locations are all in coordination with the Springs Group, which Rowse says has been very helpful through the process. 

“We’re very grateful to have their support. When I first heard about the amendment, I thought this just makes sense. They already have the space, they have these pubs where people are smoking. Why not enhance the smoking patios and become a little more like a lounge, set some games up, make it more appealing to this generation.”

Rowse says she was inspired by other cannabis consumption spaces she has visited, including in the US, which gave her a vision of a different kind of community consumption space than how many bars are currently set up. One location in Palm Springs, California, the Four Twenty Bank, was particularly eye-opening. 

“To me, that’s my inspiration, is what she’s done there. There’s games, good ventilation, very open and welcoming. I really think this is the future of pubs. People don’t want to just sit around and drink anymore. I think people are interested in having something else to do. And this just makes it more cannabis friendly.”

Seed and Stone, another small cannabis chain with a handful of locations in BC, is currently developing a similar space at a cannabis store it operates in partnership with the Songhees First Nations on Vancouver Island. 

Vikram Sachdeva, the Founder & CEO​ of Seed and Stone, says he is working with the local leadership to develop a space with a food truck and an area where customers can enjoy cannabis.

Sam Jones, the owner of 2% Jazz Coffee, a cafe in Victoria, also began hosting cannabis-themed events in April. 

“It’s a very casual affair,” Jones explained to StratCann earlier this year. “There’s no smoking indoors at all. No buying, nothing like that. It’s just an open cafe where people can go out on the patio and smoke a joint. Then you can come back in and enjoy a coffee and some good conversation.”

Instead, he works with local cannabis companies who help host the event, which can serve as a learning session for those interested.

“We just want to provide a space where the idea of having a joint can be normalized.”

Further north on the island in Cumberland, the owner of cannabis store Trugreen Cannabis is helping to develop a community space on the property next to their store that will feature a cannabis consumption space, which store owner Michael Arneja plans to “soft launch” for April 20.

Marianna Wolff, the owner of Cannabis Cottage, a cannabis store in Penticton, is hosting a grand opening for their own outdoor consumption space in front of their store on April 20.

“This was what we were hoping to do from the beginning,” Wolff told StratCann. “We secured a space with the hope that at some point the government would allow for consumption spaces as well. So right now we’re just jumping over the moon.”

Back in Maple Ridge, Rowse says the ultimate goal is to provide a comfortable place for people to consume cannabis outside of their homes without being pushed into a back parking lot or alley. 

“My goal is for people to be comfortable, and I think this is a chance for a lot of pubs and similar businesses in BC to bring people back after covid.”

Former Aurora CIO questioned as part of ArriveCAN hearings

As part of its work looking into issues around the federal government’s ArriveCAN app, the House of Commons Standing Committee on Public Accounts (PACP) recently heard from Aurora Cannabis Chief Information Officer Darryl Vleeming.

Vleeming spoke with the committee in his current role as vice president and chief information officer at Canada Border Services Agencies (CBSA). 

The committee questioned Vleeming on the issue of GC Strategies, a company which received millions of dollars from the federal government to develop the mobile app provided by the Canada Border Services Agency in 2020, while Vleeming was still with Aurora.

Vleeming was speaking to the committee along with Jonathan Moor, vice-president, comptrollership branch of the CBSA, and from the Office of the Auditor General: Andrew Hayes, deputy auditor general; Sami Hannoush, principal; and Lucie Després, director. 

During questioning, Bloc Québécois MP Nathalie Sinclair-Desgagné questioned Vleeming about a hack that occurred when he was chief information officer at Aurora Cannabis on Christmas in 2020.

In that breach of security, hackers stole all of Aurora’s computer data, noted Sinclair-Desgagné, including copies of driver’s licences “and other highly confidential documents.” 

When the hackers tried to sell that data in an online marketplace, she noted, they used a copy of Vleeming’s passport as evidence that their claims were real. 

Vleeming confirmed the hackers had indeed shared his passport but said Aurora’s security system had limited them to accessing only “a very small amount of data.”

“The data breach actually got a very small amount of data from Aurora, and we were subjected to blackmail,” Vleeming told the committee. “Basically, they tried to force us to pay to not release it, but the amount of information they stole was extremely limited, so we made a decision as an organization not to pay.”

Sinclair-Desgagné questioned whether this showed a lapse in his duties as chief information officer at the time, but Vleeming says such hacks are “never ideal” but common.

“You’re never as prepared as you could be, but the reality is that cyber-attacks continue to increase worldwide,” he said as part of his final comments on the matter. “You just have to google the number of companies that get hacked on a daily basis. It is expected. What you have to do is limit the damage, and in this case the damage was extremely minimal.”

The hackers that stole data from Aurora Cannabis posted 11 sample images on January 7, 2021, as “proof of concept.” In addition to Vleeming’s passport, it appeared to include an Alberta driver’s licence belonging to Amy Lamoureux, a supply chain manager at the company.

Aurora maintains that no patient data from its medical cannabis program had been compromised.

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Still no changes to excise. Don’t be surprised.

As expected, the Federal Budget 2024 did not include any changes to cannabis excise rates.

This is unsurprising, despite recent recommendations for such changes by the federal House of Commons Standing Committee on Finance and years of industry lobbying, given the complexities of the issue

Nonetheless, some in the industry took the opportunity to highlight the issues of Canada’s $1 per gram federal excise rate. David Klein, CEO of Canopy Growth, called it a missed opportunity and an oversight that “signals a lack of commitment to the legal cannabis industry as well as the jobs and economic growth we create.”

“The failure to correct this broken tax regime and to leave other critical issues like potency limits unaddressed will continue to hinder the growth of legal cannabis business and comprises consumer access to safe, regulated products,” he continued in a post shared on social media.  

Others had held out hope that such changes were coming. Beena Goldenberg, CEO of Organigram, had said in February that the changes proposed by the House of Commons Standing Committee on Finance were what was needed to give the industry an edge in the global market. 

“The pre-budget recommendation could not have come at a better time. Excise reform is critical to the long-term viability of the Canadian cannabis industry. The positive impact of the proposed reduction to a 10% ad valorem rate on the sustainability of the sector cannot be underestimated. We sincerely hope that the recommendation made by the Finance Committee is adopted by the Federal, Provincial and Territorial governments so that Canada can retain its position as global leader in the emerging cannabis movement.” 

The industry has been calling for these changes for years now. A Cannabis Council of Canada (C3) survey from 2023 said that 96% of respondents viewed the current model as excessively punitive.

The recent report on the review of the federal Cannabis Act suggested changes to the excise program that would see higher rates on higher potency products, a suggestion many in the industry were, unsurprisingly, not supportive of. 

Still, as others in the industry have noted and StratCann has covered extensively, such changes will require coordination with provincial authorities, who take home 75% of every dollar collected and are not likely to be eager to give that up. 

“Changing the rate structure on flower to a fixed 10% model, as the federal House of Commons Standing Committee on Finance has recommended, would affect the provinces, and is something they probably wouldn’t do without provincial consent,” says Trina Fraser, a partner at Brazeau Seller Law in Ottawa. 

While the federal government could potentially unilaterally change these rates, doing so without the province’s support would likely have significant political blowback. And in a politically contentious time when governments are desperately looking for revenue, this becomes even more unlikely. 

One move the federal government could make, is to lower the rate they collect, which is currently 25% of every dollar. It could also lower initial and annual fees for various aspects of licensing for cannabis producers. 

The fact we don’t see these kinds of changes highlights how little leverage the industry has with both politicians and the general public. Despite years of lobbying efforts in Ottawa, the industry has been unable to generate the political capital required to push the issue over the line. 

While many of those operating cannabis businesses, especially small-scale producers, express frustration at this lack of response to their concerns, the reality is that politicians will only care when they know it’s an issue voters care about. And there is very little knowledge of the issue outside of those working in or directly connected to this industry. Telling a politician that your company will go out of business if a specific policy doesn’t change will not motivate them as much as telling them such and such issues will help them get reelected. 

While similarly-regulated industries like alcohol enjoy all kinds of benefits from government programs, the cannabis industry in Canada has not been able to leverage that kind of political capital. Is this because politicians love alcohol but not weed? Maybe. Or it might be because beer, wine, and spirits operate a more sophisticated ground game at all levels of government, and enjoy a much broader acceptance across the voting public than cannabis. 

Of course, these are long-term solutions and many cannabis producers in Canada don’t have that much time. More and more producers are throwing in the towel. Several dozen have chosen to revoke their own licences this year alone. But that’s the reality of this industry. No one is going to swoop in and save the day. Batten down the hatches and figure out how to operate in today’s landscape, as flawed as it may be, because change will take a long time.

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Avant Brands reports increasing revenues, supported by international sales

In its most recent quarterly report, Avant Brands reported $8.1 million in net revenue and $1.2 million in net income.

The BC-based company behind cannabis brands like BLKMKT, Tenzo, Treehugger, Flower, Cognoscente, and GreenTec, recently shared the financial results of its first quarter ended February 29, 2024 (Q1 2024). 

Net revenues increased by 15% compared to the same quarter in the previous year, and international sales into markets like Israel, Australia, and Germany increased by 21% for a record $3.3 million. International sales represented 37% of the company’s total gross revenue.

Revenue on sales into the Canadian non-medical market was $3.4 million, a decline of 19% compared to Q1 2023, while B2B sales increased from $60,000 to $1.3 million in the same period. 

The company also produced a record amount of cannabis in the most recent quarter, with 3,231 kg of cannabis, a 23% increase from Q1 2023. Sales of cannabis also hit record levels for the company, with 2,785 kg sold. 

The average sales price for cannabis Avant sold into the international market was $4.30 a gram, while the average price after excise taxes was $5.49 a gram. The company is also seeking partnerships in the UK, Switzerland, and other emerging markets.

The company’s cash flow increased to $3.8 million, while SG&A and Corporate Expenses decreased 14% from the same quarter in 2023 to $2.5 million.

“I’m thrilled by Avant Brands’ outstanding Q1 2024 performance,” says the company CFO, Jeremy Wright. “I’m impressed by the efforts of our sales and operations teams, which are driving record-breaking results. Our strong financial performance, including record net revenue and substantial growth in cash flow from operations, reflects the effectiveness of our strategies. With continued focus, we’ll sustain this momentum and drive further growth. It’s an exciting time to be back with the team.”

Avant operates cultivation and processing facilities in Chase, Vernon, and Kelowna in BC, and in Edmonton, AB, and Tiverton, ON, and is approved for sale in all provinces except Alberta and Nova Scotia.

Avant also recently welcomed Sukhie Chahal (previously at Canopy Growth) as its new VP of Revenue Strategy and Tyson Macdonald (previously at Acreage Holdings) to its Board of Directors.

Featured image via Avant Brands.

Week in Weed – April 13, 2024

This week in cannabis news, StratCann reported on Ontario’s AGCO issuing a $200,000 fine for “data deals” to a cannabis retail chain. At the same time, the OCS says they are already seeing a decline in high THC cannabis flower following the announcement of their internal testing program in January.

In BC, Surrey will finally begin accepting applications for cannabis stores, while the BC Budtenders Union added new members.

Quebec’s ban on cannabis vapes doesn’t appear to be keeping residents from using them

Diteba Laboratories Inc. filed a notice of intent, and Tilray shared their most recent financial report

In other cannabis news…

Business in Vancouver’s Daisy Xiong spoke with Deepak Anand from ASDA Consultancy Services, Julia Cameron from Pure Sunfarms, and Kirk Tousaw from Great Gardener about the recent Cannabis Act report. 

Xiong also ran a story on BC cannabis exports, speaking again with Deepak Anand, as well as Paul Furfaro from Village Farms International Inc. (Pure Sunfarms parent company), and Philip Campbell of Herbal Dispatch.

CBC’s Terry Roberts spoke with Brian Keating about the recently closed Argentia Gold, Chris Crosbie from Atlantic Cultivation, and Bruce Keating from the NLC about the challenges facing the local cannabis industry. Retail cannabis sales in Newfoundland and Labrador will be near $90 million for the 2023-24 fiscal year, says the latter Keating. 

CBC also ran a story on the challenges facing the medical cannabis sector in Canada. The article includes comments from Erin Prosk of Quebec’s Santé Cannabis, Dr. Mary-Ann Fitzcharles, a spokesperson for the Canadian Medical Association, and a rheumatologist and a pain medicine physician at Montreal’s McGill University.

A study was released last week looking at the demographic and health-and medical cannabis-related factors associated with authorization as well as the differences in medical cannabis use, side effects, and sources of medical cannabis and information by authorization status in Canada. The study involved input from several well-known names in Canadian cannabis, such as Lynda Balneaves, Ashleigh Brown, Matthew Green, Erin Prosk, Lucile Rapin, Max Monahan-Ellison, Eva McMillan, Jonathan Zaid, Michael Dworkind, and Cody Z. Watling.

A master’s student in biochemistry and medical genetics at the University of Manitoba won a competition for her work looking at the epigenetic changes induced by prenatal cannabis smoke exposure.

BC’s Avant Brands launched a $3.88 million non-brokered private placement offering.  

Decibel Cannabis Company Inc. announced Benjamin Sze as its new CEO, effective April 8, 2024. Sze previously served as the CEO of Decibel before resigning in late 2020. Former CEO Paul Wilson will be assisting Mr. Sze in handing off leadership of the Company.

Decibel’s sale of Prairie Records to Fire & Flower also closed last week.

High Tide Inc. announced a transition to a new CFO effective May 1, 2024.

SNDL CEO Zach George and CFO Alberto Paredero will participate in several upcoming investor and cannabis conferences, including the International Cannabis Business Conference (ICBC) in Berlin and the Benzinga Cannabis Capital Conference in Miami this month.

Following an NOI filed by Hempsana Inc., the Ontario Superior Court of Justice recently issued an order extending the time within which the Company is to make a proposal to May 24, 2024. Hempsana is a licensed manufacturer of cannabinoid derivative products specializing in extraction, purification, and end-product manufacturing.  It owns and operates an 8,880 sq. ft. extraction facility in Goderich, Ontario.

Finally, ABC News in Australia reports that data from Australia’s Therapeutic Goods Administration shows there have been six reported cases of people having adverse reactions to prescribed cannabis since 2019, and two of those cases involved Canadian products.

Quebecers still vaping cannabis, despite provincial ban

Despite a provincial ban, a quarter of cannabis-using Quebecers report using cannabis vapes, according to new figures from the Institut de la statistique du Québec (ISQ).

Twenty-five percent of Quebecers who reported consuming cannabis in the past year vaped it. 

The study also shows that most cannabis consumers in Quebec get at least some of their cannabis products from legal sources in the province.

Nearly 73% of people in Quebec aged 15 to 17 who used cannabis in the past year reported vaping it, along with 55% of those aged 18 to 20, 14% of those 21-24, 9% of those 25-34, and 3% of those 35-54. 

Just under 1% of Quebecers aged 55 and older reported using a cannabis vape in the past year. 

Nearly half of Quebecers aged 15-20 who did use a cannabis vape said they did so less than one day per month. About one-quarter of them said they vaped one to three days a month. 

Quebec banned cannabis vape pens in 2019. Since there is no legal source for cannabis vapes in Quebec, residents told ISQ that they sourced their vapes from family and friends, from legal sources in other provinces, from illicit suppliers, and/or online. Newfoundland and Labrador had also previously banned the sale of cannabis vapes but began allowing them in 2022.

Only about 4% of the total population of Quebec has reported vaping cannabis in the past 12 months.

About half (49%) who said they had vaped cannabis in the past year reported that they did not know the amount of THC in the cannabis they primarily vaped. Younger people were more likely to know how much THC was in their vape products.

Some 46% of Quebecers aged 15 and over said they believed vaping cannabis poses a high health risk, 43% said it represents a moderate risk, and about 11% believe the vaping of cannabis carries no risk or that this risk is minimal. 

People over the age of 34 were more likely to see vaping cannabis as harmful than younger Quebecers.

The survey results come from the 2023 Quebec Cannabis Survey (EQC), collected between February and July 2023 from 13,209 people. The first results from the survey were released in October 2023.

The study also shows a slight decrease in Quebecers who reported using cannabis at least once in the past year, from 19% in 2022 to 17% in 2023. 

Most Quebecers who consume cannabis do so by smoking it (81%), while 31% reported using edibles and 23% consuming oral cannabis drops such as cannabis oils. These oils have the same active ingredient as in cannabis edibles.

About three-quarters (71%) of Quebecers over the age of 15 who consumed cannabis in the last year reported getting at least some of their cannabis from legal stores in Quebec (SQDC). 

Thirty-five percent said they got their cannabis from a family member, friend, or acquaintance, and 11% said they purchased cannabis in person from a legal source in another province. Just 6% reported purchasing cannabis from an illegal supplier.

Almost half (47%) of consumers 21 and older said they purchased their cannabis only from the SQDC in the past 12 months, while another 21% said they bought cannabis exclusively from sources other than the SQDC.

Approximately 21% of people who consumed cannabis in the 12 months preceding the survey obtained it via the Internet from a supplier other than an authorized Health Canada producer or the SQDC, which may give rise to possession of illegal cannabis.

Two new Trees locations join BC Budtenders Union

The employees at two new Trees Cannabis locations in BC have recently joined a union representing cannabis industry budtenders. 

Workers at two Trees Cannabis locations in Nanaimo have joined their colleagues at other locations across Vancouver Island by joining United Food and Commercial Workers (UFCW) Local 1518, also known as the BC Budtenders Union. The two new locations make Trees Cannabis British Columbia’s first private unionized cannabis chain.

Workers at the two Trees locations in Victoria first joined the BC Budtenders Union in 2021, following employees at Clarity Cannabis being the first to join in 2020. The second two Trees locations recently joined them in solidarity, according to a press release from the union. 

“We are proud to welcome UFCW 1518’s newest members as they make history by organizing as the province’s first private wall-to-wall unionized cannabis chain.” says UFCW 1518 President Kim Novak. “These workers are setting a new standard for the cannabis industry, and we anticipate that their achievement will send shockwaves across the cannabis labour landscape, empowering workers across Canada to demand fairness and respect in their own workplaces.”

As of the certification at the Trees locations in Nanaimo, The BC Budtenders Union now represents workers at nine cannabis businesses and 16 locations.

Fifteen of these locations are cannabis stores. It also represents workers at a cannabis production facility in BC,  the first cannabis production facility to successfully unionize in Canada, following a 2020 court ruling that found the company had unfairly penalized workers for trying to unionize

A third Trees location in Victoria joined the union in 2023, but the location is now closed. In 2020, employees at a cannabis store in Vancouver quietly voted to decertify the union a few months after joining, meaning the BC Budtenders Union no longer acts as their bargaining agent. 

In March of this year, a recently opened Canna Cabana location in Vancouver also joined the union, and members at The Original Farm recently approved their latest contract with the union.

In a post on the union’s Facebook page, it says the two-year contract includes a 6.5% wage increase, retroactive pay on all wage increases to November 11, 2023, doubling the Call-in premium to $1.00 per hour, and “timely and fair redistribution of cannabis samples from sales reps.”

BC began allowing producers to provide samples to retailers in 2023.

Trees Cannabis also has five locations in Ontario. In December 2023, Trees announced that it and its subsidiaries would be filing for creditor protection under the CCAA. The group had been seeking additional financing to keep it operating. On December 22, 2023, Trees was granted creditor protection. 

Then, in January, a court-appointed monitor of Trees Corporation began conducting a sale and investment solicitation process for the cannabis company. 

OCS: Decline in high-THC flower following launch of testing program

The OCS says they have seen a decline in the number of high-THC products in its catalogue after launching a testing program earlier this year. 

The Ontario Cannabis Store launched its temporary THC testing program on January 4, 2024. Under the program, the provincial cannabis wholesaler has been selecting high-THC cultivars coming into its warehouse for secondary testing

Any products with secondary testing results inconsistent with the THC levels posted on their label are subject to further scrutiny, including a potential return-to-vendor for re-labelling.

A representative from OCS tells StratCann that several products it carries have also been re-labelled with lower THC ranges since the program began. 

The issue of high THC products, primarily cannabis flower, is contentious in the cannabis industry and not limited to Canada or to the regulated market.

While research often shows that the THC percentage in most cannabis flower is in the high teens to low twenties, increasingly, many cannabis flowers on the market advertise having well over 30 percent, something considered statistically improbable but not impossible.

“The purpose of the OCS’s temporary THC testing program is to gather information and evaluate industry reports of inaccurate THC label claims on legal cannabis products. We look forward to leveraging our findings to further engage government and industry partners in support of testing and sampling standards.”

OCS spokesperson

The goal, says OCS, is to not only check against specific label claims but also to evaluate the larger claims and concerns that many cannabis products, especially cannabis flower products, have highly inflated THC levels on their labels.

“The OCS will not share commercially sensitive information publicly,” said the spokesperson in an email.  “The purpose of the OCS’s temporary THC testing program is to gather information and evaluate industry reports of inaccurate THC label claims on legal cannabis products. We look forward to leveraging our findings to further engage government and industry partners in support of testing and sampling standards.”

The OCS covers the cost of testing, which is done through a third-party lab. Any products within an acceptable range of variance (±15%) will be released for sale. Note: “±15%” refers to the variance from the label claim; it does not refer to actual percentage points. For example, a product labeled at 20% THC could be allowed to fall within about 17-23% THC because 15% of 20% is 3%.

Producers whose product falls outside of that range have five days to dispute any results that find their product’s true THC level is not aligned with what is stated on the label. 

If disputed, the OCS will send it back to the same third-party lab for more testing. If it fails again, the product will be sent back to the producer at their cost. 

Winton also says the OCS has not included product calls for High THC products in its last seven  Assortment Needs Bulletins, which are published four times a year before each product call launch.   

“The OCS is committed to working with government and industry partners to ensure consumers have confidence in legal cannabis products. We thank our network of Licensed Producers for their patience and cooperation as we continue to roll out this new temporary program.”

Concerns around inflated THC numbers have prompted many in the industry, from labs to producers, consumers, and retailers, to call on the federal and even provincial governments to do more to ensure that THC levels reported on labels are accurate. 

In 2023, Rob O’Brien, the CEO and CSO of Supra Research and Development in Kelowna, BC, shared his independent testing results online from 46 different cannabis products he purchased from BC Cannabis Stores.

Last year, Health Canada also announced it was launching a data-gathering program on cannabis markets in Canada that will include sampling and testing of both legal and illegal products currently in the market.

As part of the program, Health Canada’s Regulatory Operations and Enforcement Branch (ROEB) Cannabis Laboratory will randomly purchase cannabis products from authorized retailers in Canada. It will also work with various law enforcement agencies to test samples of illicit cannabis products. 

Health Canada routinely inspects cannabis facilities and conducts secondary testing on cannabis but maintains it does not inspect cannabis labs that provide the results used by these cannabis producers.

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More than five years after legalization, Surrey approves plan to allow cannabis stores

Surrey City Council has now approved a plan to begin allowing up to 12 cannabis stores in the city.

Council approved the city staff’s proposal in a council meeting on April 8 and will begin accepting applications soon.

In 2023, Surrey City Council began exploring the possibility of allowing cannabis stores, directing city staff to develop a plan. In July of that year, council sent a plan back to city staff to be reworked to address some councillors’ concerns. 

A survey then went out to the public about the proposed plan for up to 12 locations in the city, with up to two for each of six distinct communities: Whalley/City Centre, Guildford, Fleetwood, Newton, South Surrey, and Cloverdale.

Although many residents reported in the survey that they supported more than 12 locations, some councillors said starting with 12 was a good way to avoid the flood of new stores some cities have seen.

Stores must be a minimum of 200m from schools, community centres, and other cannabis stores. 

A previous city council had banned cannabis stores from Surrey entirely. Since then, several stores have popped up on the city’s border in neighbouring communities. Residents can also receive deliveries from stores located in other cities. 

With more than 600,000 residents, Surrey is the second largest city in BC, just behind Vancouver. The BC government currently lists 81 stores as approved in Vancouver. Neighbouring city Langley, with a population of about 150,000, has two cannabis stores, while Delta, another neighbouring city, has a population of about 100,000 and has six cannabis stores.

Pitt Meadows, a small city of about 20,000 about an hour away from Surrey, began allowing cannabis stores last summer. One store has already opened and several other applications are now in the queue.

Richmond, BC, located west of Surrey and home to more than 200,000 people, also does not allow any cannabis retailers.

Many cannabis retailers are located along the city border in neighbouring municipalities, including Langley and Vancouver.

Featured image of Queens Cannabis Co location in Delta, on the western border of Surrey.

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Tilray sees increased cannabis revenue, boosted by international sales

Tilray reported US$63.4 million in net revenue from its cannabis operations in the three months that ended February 29, 2024, one-third of the company’s total net revenue.

The company’s most recent quarterly report, posted on April 9, shows $188 million in total net revenue for all its operations, including its beverage alcohol, cannabis, distribution, and wellness business. (All numbers in US dollars).

Net revenue from its cannabis operations increased 33%, with 44% growth in its international sales from the previous quarter. 

The bulk of Tilray’s net revenue, before taxes, from cannabis sales was in the non-medical market, with $62 million. Nearly $6.4 million of that net revenue was from Tilray’s medical cannabis business, while about $2.8 million came from wholesale cannabis sales and $14 million in international sales.  

The company reported $21.8 million in excise taxes on cannabis sales in the three months ending February 29, 2024. Costs related to its cannabis operations were $42.5 million for a gross profit of $20.1 million and an adjusted gross profit of $21 million.

Gross profits from cannabis sales increased to $20.9 million in the third quarter from a  $32.8 million loss in the prior year quarter. Adjusted gross profit was $21.1 million compared to $22.2 million in the same quarter in 2023.

“Over the past several years, our playbook of expanding our cannabis business to complementary markets such as beverages and hemp-based consumer products has positioned us well to navigate the current environment and to benefit from future growth opportunities,” said Tilray Brands’ Chairman and Chief Executive Officer Irwin D. Simon in a press release. 

“Tilray Brands today represents the future of the global CPG industry leading the convergence of cannabis, beverages, and wellness. We have become the most dynamic and diversified cannabis-lifestyle and consumer products company globally as we lead and advance global cannabis, fuel consumer needs in wellness foods and snacks, and disrupt craft beverages. We are proud of our position as the #1 Canadian cannabis LP, the European market leader in medical cannabis, the leader in hemp foods, the 5th largest craft brewer in the U.S., and are now aiming to become a top 12 beer and alcohol beverage company in the U.S.”

Although Tilray does not currently have any US-based cannabis operations, the company says it hopes potential rescheduling of cannabis could open that door. The company also has an investment in US retail chain MedMen.

Tilray’s cannabis brands include Hexo, Original Stash, Good Supply, Broken Coast, Redecan, Solei, Mollo, Chowie Wowie, and XMG.

Diteba Laboratories Inc. files notice of intent

Mississauga-based cannabis company Diteba Laboratories Inc. filed a notice of intent (NOI) on March 2 under the Bankruptcy and Insolvency Act, listing more than $15 million in liabilities, including nearly $8.2 owed to the CRA.

The company blames its financial hardship on the resistance of provinces and consumers to new and innovative cannabis products and the “stubborn resilience” of the flower, prerolls, and vapes markets, as well as the illicit market. 

All creditors are barred from commencing or continuing any actions against Diteba until the creditors handle the proposal.

Diteba Laboratories Inc. has thirty days from the date of filing the NOI to make a proposal.

The company already underwent a court-approved sale and investment solicitation process (SISP) in 2023, which resulted in the sale of its scientific contract research business. The same was approved in October. Diteba also operates a white-label cannabis processing and distribution business.

The company processes and packages cannabis vape products, milled cannabis flower, pre-rolls (traditional and infused), and whole cannabis flower and sells cannabis under the Common Ground brand.

Week in Weed – April 6, 2024

Financial reports and restructuring were yet again the theme in the news this week, with Stigma Grow’s parent company releasing their Q2 2024 financial report, Lifeist announcing the restructuring of CannMart after shareholders rejected plans to sell it, and Heritage Cannabis seeking creditor protection.

Also, BC’s second-largest city, Surrey, could again be looking at a plan to allow up to 12 cannabis stores next week, Trudeau was interviewed about Canada’s approach to legalization as part of a French documentary on cannabis, C3 announced its new president, New Brunswick said it can’t enforce its cannabis laws on First Nations reserves, and someone crashed into a weed store in Ontario. 

We also shared our monthly cannabis industry jobs update.

Oh, and we had some fun with two April Fool’s Day articles, with satirical takes on Trudeau’s and Poilievre’s stances on cannabis laws that caught some of our readers off guard. 

In other cannabis news this week…

CBC covered some of the evolutions of the cannabis market in New Brunswick, with Cannabis NB CEO Lori Stickles, Kevin Clark with Eco Canadian Organic, and Jonathan Wilson from Crystal Cure speaking about new CannabisNB stores and the possibility of consumption spaces and tourism, especially for farmgate operators. 

A Nova Scotia court acquitted Chris Googoo this week, an Indigenous man from the Millbrook First Nation who faced counts of possession of cannabis for the purpose of distributing and selling it. The decision means there will be no constitutional challenge related to treaty rights in the case, but Goodoo’s lawyer, Jack Lloyd, told CBC that Googoo will seek to challenge cannabis laws in federal court. More on this story next week from StratCann.

CBC also ran a more in-depth story on this court case and the broader issue in Canada around First Nations jurisdiction as it relates to cannabis laws, speaking with the owners of several Indigenous-owned cannabis stores and First Nations leaders. 

The Star ran a story on a number of raids of unlicensed cannabis stores in Ontario last week, including at least one location of the Mississaugas of the Credit Medicine Wheel chain, and at least two locations of Cannabis and Fine Edibles (CAFE). The article also quoted C3’s Rick Savone, Canopy CEO Rick Klein, and High Tide’s Omar Khan, who spoke positively about new provincial funding to target unlicensed stores. 

On a similar note, CBC Radio spoke with Corry Van Iersel of True North Cannabis Co., who says he’s frustrated by the lack of enforcement against illicit stores.

Nextleaf Solutions announced the launch of infused pre-rolls with up to 1000mg THC per 3-pack under their Glacial Gold brand, as well as increased distribution for their Glacial Gold softgels. 

High Tide announced its fifth Canna Cabana Store in Mississauga.

Christina Lake Cannabis announced a delay in the filing of its 2023 annual financial statements. They now expect to file no later than May 31, 2024.

Organigram Holdings Inc. announced that sales of their Shred brand have surpassed the $200 million mark in yearly retail sales.

And, of course, in International news this week, Germany’s new cannabis laws have come into effect as of April 1. The law allows for personal possession and home cultivation, but not sales. Cultivation “Clubs” will become legal in July. 

A judge in New York struck down certain aspects of the state’s new cannabis laws after siding with a lawsuit brought by Leafly that challenged the restriction of cannabis stores advertising on third-party websites. 

Although the ruling initially appeared to void the state’s entire regulatory regime, the decision was later amended to show that the judge voided the state rules dealing only with so-called third-party platforms such as Leafly that help marijuana companies market and promote their products. 

Surrey, BC, once again considering plan to allow cannabis stores 

The city of Surrey, BC, which has banned cannabis stores since the beginning of legalization, will again be considering a proposal to allow up to 12 cannabis stores in the city.

In 2023, Surrey City Council began exploring the possibility of allowing cannabis stores, directing city staff to develop a plan. In July of that year, council sent a plan back to city staff to be reworked to address some councillors’ concerns. 

A survey then went out to the public about the proposed plan for up to 12 locations in the city, two for each of six distinct communities: Whalley/City Centre, Guildford, Fleetwood, Newton, South Surrey, and Cloverdale.

The survey results are now available, and Surrey City Council could address the report as early as April 8, the next scheduled council meeting. 

Under the proposed plan, city staff would inform retail cannabis applicants of the results of Surrey’s Request for Expression of Interest (RFEOI) selection process. Up to two applications would then advance to city council for consideration of their site-specific rezoning, including a public hearing, before the possibility of a licence being awarded. 

Retail licences also must receive approval from the provincial government. 

More than 4,000 people responded to the survey, with 96% living in Surrey. About 68% of respondents said they supported having 12 or more cannabis stores in the city. The 47% who strongly disagreed with the proposal said they felt setting a limit of 12 stores was too little, while just 38% of those who disagreed said it was too many. 

There were similar results when respondents were asked about the proposed limit of no more than two stores per community in Surrey. 

Those supporting more stores in Surrey didn’t necessarily mean they were cannabis consumers, though. Of those who supported having 12 or more pot shops in Surrey, just over half (52%) said they visit stores in other communities or purchase cannabis online, and 51% said they would buy from a store in Surrey.

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Trudeau: Concerns over cannabis legalization violating international treaties were unfounded

Prime Minister Justin Trudeau spoke of the easy transition Canada took into a legal market in an interview with the host of a French show on cannabis and cannabis laws around the world. 

The Prime Minister’s comments spoke of the rather un-exciting nature of legalization in Canada, a reflection of the lack of any significant societal changes caused by taking the historic step to be the first G7 nation in the world to legalize cannabis. 

This was not surprising, Trudeau tells the interviewer, as Canadians were already consuming cannabis, a drug he says is significantly safer than another legal, regulated product: alcohol. 

“People watched with interest what we were doing. The other ‘downside’ is that there is still work to be done, but there is nothing that would be negative enough to even say that we should not have done it.”

Prime Minister Justin Trudeau

The only major changes, he says, are that there is now less pressure on the justice system since people, especially minorities, are not being targeted for cannabis possession anymore, and that Canadian adults now have a safer, regulated source for cannabis rather than relying on the illicit market. 

One issue Trudeau says he did have concerns about was if legalizing would put Canada at odds with international treaties, something many Conservatives raised as a serious concern in their opposition to legalization as the bill was being debated in 2017 and 2018. 

But those fears were also unfounded, Trudeau says, and instead, the international community has been watching and learning from Canada’s trail-blazing approach. 

“The only downside that worried us a lot was that it was going to put us outside of certain international treaties on the fight against drugs,” said Trudeau (translated). “We said to ourselves: ‘Are people going to punish Canada because we are not aligned with the treaties?’ Nobody talked to us about that. People watched with interest what we were doing. The other ‘downside’ is that there is still work to be done, but there is nothing that would be negative enough to even say that we should not have done it.”

The Conservatives in the House were beating the drum around home growing specifically, with some incredibly outrageous comments and stunts over the last few months of debate, including the reading of a poem, the comparison of home-grow with ‘fentanyl on the shelf,’ the claim that four cannabis plants can produce 4,800 grams of cannabis, the claim that kids will use toasters to heat cannabis leaves, and the constant and ever-present concern of kids being around cannabis plants.

Marylyn Gladu, then the Conservative health critic, said it was ridiculous and irresponsible for the government to put Canada in breach of these international treaties in 2017.

“I think it’s completely unacceptable that the Liberal government, by choosing an arbitrary implementation date, would put us in a position where Canada would breach three treaties that may jeopardize trade deals that are dependent on us complying to them. I think that’s ridiculous. It’s naive to think that we could have any kind of integrity on the world stage by violating the treaties. I think “principled non-compliance” was the term used. This is ridiculous. We are always calling out other countries that don’t abide by the treaties they’ve signed with the UN. We will lose that ability if we don’t address this situation. I think this is completely irresponsible.”

Conservative MP Lenn Webber shared similar sentiments in the same meeting. 

“I think it’s absolutely unacceptable that we are violating UN treaties to pursue the legalization of marijuana in this country,” said Webber. “I don’t know what the Liberal government is going to do, whether they’re going to either withdraw from the treaties or just violate the treaties. I would like to know from that government what they plan on doing.”

In the same meeting, however, Steven Rolls, a senior policy analyst at Transform Drug Policy Foundation in the UK who was called an expert witness on the subject, said the issue was being exaggerated

“I think there’s a little bit of over-dramatization here, that somehow the whole system would cave in if you move into a technical non-compliance for a period, especially if you’re making a clear moral case on UN grounds based on higher UN principles, and you are clearly showing an effort to resolve the tensions that have emerged. I would caution in regard to some of this rather over-dramatizing situation. It needn’t be this terrible cataclysmic situation. You can progress things without the whole system collapsing. I just wouldn’t worry quite as much as some of the committee members seem to be doing.”

Oh no! “Kool-Aid man” style car crash into cannabis store in Ontario

A cannabis store in Ontario is temporarily closed today after a car crashed through the front of their store.

RC Bud Shop in downtown Harrow had a vehicle ram through the front of their store around 11:15 am on April 4.

Store manager Jenn Kane described the crash as “Kool-Aid man style” to the CBC, who were first to report on the story. A photographer on the app still known as Twitter, Tony Smyth, captured images and video of the crash shortly after it occurred. A video shows the vehicle almost completely inside the store, nearly taking out the front counter. 

CBC is also reporting that while there were people inside the store at the time, there were apparently no injuries. Harrow is located in the southwestern tip of Ontario, about 45 minutes from Detroit. 

There were no signs of impairment, no criminal charges are pending, and no injuries were reported, according to OPP. 

A similar event occurred on January 4 when a drunk driver crashed into a cannabis store in Cardinal, ON, about an hour’s drive south of Ottawa. The 67-year-old driver received a three-day licence suspension after a roadside breath test found him to have a quantity of alcohol in his system.

Featured image via X

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Lifeist begins CannMart restructuring after shareholders reject sale

Lifeist Wellness Inc. has commenced restructuring proceedings pursuant to the Bankruptcy and Insolvency Act for one of its wholly owned subsidiaries, CannMart Labs Inc. 

Lifeist announced its plans to divest and sell all of its shares of the CannMart Group in February to a BC company affiliated with Tierra Corp for $5 million. However, that proposed sale was rejected by Lifeist’s shareholders in a meeting in March, with the Board of Directors promising to explore every alternative avenue to adapt and restructure the CannMart Group.

In a press release on April 3, Lifeist emphasizes that the newly-announced restructuring does not impact CannMart Inc., the company’s flagship subsidiary and a leading distributor of licensed and in-house branded adult-use cannabis and cannabis-derived products in Canada.

The move will help Lifeist to better “streamline” their operation.

“Following a thorough financial and strategic review, we believe that it is in the best interest of shareholders for CannMart Labs alone to enter into restructuring proceedings in order to address its obligations and contributions to Lifeist’s balance sheet,” said Meni Morim, CEO of Lifeist. 

“We are fully committed to streamlining the operations of our cannabis divisions to better meet the present moment in the industry and are optimistic that this restructuring of CannMart Labs will allow Lifeist’s cannabis operations to unlock greater shareholder value. We expect that these proceedings will have no impact on the day-to-day operations of CannMart Inc. or any of our other operating divisions.”

Lifeist’s most recent quarterly report for the three and 12 months ended November 30, 2023 (Q4 2023) showed net revenue was $4.7 million in Q4 2023, a decline from $6.2 million in Q4 2022. The company attributes this to “continued supply chain challenges impacting CannMart’s cannabis revenue in Q4 2023, as compared to Q4 2022.”

Lifeist reported a net loss for the year ended November 30, 2023, of $14.1 million, including nearly $6 million in excise and a $15.4 million loss in the same period in 2022.

As of November 30, 2023, Lifeist had a deficit of $206,192,203 (2022-$192,066,533) and a working capital deficit of $290,870 (2022-$7,937,326 surplus).

The company’s goodwill and intangible assets comprise two cash-generating units: Australian Vaporizers and CannMart. CannMart operates as CannMart, CannMart Marketplace, CannMart Labs, 1000501971 Ontario Inc (Zest), and CannMart MD. Australian Vapes is an online vape retailer.

Net revenue from CannMart in 2023 was $13.5 million, which came from sales to its major wholesale customers, but it reported a net loss of $6.3 million.

Heritage Cannabis seeks creditor protection

Heritage Cannabis Holdings Corp. and its subsidiaries have sought and obtained an order for creditor protection from the Ontario Superior Court of Justice pursuant to the Companies’ Creditors Arrangement Act (CCAA).

The company behind a handful of cannabis brands like RAD, Purefarma, Premium 5, Pura Vida, Dank Drops, and others says the decision to commence CCAA proceedings was a difficult one, made after careful consideration of the company’s financial position, while evaluating all available alternatives and engaging in significant consultation with legal and financial advisers. 

The decision was also informed by Heritage’s senior secured lender, BJK Holdings Ltd., with an April 1 demand for payment in full of certain indebtedness owing by the Heritage group to the lender in the amount of $8.4 million.

Heritage announced in October 2023 that it had entered into binding agreements to sell its real estate properties in Ontario and British Columbia (the former Cannacure and Voyage Cannabis locations) to BJK Developments Ltd. for a net purchase price of $9.7 million and lease the Ontario and BC Property back from the Purchaser.

The purchase price was to be used to offset the amount Heritage owed BJK Holdings, reducing the Company’s remaining term debt by approximately 64% to just under $5.3 million. Heritage last updated the terms of its $7 million loan from BJK in October 2021, increasing it to $7.175 million, and extending the maturity date from September 29, 2022, to February 1, 2023. 

Under the newest deal, the remaining term financing, as amended within a third amending agreement, has been extended to January 31, 2025, with interest calculated at the Royal Bank of Canada prime lending rate minus 1.75%. In addition, the Company retains its revolving line of credit of up to $5 million with BJK, which has also been extended until January 31, 2025.

The initial order for creditor protection for Heritage includes, among other things, a stay of proceedings in favour of the company and its Canadian subsidiaries; and the appointment of KPMG Inc. as monitor of the company. The initial order also extends the stay of proceedings to certain US affiliates of the company which are not applicants in the CCAA proceedings.

The board of directors of Heritage will remain in place, and management will remain responsible for the company’s day-to-day operations under the monitor’s general oversight.

Heritage Cannabis also says it plans to seek approval of a sale and investment solicitation process. If approved, this would allow interested parties to participate in the process in accordance with the Sale and Investment Solicitation Process (SISP) procedures. Additional details regarding the SISP will be disclosed in due course.

Heritage says they expect that the Canadian Securities Exchange (CSE) will place the company under delisting review and that there can be no assurance as to the outcome of such review or the continued qualification for listing on the CSE.

In February 2024, Heritage Cannabis released its Q4 2023 and year-end financial results, with $11,409,434 in gross revenue for the three months ending October 31, 2023, and a comprehensive loss of $14,123,548. Its loss for 2023 was $19,906,411, down from a loss of $23,937,773 in 2022.

“Remaining true to our vision of sustainable growth, Heritage continued to optimize our products in 2023 while maintaining a close focus on production efficiencies, operational spending, and high gross margin sales, all of which were key in achieving growth in gross margin of over 50% for the year and 628% for the quarter compared to last year, showing a very promising trend for the start of this year,” said David Schwede, CEO of Heritage at the time of its year-end financials.

Featured image of Heritage Cannabis West Corporation, Heritage’s British Columbia site.

C3 announces new president, a former Canopy exec with extensive public service experience

The Cannabis Council of Canada (C3) has appointed a new president, a former executive at Canopy Growth with extensive experience working within the public sector at the federal level. 

Paul McCarthy was announced as the new president of the national Canadian cannabis industry association on April 2, following the former CEO and President, Goerge Smitherman, stepping down in January

“There is great potential for the cannabis sector to flourish in Canada,” said McCarthy. “It can contribute to the country’s productivity and provide good-paying, sustainable jobs. That, however, can only be achieved through a reformed regulatory regime and the eradication of the illicit market,” said Paul McCarthy, President of C3. “I look forward to working collaboratively with government and other stakeholders to make this industry the success story it can be.”

Rick Savone, Chair of the Cannabis Council of Canada and the Senior VP at Aurora Cannabis, expressed the Board’s enthusiasm about McCarthy’s appointment. 

“We are delighted to welcome Paul McCarthy as the new President of the Cannabis Council of Canada. His wealth of experience and proven track record in policy development and stakeholder engagement make him instrumental in driving C3’s annual strategic plan. We are confident that under his leadership, C3 will continue to be a leading voice in advocating for a thriving and responsible cannabis industry.”

McCarthy has received recognition for public service in managing the British Columbia component of the Infrastructure Stimulus program that saw a total investment of $1.2B to complete 450 projects over a two-year period. In addition, during his time with Veterans Affairs, he led the redesign and enhancement of financial benefits for Canadian Armed Forces veterans, culminating in the Pension for Life, which provided greater financial security for many veteran families.

McCarthy spent the last three years at Canopy, most recently as Head of Corporate Policy, as well as previous roles as head of international implementation and as a strategic advisor to the then President and CEO Bruce Linton. He has held several high-level roles within various federal ministries. 

C3 has served as the main national industry association for Canada’s cannabis industry since it was medical only, but has struggled to maintain membership in recent years as the industry struggles to survive in a highly regulated and taxed environment.

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SNDL agrees to deal for four NOVA-operated Value Buds in BC

SNDL Inc. has agreed to assign its rights to own or operate four Dutch Love stores to Nova Cannabis Inc.

The move will give Nova a footprint in BC’s retail cannabis space. Nova currently owns and/or operates 96 locations across Alberta, Ontario, and Saskatchewan, primarily under its “Value Buds” banner.

SNDL is the largest private-sector liquor and cannabis retailer in Canada, with retail cannabis banners like Value Buds, Spiritleaf, and Firesale Cannabis. SNDL is also a licensed cannabis producer and one of the largest vertically integrated cannabis companies in Canada. SNDL also produces a private label product for Value Buds.

In November 2023, SNDL and Nova Cannabis announced their mutual decision to terminate the two companies’ implementation agreement from December 20, 2022, which would have, in part, seen SNDL vending into Nova’s retail network under the Value Buds, Spiritleaf, and Superette banners located in Ontario and Alberta. The pair of companies had previously attributed several delays in the implementation of that agreement to the continued review by one provincial regulator.

“SNDL remains committed to strengthening Nova’s retail position and the sustainability of its capital structure, as underscored by the extension of the credit facility,” said Zach George, CEO of SNDL, in a press release about the most recent announcement. 

“The assignment of four well-located cannabis retail stores to be owned or operated by Nova creates an opportunity for Nova to open its first Value Buds branded locations in British Columbia and highlights the benefit of SNDL’s M&A pipeline.”

As part of the assignment, Nova will issue to SNDL $8.179 million of Nova shares based on the 20-day VWAP of the Nova shares on March 28, 2024, subject to customary closing conditions.

The deal is expected to close by the end of April 2024. Adding the four Dutch Love Stores should bring Nova’s total store count to 100 and SNDL’s direct and indirect cannabis store count across all retail banners to 190. 

SNDL has also extended the maturity date of the $15 million revolving credit facility with Nova for an additional 24 months, to March 31, 2026, and has amended the revolving credit facility to remove SNDL’s right to demand repayment prior to the maturity date, subject to certain conditions.

“The updates announced further solidify SNDL’s continued support of Nova’s growth trajectory,” said Anne Fitzgerald, lead independent director of Nova. “We will continue to collaboratively pursue avenues that support Nova’s expansion and optionality with our partners at SNDL.”

In late 2022, Nova and SNDL had a tentative agreement that would have seen SNDL hand over control of 26 cannabis stores it owned under the Spiritleaf and Superette banners located in Ontario and Alberta. SNDL would also get exclusive access to Nova’s intellectual property, such as sales data, from its Value Buds retail brand.

The two companies have been repeatedly extending the closing of that partnership due to what they say is a review by one provincial regulator. The most recent extension is to November 30, 2023.

SNDL became Nova’s majority shareholder when it acquired Alcanna in 2022, Nova’s largest shareholder at the time. Similarly, High Tide, another sizeable retail cannabis business in Canada with more than 150 Canna Cabana locations across the country, reported sales from its own “Cabanalytics business data and insights platform” increased to $6.5 million in the third fiscal quarter of 2023 from $5.5 million during the same period in 2022.

Nova reported its first year of net revenue in 2023 as part of their most recent annual report. Revenue from Nova’s “proprietary data licensing arrangements” was $12.4 million for 2023, which was an increase of 125% from $5.5 million in 2022.

In its most recent annual report, SNDL reported an operating income loss of $112 million for its cannabis operations and net earnings of $4.9 million for its retail cannabis operations in 2023.

Countering its overall losses on its cannabis operations side, SNDL attributes its record results in revenue, gross profit, and cash flow within its retail cannabis segment in part to its own data program.

Despite these losses, SNDL says it is well positioned in 2024 given its recent acquisition of The Valens Company Inc., the closing of its facility in Olds, Alberta, and the transition of its remaining cultivation activities to Atholville, New Brunswick, and moving its manufacturing and processing activities in Kelowna, British Columbia.

British Columbia currently has a cap that allows a company to operate no more than eight cannabis stores, although the province has been discussing raising that limit

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Stigma Grow focuses on infused products, pre-rolls

CanadaBis Capital Inc., the Alberta-based company behind cannabis producer Stigma Grow, reported over $2 million in gross profit, $109,901 in net revenue and comprehensive income, and a half million in adjusted EBITDA as part of their most recent quarterly update. 

The report covers the three months ending January 31, 2024 (the second quarter of 2024) and shows nearly $2.7 million in federal excise on over $7 million in gross revenue. 

This was an 88% decrease in net income and comprehensive income compared to the same reporting period in 2023 and a 20% decrease in gross revenue. The company attributes this to increased competition and price compression, as well as increased efforts to expand its Dab Bods brand. Most of CanadaBis’ $900,000 in wages in this most recent quarter were related to its marketing and brand-building efforts.

Some of these costs were also balanced by renegotiating with suppliers for lower costs on input materials and purchasing bulk materials in higher volumes at a lower cost. 

The company operates in cultivation and processing, as well as having a retail store in Alberta. Net revenue for its cultivation and wholesale business was $690,000 in Q4 2024, an increase from just $30,000 in Q2 2023. Gross profits for Q4 2022 were $81,378.

CanadaBis’ retail operation, the INDICAtive Collection, is currently listed as temporarily closed. The company reports $17,534 in net revenue, with the cost of sales at $55,989 for a gross loss of $38,455. Management is currently seeking a buyer for the store.

On the extraction side of the business, the company reported more than $5.8 million in Q2 2024, $3.6 million in net revenue, and more than $2 million in gross profits. This decreased from $6.1 million in net revenue and nearly $3.2 million in gross profit from the same period in 2023. This decline was largely attributed to a 40% decrease in sales of its extract products in Alberta, Ontario, Saskatchewan, and British Columbia

“Building on momentum realized in Q1 2024, I am proud to report that our second fiscal quarter represents another period of positive net revenue, earnings and adjusted EBITDA, reflecting our resilience despite a significant increase in competition and meaningful price compression as cultivators and processors reposition themselves in the market,” said Travis McIntyre, CEO of CanadaBis. 

“Both in fiscal Q2 and Q3 2024, we are directing investment to enhance our product offering, while also launching a comprehensive nationwide retail-focused marketing campaign that leverages existing brand awareness. Our goal is to increase the profile of established brands while supporting the introduction of at least 17 exciting new SKUs that we anticipate will increase sales in subsequent quarters. With our unique capabilities and consumer-centric value proposition, the Company has earned brand loyalty that positions us well to drive continued shareholder value creation in an industry rife with competition and continued regulatory challenges.”

Cannabis Jobs Update – April 2024

Looking to work in Canada’s cannabis industry? There is a wide variety of jobs available, ranging from entry-level positions to highly skilled roles.

In our April round-up, we’ve provided a snapshot of some current cannabis job openings. From Cultivation to Labs, from Budtending to Brand Reps, there’s an array of jobs available at any given time.

The Ontario Cannabis Store is seeking a Consumer Market and Insights Manager to lead priority projects.

Quebec cannabis producer Greentone is looking for a Commis assurance qualité/QAP and Culture Kizos is hiring a Packaging Partner/Partenaire d’emballage in Trois-Rivières.

BC’s Pure Sunfarms is looking for a VP of International Business Development to help grow the company’s footprint, reporting to the Senior Vice President of Strategy & Medical Exports at Village Farms International.

Canada House Clinics is looking to hire a Licensed Practical Nurse to act as a Cannabinoid Therapy Educator in Greenwood, Nova Scotia. 

Muse Cannabis in South Vancouver is seeking a General Manager for a full-time position. 

Aurora Cannabis continues to post for numerous positions at its various operations across Canada, including the recently-posted Master Data Management Specialist, a remote position, as well as a Technician, Cultivation Co-Op at their site in Comox, BC.

SNDL is looking for a Category Manager in Edmonton.

Clavet, Saskatchewan’s Under the Sun Groweries Inc. is looking for a new Master Grower to oversee their cannabis production facility. 

Ontario’s Motif Labs, the company behind cannabis brands like BOXHOT, DEBUNK, Boondocks, and Rizzlers, is seeking a Hydrocarbon Supervisor.

Plantlife Cannabis is looking for a Sales Associate for its Erin Ridge location, and Canna Cabana is looking for a Retail Shift Leader for its Kennedale location, both in Alberta. 

Tilray is seeking a Cultivation Technician for their Redecan facility in St Catharines, Ontario. The role entails the application of pesticides, and the ideal candidate will possess a pesticide licence. 

Eurofins Experchem Laboratories, Inc. is looking to hire an Analyst I to provide technical support and analysis within the company’s Cannabis Chemistry Testing Laboratory. 

BZAM is looking for a Production Supervisor for its Pitt Meadows, BC facility.

And, last but certainly not least, Vancouver’s famous Cannabis Culture Headquarters is looking for a retail store salesperson.

Week in Weed – March 30, 2024

This week, StratCann’s Tim Wilson took an in-depth look at the similarities and differences between how cannabis and alcohol are regulated and taxed in Canada.

Ontario plans to add $31 million to its budget to deal with an increasing number of illegal cannabis stores. At the same time, Toronto also wants more money from the province for the same reason.

New Brunswick introduced legislative changes to address illicit cannabis sales in that province.

Sales up and losses down for Auxly in 2023, and BC-based cannabis producer Rubicon Organics Inc. reported an increase in net revenue and a decrease in net profit in its recent year-end results for 2023.

Cannabis retailer Nova Cannabis Inc. reported its first year of net revenue in 2023 as part of its recently released annual report. The company saw some of its most significant increases in revenue from the growth of its “data licensing program.”

Peers Cannabis’ had to recall their Giggly Bits Sativa from Ontario and Saskatchewan due to a minor labelling error.

A Manitoba woman who pleaded guilty to distributing illicit cannabis edibles on Halloween with her husband in 2022 received a $5,000 fine from provincial court

We also looked at the ongoing failure of media and public health officials to distinguish between legal and illegal cannabis products, especially edibles, when reporting on issues of hospitalization or access to young people. 

In other cannabis news this week…

Trina Fraser, Partner at Brazeau Seller Law, spoke with CBC radio about the Expert Panel’s new report.  

Lawyers for Aurora Cannabis and a group of shareholders have agreed to settle a class-action lawsuit where the company allegedly booked a “sham” transaction to boost its sales figures. Both sides reached a settlement via mediation on March 4.

High Tide closed on their previously announced acquisition of accessories brand Queen of Bud. High Tide also announced its fourth store in Mississauga, the company’s 167th Canna Cabana branded cannabis retail location in Canada, the 58th in the province of Ontario, and the fourth in Mississauga.

The Canadian Press spoke with two young people who were diagnosed with cannabis-induced psychosis who are supporting the expert panel’s recommendation that Health Canada establish a standard dose for cannabis, saying it would help nudge people toward safer consumption.

Organigram Holdings Inc. announced a US $2 million minority investment in Steady State LLC (dba Open Book Extracts or OBX in the form of a convertible note. Based in North Carolina, OBX specializes in cannabinoid ingredient production and serves as a one-stop formulation and finished goods manufacturer. 

The Canadian Hemp Trade Alliance (CHTA) says the Expert Panel that conducted the Cannabis Act review “missed the opportunity to recommend meaningful amendments to the Cannabis Act and Industrial Hemp Regulations.”

A new study published in Nature suggests that weight loss drug Ozempic might help people struggling with Cannabis Use Disorder (CUD).  

A fraud charge against the former chairman and chief executive officer of cannabis stock market company Instadose Pharma Corp. has been stayed in Ontario court over excessive delays.

RCMP in Midway, BC, say they disrupted a lab in Beaverdell used for manufacturing cannabis shatter.

Niagara Regional Police are looking for a lone male suspect who entered the Cannabis Cupboard at 4506 Ontario Street, Beamsville, with a revolver style black handgun and demanded money from an employee. The man fled on foot with the money. 

Media in Nottingham, England, reported that a local grandfather was found with cannabis and evidence that allegedly showed an agreement to buy 1kg of cannabis from Canada for $4,000 Canadian dollars (no excise included). 

Rubicon Organics shows increased growth in 2023 annual report

BC-based cannabis producer Rubicon Organics Inc. reported an increase in net revenue and a decrease in net profit in its recent year-end results for 2023.

The cannabis cultivator reported $40.1 million net revenue in 2023, a 13% increase from 2022, and gross profit after fair value adjustments of $13.1 million, about a 5% decrease from 2022.

The fourth quarter of 2023 saw $5 million in operating cash flow, the sixth consecutive quarter of operating cash flow positive.

The company also reported a $1 million loss in operations, down from a nearly $2.6 million loss in 2022 and $13.2 million loss in operations in 2021.

After adding IFRS fair value accounting related to cannabis plants and inventory, depreciation and amortization, and share-based compensation expense, the company’s adjusted EBITDA for 2023 was $4.3 million 

“I am pleased to announce that Rubicon has attained its seventh consecutive quarter of positive Adjusted EBITDA and sixth consecutive quarter of positive operating cashflow,” said Janis Risbin, CFO, in a press release. “Despite the challenges faced in the latter half of 2023 due to competitive pricing pressures in the Canadian cannabis sector and broader negative macroeconomic factors affecting Canadian consumers, we are optimistic about the prospects in 2024. With Rubicon’s prominent position as a leading force in the premium cannabis market, I am enthusiastic about the opportunities that lie ahead.”

The company, which sells certified organic products in several provincial markets, launched several new products in 2023, including its first entry into the edibles category, through a co-manufacturing relationship with 1964 Supply Co. live rosin edibles in Ontario, BC, and Alberta. These edibles were Canada’s first single-strain live rosin edibles and are vegan and gluten-free. 

One of Rubicon’s brands, Wildflower, also launched its first edibles in October 2023, which contain the minor cannabinoids CBN, CBG and CBD, as well as full spectrum THC live rosin. It also released topical products like Wildflower Extra Strength Relief Stick and Wildflower 1:1 CBD:THC Relief Stick.

The company also plans to enter the vape market by taking advantage of additional biomass from its contract-grow strategy launched in 2023, which saw its genetics being grown outside its own facility. 

Rubicon reported a 2.1% national market share of flower and pre-rolls, a 21.8% national market share of topical products, and a 15.2% national market share of premium concentrates, based on data from Hifyre.

More information from Rubicon’s March report here.

Nova Cannabis reports first year of net earnings, driven by data licensing program

Cannabis retailer Nova Cannabis Inc. reported its first year of net revenue in 2023, as part of its recently-released annual report. 

The company saw some of its largest increases in revenue from the growth of its “data licensing program.”

The Alberta-based retail chain owns and/or operates 96 locations across Alberta, Ontario, and Saskatchewan, primarily under its “Value Buds” and “Firesale Cannabis” banners.

Nova’s net earnings in 2023 were $3 million, compared to a $11.2 million net loss in the previous year. The company reported an adjusted EBITDA of $21.8 million in 2023, compared to $9.2 million in 2022.

The company also reported record revenue of $259.3 million, an increase of $32.9 million or 15%, from $226.4 million in 2022 and record gross profit of $61.6 million, or 24% of sales, a 40% increase from $43.9 million, or 19% of sales, in 2022.

Revenue from Nova’s “proprietary data licensing arrangements” was $12.4 million for 2023, which was an increase of 125% from $5.5 million in 2022.

Cash from operating activities increased significantly in 2023 to $11.7 million, an $11.6 million increase from $100,000 in 2022.

“Nova has achieved significant milestones this year, marked by sequential gross profit growth and positive net earnings for three consecutive quarters,” said Marcie Kiziak, CEO of Nova. “Our success in the current market is a direct result of our sharp focus on inventory management and the strategic enhancement of our proprietary data agreements, which has contributed to our positive cash flow position this past year. 

“Amidst a competitive and fluctuating market, our expansion will continue to be measured, focusing on tactical opportunities in the key markets of British Columbia and Ontario in 2024. Our achievements through 2023 further highlight the success of the Value Buds banner, which has proven adaptable and well-positioned to endure success in Canada’s dynamic cannabis retail sector.”

The company’s annual report also says it is focused on opening new locations in the prairie provinces, as well as BC and Ontario. Ontario recently increased the number of stores one company can operate from 75 to 150, while BC is considering raising its cap of 8 stores per company

BC currently lists three open Value Buds locations, while Ontario lists 34 as authorized to open. “Firesale Cannabis” was launched in 2023 and currently has one location in Alberta. There are 61 Value Buds locations in Alberta.

Toronto wants more money from the province to deal with a growing number of illegal cannabis stores

The head of Toronto’s licensing and standards department says the city needs more money to enforce the law against a growing number of illegal cannabis stores operating there. 

In an interview with City News, Carleton Grant, Executive Director, Municipal Licensing and Standards at City of Toronto, says that while many illicit cannabis shops shut down voluntarily in the first few years of legalization, new illegal stores have been popping up again. 

Grant says there are currently 53 illegal, unlicensed cannabis stores now operating in Toronto and 215 legal ones (The AGCO currently lists 204 stores as being authorized to open in Toronto). 

The comments come following a request by Toronto City Council, asking the Province of Ontario  to undertake a comprehensive review of the provincial Cannabis Control Act, 2017. The motion says a review is “Imperative to ensure the effective regulations and enforcement of cannabis-related matters” in Ontario.

Municipalities need more tools and resources to address these illegal cannabis businesses, continues the motion, including “exploring options to strengthen enforcement measures, increase penalties for non-compliance, and improve collaboration between municipalities and provincial authorities

Because of the criminal nature of activities in these stores, which can include weapons and large quantities of cash, Grant says he is uncomfortable sending in his bylaw officers to address the lack of municipal licenses held by these businesses. 

“What we’d like to see is the temporary funds that the province provided to the city in the first two years of the program are reinstated.”

Carleton Grant, Executive Director, Municipal Licensing and Standards at City of Toronto

“The concern is this is illegal activity, this is criminal activity. When our officers are going into these stores, there’s a presence of guns, large amounts of cash. There are things happening that officers really shouldn’t be involved in. 

“We do go with the police. Police are best suited to deal with this type of illegal and criminal activity, and I think that’s where this is likely to go.”

However, Grant also says that law enforcement has a limited budget and other priorities and needs additional funding from the province to enforce the law. 

“What we’d like to see is the temporary funds that the province provided to the city in the first two years of the program are reinstated,” continued Grant.

“If the city were to receive its appropriate allocation of funding from this particular program, it would assist in enforcement, it would assist in cracking down on illegal storefronts.”

Grant says he’s calling on a review of the provincial Cannabis Act, with an eye on the province providing additional funds to cities like Toronto to address the growing number of illegal cannabis stores. 

In 2018, Ontario set aside $40 million over two years to help cities manage the implementation and oversight of cannabis legalization. The first $30 million was distributed in 2019, with $10 million set aside for unforeseen costs. Ontario also invested $3.26 million to support municipalities through enhanced enforcement against illegal cannabis operations.

This plan, called the Ontario Cannabis Legislation Implementation Fund (O.C.L.I.F.), was to be used for increased enforcement (e.g. police, public health and by-law enforcement, court administration, litigation), increased response to public inquiries (e.g. 311 calls, correspondence), increased paramedic services, increased fire services, and by-law/policy development (e.g. police, public health, workplace safety policy).

Ontario has distributed four payments from this fund, with cities receiving at least $5,000 each payment. Toronto received just over $3 million for its first payment, $3.7 million for its second, and $1.5 million for its third, and just last month received the fourth and final payment of $747,954 for a total of just under $9 million.

The cost of policing and enforcement has been a major part of municipal budgets all across Canada, with a significant portion of cannabis tax revenue and other related funding going to police, enforcement, fire and emergency services as it relates to cannabis legalization. This is in addition to costs associated with developing and maintaining municipal zoning rules and bylaws.

Toronto police asked for an additional $1.5 million from the city in 2021 to address the cost of cannabis-related enforcement in the department.

Toronto Police Services’ (TPS) 2022 operating budget noted that the department had a balance of $3 million in reserve, with an expected $500 million in funds withdrawn that year. It was projected to have just over $1 million in reserve for these funds in 2023 and just over $500,000 in the beginning of 2024.

Those numbers were updated in the 2023 budget to an expected $136,000 after withdrawing nearly $2 million. 

When negotiating for a 75% share of all federal cannabis excise taxes collected, provinces argued that the costs of addressing the new cannabis laws in Canada would largely be borne by themselves, cities, and law enforcement. 

According to the Federation of Canadian Municipalities (FCM), municipal administration and local policing costs linked to the legalization of cannabis will total $3-4.75 million per 500,000 residents.  

As some examples of that spending and activity, public news reports show that Toronto police spent more than $350,000 placing bricks in front of several illegal dispensaries’ locations that refused to close, even following raids and product seizures in the summer of 2019, or about one-third of what they say was their cost for the first year of legalization. 

Neither TPS nor the city of Toronto were immediately available for comment. 

Previous requests for information on this subject from Toronto Police Services resulted in StratCann being told that media would need to file a freedom of information request to get information on how the department has spent the allocated cannabis funds.  

Alberta worker wins appeal to have medical cannabis covered by Worker’s Compensation Board

An Albertan recently won an appeal to have their medical cannabis covered by Workers’ Compensation.

On March 19 of this year, the Appeals Commission for Alberta Workers’ Compensation reversed the 2023 Workers’ Compensation Board (WCB) Dispute Resolution and Decision Review Body (DRDRB) decision.

That decision from 2023 ruled that the worker was not entitled to coverage for medical cannabis based on a workplace accident in January 2011 in which the worker injured their ankle after falling on a patch of ice. 

Throughout the claim, the WCB had accepted the worker’s claim for a left ankle fracture and Chronic Regional Pain Syndrome (CRPS), but in March 2015, a case manager denied the authorization of cannabis for medical purposes as it was considered a non-standard medical aid in use for treatment of chronic pain. 

Then, upon further review, the WCB determined in March 2017 that the worker’s use of medical cannabis was, in fact, related to the injuries accepted under this claim. 

“The worker told the panel that the medical cannabis does not take the pain away, but it allows him to function, to relax, and he is able to carry on a conversation with people.”

More than five years later, in September 2022, the WCB informed the worker that any extension of the provision for medical cannabis after September 1, 2022, would be reviewed based on new policy criteria for authorization of medical cannabis.

For ongoing coverage, WCB requires a clinical reassessment to be conducted by the authorizing physician and confirmation of functional improvement every three months. WCB’s policy states that it will continue coverage if there is sufficient evidence that the cannabis is effective, measurable treatment goals are reached and maintained, and there are no adverse effects that outweigh the benefits of the cannabis.

Then, on February 16, 2023, following further reviews by WCB medical consultants, a WCB case manager ruled that the worker did have a designated condition named under the new policy criteria, but that the worker had exceeded the standard for maximum allowable THC content and maximum daily use of three grams a day, with a maximum allowable THC content of 90 milligrams per gram or 9% THC.

Because of this determination, WCB ruled that the worker did not meet all the criteria that would allow the agency to authorize medical cannabis. That ruling was immediately appealed by the worker and upheld just a few days later before it was sent to the Dispute Resolution and Decision Review Body.

In their decision, the review body noted that the worker’s long-time physician had supported his use of cannabis to deal with his chronic pain from this accident, noting that the worker uses different amounts depending on his level of pain. The physician argued that his patient represented an exception to the WCB’s rules of no more than 3 grams a day at no more than 9% THC.

The physician also indicated the worker had not used cannabis prior to his injury and had only tried it after conventional treatment for his pain did not work. He described himself as feeling like a “zombie” before trying medical cannabis, according to the review board’s ruling. 

“The worker told the panel that the medical cannabis does not take the pain away, but it allows him to function, to relax, and he is able to carry on a conversation with people,” states the final ruling. “It has allowed him to have a normal relationship with his wife, family, and friends. He is aware enough of what dose and route he requires to prepare himself for outings and interactions and events such as the hearing.”

The man says he has been using four grams per day for approximately five years without limits on THC or CBD, following the guidance of his doctor. He generally smokes but occasionally vapes dried flower, because edible products are often too expensive. He also uses edibles in the form of gummies, as well as topical gels and patches. Although he uses THC products, the majority of the products he consumes are primarily CBD-rich. 

Following the WCB ruling that said he was consuming more cannabis than necessary, the man also worked with his physician to lower his daily intake of cannabis, which resulted in an inability to eat or sleep due to the pain. 

Following these results, it was his physician who then advised him to go back to his usual dosages and modes of consumption.

In its final ruling, the review panel found that the majority of the evidence supports the worker’s use of medical cannabis under the WCB’s criteria in WCB Policy 04-06, Part II, Application 6, Question 8.

Ontario to add $31 million to budget to deal with increasing number of illegal cannabis stores

Ontario is planning to add $31 million to its budget to address illegal cannabis stores and websites operating in the province. 

As part of Ontario’s Budget 2024, it says it plans to provide the funds over three years to the Provincial Joint Forces Cannabis Enforcement Team (PJFCET).

The PJFCET is led by the Ontario Provincial Police’s centralized enforcement unit, which targets illegal cannabis storefronts. This investment, says the province, would enable the PJFCET to “respond to the challenge of illegal online operators and crack down further on the production, sale and distribution of illegal cannabis in the online and offline space.”

Toronto City Council recently passed a motion asking the province to undertake a comprehensive review of the Provincial Cannabis Control Act, 2017. The motion says a review is “imperative to ensure the effective regulations and enforcement of cannabis-related matters” in Ontario.

Municipalities need more tools and resources to address these illegal cannabis businesses, the motion continues, including “exploring options to strengthen enforcement measures, increase penalties for non-compliance, and improve collaboration between municipalities and provincial authorities.

“I think $31 million could be spent in a better way than prohibition enforcement.”

Jennawae Cavion, Calyx + Trichomes

In a recent interview with City News, Carleton Grant, Executive Director, Municipal Licensing and Standards at the City of Toronto, says that while many illicit cannabis shops shuttered voluntarily in the first few years of legalization, new illegal stores have been popping up. 

Grant says there are currently 53 illegal, unlicensed cannabis stores now operating in Toronto and 215 legal ones (The AGCO currently lists 204 stores as being authorized to open in Toronto). 

Enforcement in Ontario has been ongoing. Just this past February, the PJFCET executed nine search warrants at different locations associated with illicit cannabis stores.

Raj Grover, the founder and CEO of High Tide Inc., which operates 58 legal cannabis stores in Ontario, says he is happy to see the province looking to address these types of businesses, especially online stores. 

“I welcome the Ford Government’s decision to take aggressive action against illegal online cannabis dispensaries, who blatantly target kids and sell unsafe products,” says Grover. “Today’s move makes it clear that Ontario is committed to safety and supporting its legal cannabis industry. We look forward to continuing to work with Attorney General Downey and Minister Bethlenfalvy on further legislative and regulatory reform to help bolster Ontario’s regulated cannabis sector as it continues to convert consumers away from a resilient illicit market.” 

Jennawae Cavion, however, founder of Calyx + Trichomes in Kingston and the Executive Director of Norml Canada, says she thinks the money could be better spent on assisting the legal industry instead of on shutting down illegal stores, especially given how easily these stores and websites can open up again. 

“I think that they need to invest in ways to make the cannabis industry more sustainable and more inclusive so that there’s no reason for unregulated suppliers to want to exist,” Cavion tells StratCann. “I think $31 million could be spent in a better way than prohibition enforcement.”

Given the challenges legal store owners face in trying to follow all the rules to stay compliant, she says she understands why many operating in the illicit space are not interested in closing down or transitioning. 

“There’s a lot of hurdles that we still need to jump over, as legal retailers. That $31 million would go a long way to helping instead of going after people who can just open up again the next day.”

The push for more resources to address illicit sales, especially online stores, echoes a similar call for action from the federal government’s expert panel that looked at the federal cannabis legislation. 

The report said, in part, that the federal government should consider creating authorities to force internet service providers to block illicit cannabis websites and to compel financial service operators to provide financial information that helps identify illicit online operators. It also called on law enforcement to “focus its efforts on the activities of organized crime and criminal networks, the diversion of cannabis from sites registered for personal and designated production, the proliferation of retail stores on First Nations reserves operating without provincial, territorial, or community authorization, and illicit online sellers,” and noted that regulatory authorities have a role to play in combating the illicit market, not just law enforcement. 

The provincial budget also shows that Ontario brought in $310 million from its share of provincial excise on cannabis sales, with $344 million expected in 2023-24 and $379 million in 2024-2025. The Ontario Cannabis Store brought in another $234 million in 2022-2023, with $242 expected and $225 million.

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New Brunswick introducing legislative changes to reduce illicit cannabis sales

New Brunswick is changing its provincial rules to more aggressively target illegal cannabis stores.

The provincial government has introduced amendments to its Cannabis Control Act with the goal of increasing compliance with provincial rules, reducing the sale of illegal cannabis, and preventing young people from consuming the drug.

Once passed, the proposed amendments to the act and its regulation would give inspectors more authority and increase fines for those operating illegal dispensaries and their landlords. They have been introduced as Bill 29, An Act Respecting Cannabis Control Act.

“Greater compliance is required to ensure the product is regulated and to keep it out of the hands of youth.”

Health Minister Bruce Fitch

The bill makes some proposed changes to the Act, such as adding new definitions and including language addressing landlords that knowingly allow the illegal sales of cannabis to operate on their property and giving enforcement officers the ability to enter and inspect any place, premises, or vehicle to which the Act applies, or any other place or premises connected to such business.

It also allows inspectors to purchase and inspect any products they come across as part of their investigations and gives greater authority to seize property and conduct inspections.

Inspectors would be given the power to seize items they believe are evidence of an offence under the act and allow those items to be forfeited to the Crown for disposal following a conviction.

“It is an offence to operate an illegal cannabis dispensary, and amendments are needed to strengthen the province’s ability to enforce penalties and investigate,” said Health Minister Bruce Fitch. “Greater compliance is required to ensure the product is regulated and to keep it out of the hands of youth.”

Fitch said the proposed amendments align with legislation in other Canadian jurisdictions.

This fiscal year, peace officers in New Brunswick say they have investigated and shut down 23 illegal cannabis dispensaries across the province.

Law enforcement in New Brunswick has raided several unlicensed cannabis stores in recent months, with two arrested in two raids in March, and two more arrested and product seized from an unlicensed dispensary in Saint John in January

A court recently issued a $20,000 fine following a raid in 2022, while charges against two men connected to the company have been withdrawn.

There are 25 Cannabis NB stores in the province, plus a handful of licensed, privately-run cannabis stores.

Ontario also recently announced funding to address enforcement against illicit cannabis stores better. 

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Sales up, losses down for Auxly in 2023

Auxly Cannabis Group Inc. had record net revenues of $101.1 million in 2023 and a net loss of $44.5 million for the year ended December 31, 2023.

The cannabis producer’s newest annual report also shows a net income of $3.9 million compared to a net loss of $66 million in the previous year.

Cost of sales for the company also declined in 2023 compared to the year prior, and fourth-quarter net revenues were $26.9 million, a $2.2 million increase from the same quarter in the previous year.

The company incurred over $50 million in federal excise in 2023, up from $44 million in 2022.

Hugo Alves, CEO, says that 2023 was a pivotal year for Auxly. 

“Thanks to a tremendous team effort, we achieved our profitability targets despite overall industry and macro-economic headwinds. For the first time in our corporate history, we achieved full year adjusted EBITDA profitability; broke one hundred million dollars in net revenue; and generated positive cash flow from operations. We focused and optimized our business, resulting in meaningful cost savings and industry-leading margins, all done while delivering quality products and meeting the ongoing demands of our consumers.”

Net revenues for the year ended December 31, 2023, were $101.1 million compared to $94.5 million during the same period in 2022, an increase of 7%. 

Revenues for 2023 were primarily from sales of dried flower and pre-rolls (61%, up from 42% in 2022), with the rest coming from sales of oils and Cannabis 2.0 products like vapes. Net revenues also included wholesale bulk flower sales of approximately $15.7 million in 2023.

On December 31, 2023, the Company had total cash and cash equivalents of $15,608,000 negative working capital of $40,984,000 and cash flow provided by operating activities of $8,214,000 for the year ended December 31, 2023. 

The company’s financial report also says that it will have “insufficient cash to fund its operations for the next 12 months if the Company’s sales do not improve or if they decline; if the Company’s margins do not improve, or if they decline and/or if the Company’s selling, general and administrative expenses increase.”

Government’s expert panel calls for pharmacy access to medical cannabis

As a way to improve access to cannabis for medical purposes, the federal government’s expert review panel is suggesting allowing sales through pharmacies. 

The recommendation, part of a recent report based on a review of the federal cannabis legislation, was one of about a half dozen relating to Canada’s medical cannabis regime, which also included calls for more research and education campaigns. 

Currently, those who are authorized to access cannabis for medical purposes in Canada can only purchase it online through specific medical providers. While there have been a few pharmacies, including Shoppers Drug Mart, that received federal licences allowing them to store cannabis on-site by acting as one of these licensed producers, the examples were few and far between. Shoppers exited the medical cannabis market in 2023.

“We have a massive doctor shortage. When patients have questions, who do they turn to? Us, pharmacists. This is no different with cannabis.”

Rahim Dhalla, Hybrid Pharm

The expert panel’s report recommends keeping the existing model of online sales but proposes expanding that model to also obtain cannabis in-person at pharmacies. 

From that report, in part:

“Pharmacies are equipped to manage many types of products. We believe pharmacy systems and infrastructure can be adapted to handle cannabis, given they already manage controlled substances, such as narcotics. Enabling this form of access would address patient concerns about the delays with mail delivery and product shortages they encounter today. It would also provide patients with an opportunity to consult with pharmacists and be counselled on effects on mental health (such as psychosis) and issues of medication management (for example, getting advice about contraindications and interactions with other substances).” Rahim Dhalla, a pharmacist, medical cannabis consultant, and CEO at Hybrid Pharm, a pharmacy and cannabis and wellness centre near downtown Ottawa, thinks the proposals are a good step in the right direction. 

Hybrid Pharm currently has a medical cannabis licence with possession licence that allows them to sell cannabis directly to registered patients. Allowing pharmacies to bypass such federal licensing and dispense cannabis as they would any other controlled product would significantly improve access, he says. (Note: This article has been corrected to indicate that Hyrbid Pharm has a medical sales license with possession, not a processing licence).

“As I have been doing this for five-plus years now, I have learned many things. We have a massive doctor shortage. When patients have questions, who do they turn to? Us, pharmacists. This is no different with cannabis. 

“I get phone calls daily about dosing, adjustments, side effects, etc. We have patients that prefer coming to see a person vs online ordering. Some patients do not even know how to order online. Improving access to patients through pharmacy distribution will have a net positive on the industry as well as acceptance by the healthcare communities.”

The issue of pharmacy access for medical cannabis has been a contentious one for many years. The Neighbourhood Pharmacy Association of Canada has in the past said that pharmacies are the best place to offer cannabis due to their experience with controlled substances, as has the Canadian Pharmacy Association

However, other pharmacy organizations in the past have previously opposed such a distribution model, including the Ontario College of Pharmacists. After initially opposing pharmacy distribution of medical cannabis when it was first included in rules back in 2013, the Canadian Pharmacy Association (CPhA) announced in 2016 that they believe pharmacies are the safest way to dispense medical cannabis in Canada. 

Deepak Anand, a board member of Medical Cannabis Canada, a medical cannabis advocacy group, and Principal, ASDA Consultancy Services, agrees that the call for pharmacies to carry medical cannabis is a positive one. 

“The panel’s recommendation to establish an in-person pharmacy access channel is a significant improvement to the medical access regime. It would benefit patients by addressing concerns about delays with mail delivery and product shortages, and allow them to consult with pharmacists regarding drug interactions or side effects. 

“Additionally, it is encouraging to see the panel suggest that Health Canada prioritize efforts to integrate cannabis into standard drug approval pathways and conventional medical care, rather than a separate medical access program. This would provide critical and increased avenues for patients to access medical cannabis, reduce stigma, and improve overall patient care.”

Anand says the expert panels’ recommendation that Finance Canada should review whether the excise tax should be applied to cannabis for medical purposes products is also something that Medical Cannabis Canada has long been advocating for.

Any such changes to federal regulations to allow more direct pharmacy distribution models would not happen overnight, and would still require consultation with various federal and provincial pharmacy associations and provincial agencies.

Media continues to misreport issues relating to illicit cannabis edibles

Following an incident in Halifax where several students under the age of twelve were taken to hospital after eating cannabis edibles, a new media report confirms the edibles were not legal. 

While the initial media reports did not note if the products were legal or illegal, the article referred to them as “labelled.”

A follow-up article from the Canadian Press shows a picture of what is clearly an edible from the illicit market, but the article itself predictably fails to clearly note the distinction between legal and illegal edibles and how they are packaged and sold, or the THC content of those products. 

This is an ongoing issue, with researchers, academics, and the media still seemingly unaware of how widespread these illicit, unregulated edibles are, packaged to mimic traditional candy and snack foods like Nerds, Doritos, Oreos, Skittles and many more. 

In this most recent incident in Halifax, at least five kids consumed the product after one child brought them to school. Four of those kids went to the hospital for their symptoms. 

One mother, a healthcare worker, said in an interview that her son threw up multiple times and had to be rushed to the emergency department. Another mother, who spoke to the Canadian Press on the condition of anonymity, said her child was taken to intensive care for treatment before stabilizing.

Despite the image shown in the article showing a package of “Nerd Bites” advertising at least 1,000mg THC, with each “bite” containing 200mg THC, the article itself does very little to clearly communicate that these are not products from Canada’s legal cannabis industry.  

A modicum of research would clearly show the author of the article that legal cannabis edible products cannot be packaged in such a way, do not resemble regular candies like Nerds, and can only come with 10mg THC per package, not 1,000.

Only halfway down the article does the author cite a comment from the NSLC that notes this discrepancy. But even then, the article doesn’t make the distinction clear or even attempt to do so. 

“A spokeswoman for the Nova Scotia Liquor Corp., the only licensed distributor of cannabis products in the province, says it only buys from licensed producers who are regulated by Health Canada and the federal Cannabis Act. The law generally prohibits the promotion of cannabis, and packaging is to adhere to strict requirements including labelling, child-resistant containers, and plain packaging that must not appeal to youth,” reports the Canadian press, attributing the comment to a media representative for NSLC.

This type of lazy conflation of the significant difference between legal and illegal edible products is not new. Researchers and media in the past few years have breathlessly reported on hospitalizations of young people after they consumed cannabis edibles, often without an acknowledgement of how prevalent these types of highly appealing and very high THC products are in Canada, or the fact they only became common in Canada around the same time legal edible products began hitting shelves.

Such distinctions are obvious for those who actually understand the law in Canada. Legal cannabis edibles cannot mimic trademarked snack product brands, cannot contain more than 10mg THC per package, and are sold only through authorized sources. 

As long as the media, academics, and other researchers continue to misunderstand such an obvious distinction, people will continue to be encouraged to blame the legal market for what is evidently an issue with the illegal, unregulated market. 

This also continues to impact the legal market, as concerns with issues like young people presenting at hospitals after consuming edibles are used to maintain the current 10mg THC limit for legal edibles, while ignoring that these hospitalizations are more than likely due to much higher potency products that are far more appealing and accessible to young people.

Week in Weed – March 23, 2024

The big news this week was, of course, that the long-awaited final report from the federal government’s expert panel reviewing the Cannabis Act finally came out a little after 4:20 pm ET on Thursday. StratCann delivered an overview of the report and some insight into some of the recommended changes for micro and other small-scale producers.

Also, the newest results from the annual National Cannabis Survey came out last week, breaking down cannabis use by age and gender, as well as access points and modes of consumption. 

Late Friday afternoon, Organigram announced that it had received a final ruling from Health Canada, once again determining that Jolts are an edible, not an “ingestible extract.”

New figures from Stats Canada showed retail cannabis sales declined again in January after a holiday spike.

SNDL reported a $112 million loss from cannabis operations and $4.9 million in retail cannabis earnings.

Toronto police arrest a man connected to cannabis store robberies, and the Ontario Chamber of Commerce calls on the province to modernize the cannabis sector.

In other cannabis news, 

CBC ran a story examining ways the cannabis industry is urging provinces to loosen rules that ban producers and retailers from collaborating on promotions. The author spoke with Shakir Tayabali of the Independent Retail Cannabis Collective (IRCC), Brad Poulos, a lecturer in the Ted Rogers School of Management at Toronto Metropolitan University, Omar Khan of High Tide Inc., and Keenan Pascal of Token Naturals.

Caledon, Ontario, held an open house in February to garner community feedback on whether the community should allow cannabis stores, and a staff report with recommendations for council is expected on April 5. Local media spoke with Wendel Clarke, on behalf of Smokey Daze Inc., a cannabis store in Tottenham, who approached the town council last fall asking for Caledon to “opt-in.”

Aurora Cannabis Inc. received a Good Manufacturing Practice (GMP) certification from Australia’s Therapeutic Goods Administration (TGA) for its production facilities, River and Ridge, both located in Ontario.

Curaleaf Holdings Inc. signed a deal to acquire Northern Green Canada, a Canadian licensed cannabis producer focused primarily on the international market through its EU-GMP certification. NGC also partners with Canadian GACP cultivators to produce and distribute finished cannabis products to both domestic and global markets.

Cannabis NB held an industry and consumer expo in Fredericton on Saturday, March 14. The crown agency has held previous expos in partnership with others, but this was their first time running it entirely in-house. 

Cannabis producer Decibel Cannabis is selling its interest in cannabis retailer Prairie Records to the Fire and Flower retail chain for $3 million. Prairie Records has three locations in Alberta and three in Saskatchewan. Decibel is the owner of several cannabis brands like Qwest, BlendCraft, General Admission, and VOX.

High Tide Inc. announced that its Canna Cabana retail cannabis store located in Mississauga, Ontario, will begin selling recreational cannabis products and consumption accessories for adult use on Sunday, March 24. This opening will mark High Tide’s 166th Canna Cabana branded retail cannabis location in Canada, the 57th in the province of Ontario and the third in Mississauga.

Five Halifax elementary students under the age of 12 were taken to hospital after eating cannabis edibles that one of the students brought to the school. Police say the packages were “labelled,” but media reports do not note whether the products were from legal or illegal supply chains. 

International Cannabis News

Cannabis possession and home cultivation will be decriminalized in Germany starting April 1 after a new law passed the final hurdle on Friday. Adults over the age of 18 will be allowed to possess 25 grams of cannabis and grow up to three plants at home. From July 1, non-commercial “cannabis clubs” can supply up to 500 members with a maximum monthly quantity of 50 grams per member.

The decriminalization legislation is the “first pillar” in a two-step plan to legalize cannabis in the country. The “second pillar” will set up five-year pilot programs for state-controlled cannabis to be sold in licensed shops.

Law enforcement

The OPP raided three “sovereign” cannabis stores in the Niagara region

Winnipeg Police seized cartons of illegal cigarettes and cannabis products along with over $11,000 in Canadian currency from two convenience stores, arresting three.

Retail cannabis sales declined again in January after holiday spike

Retail cannabis sales in January 2024 dropped to their lowest in nearly a year, according to new figures from Statistics Canada

Cannabis sales reached a record high of $589 million in August 2023, followed by three months of decline to $505 million in November before jumping to $562 million in December. Then, in January 2024, retail cannabis sales dropped to $498 million, using seasonally adjusted numbers. 

Retail sales historically decline in the months following the Christmas shopping season, with cannabis being no different. 

Retail cannabis sales have increased on a year-over-year basis since legalization. Before the peak in sales in August 2023, the high water mark for the previous year was $511 million in December 2022, $414 million in December 2021, and $318 million in December 2020. 

While sales still show increases on an annual basis, the three-month decline in retail cannabis sales in 2023 was the steepest overall decline since legalization. The decline comes at a time when both the cannabis industry and the broader Canadian economy face challenges, with consumer spending in many sectors declining, including food and beverages and beer and wine. 

The number of retail stores across Canada also declined. As of March 2024, there were 3,690 (up from 3,682 in January) cannabis stores in Canada, excluding provincial online stores.

  • British Columbia: 512 public and private stores, either open or “coming soon”; an increase from 511 in January.
  • Alberta: 752, up from 749 in January.
  • Saskatchewan: 185 
  • Manitoba: 204, 120 of which are in Winnipeg (up from 198 in January)
  • Ontario: 1,778 listed as authorized to open
  • Quebec: 98 (down from 104 in January)
  • New Brunswick: 25 public stores, plus eight private stores and six farmgate stores for a total of 39
  • Nova Scotia: 49
  • PEI: 4 
  • Newfoundland and Labrador: 55 (from 52 in January)
  • Northwest Territories: 6 brick-and-mortar locations, plus 1 private online store
  • Nunavut: 1
  • Yukon: 6

Federal, provincial governments must address barriers for small cannabis companies

Small-scale, craft cannabis producers may choose to move back into the illicit market if the barriers to the market are not addressed, says a new report from the federal government’s expert review panel.

The panel’s review of the federal Cannabis Act included numerous recommendations to address challenges the industry is facing, including calls for changes to regulatory fees for equity-deserving groups and micro-licence holders.

From a small producer’s perspective, they do seem to understand some of the specific concerns we’re facing.

Jonathan Wilson, CEO of Crystal Cure

The report argues that the future of smaller cannabis companies is in serious question without government intervention and other regulatory changes to lessen the financial pressure these companies face. 

Some of those suggestions include reducing or even eliminating the cost of applying for micro and other “equity-deserving” applicants like First Nations and other historically disadvantaged groups. 

The expert panel also suggests that provinces and territories that control distribution and sales within their jurisdictions should allow small-scale producers to sell directly to consumers, such as through farmgate or mail-order sales. 

Ontario, New Brunswick, and BC currently have farmgate programs. No jurisdictions allow producers to sell directly to consumers, except through such a farmgate licence in BC.

The report also calls on allowing cannabis cultivators to sell dried cannabis directly into provincial markets without a processing licence, while also noting the challenges provinces face in purchasing products from a large number of often small companies.  

The panel also calls on provinces and territories to review their “mark-ups, fees, purchasing practices, and the amount of shelf space they allocate to different products and different licence holders, including those from equity-deserving groups, to improve the prospects for the many smaller-sized companies that are currently struggling.”

“Any help we receive will help us survive. Give us some kind of advantage over the larger companies.” 

Gord Nichol, North 40 Cannabis

Gord Nichol, the owner of North 40 Cannabis, a micro cultivator and processor in Saskatchewan, says any help is welcome. Since micro-producers are limited to a smaller footprint and cannot enjoy the benefits of the economies of scale of larger producers, Nichol says he would like to see the proposals for lower tax rates and regulatory fees specifically for micros. 

“As a micro, I would support that,” says Nichol. “Any help we receive will help us survive. Give us some kind of advantage over the larger companies.” 

Nichol also supports the idea of selling products directly to consumers, something he can currently only do with authorized medical patients through his medical sales licence. There are some provincial markets he’s been trying to get his cannabis into, like British Columbia, where he says he knows there’s consumer demand, but the province isn’t interested. 

“If I can get past those kinds of gates and sell directly to consumers, I think that’s probably good for the industry. I’d love to operate an online store where anybody who wants to try my product can.”

When it comes to cultivators selling directly to provinces, though, he thinks several other hurdles will make the option less than viable for most. Meeting quality assurance standards without an on-site QAP can be challenging, and provinces will not necessarily want to deal with numerous individual cultivators—something the expert panel’s report also acknowledges. 

Janeen Davis, VP of sales at Joint Venture Craft Cannabis, which operates as a processor and distributor for numerous micro and craft brands, shares a similar perspective. 

“I think that some cultivators certainly have the ability to package and process CPG goods to provincial distributors. But others may still struggle with compliance issues. So I think there’s varying ability among cultivators that could find success in that approach.”

The real challenge, says Davis, is not the ability of a micro cultivator to get a processing licence, something she argues is relatively straightforward, but in getting approved by a province to sell into their markets. Davis also emphasizes that while she is aware that many small cannabis companies are struggling, many are doing well even under the current federal and provincial regulations, including Joint Ventures.

Jonathan Wilson, CEO of Crystal Cure, a micro cannabis producer in New Brunswick, says he was pleased to see the report address challenges that small producers face. 

“I’m just excited to see so many mentions of small producers. It’s great to see that. From a small producer’s perspective, they do seem to understand some of the specific concerns we’re facing.”

“I think that some cultivators certainly have the ability to package and process CPG goods to provincial distributors. But others may still struggle with compliance issues.”

Janeen Davis, Joint Ventures Craft Cannabis

Wilson was most excited by the recommendations of provinces to allow more options with farmgate and allowing producers to sell directly to consumers. Crystal Cure is one of a handful of licensed farmgate producers in New Brunswick, meaning they can operate a retail store at their production facility, selling directly to consumers. 

He says he’s been pushing the province to expand on the farmgate model, as well as allowing them to ship cannabis from their farmgate store directly to consumers. 

“(The province) has been telling us they are waiting on guidance from the federal government, so now we have that. Now we can say ‘Hey, they’re recommending this. We’ve been echoing this and this is very consistent with what we’ve been lobbying for.” 

Featured image via North 40 Cannabis

Canada tables final Report of the Legislative Review of the Cannabis Act

The Government of Canada released its final report on its review of the Cannabis Act, identifying 54 recommendations and 11 observations on how to strengthen and improve the administration of the Act.

The legislative review was designed to look at the impacts the legalization of cannabis had on different aspects of Canadian society, with a focus on use rates among young people, impacts on First Nations Communities, and the impact of people growing cannabis at home. 

The review concludes that there has been “significant progress” made on several of the key objectives of the Cannabis Act, such as the establishment of a regulated framework for cannabis production, the ongoing adoption of legal supply chains by consumers, and a reduction in Canadians facing legal consequences for cannabis possession. 

Although there has not been a notable increase in young people in Canada reporting cannabis use, the expert panel still expressed concern about Canada’s historically high youth use rate of cannabis. It also calls for creating and following specific targets to lower youth use rates. 

The panel also expressed concern at the increasing popularity of high-potency THC products, and a need for greater consultation with First Nations and Indigenous communities to address concerns with public health and safety issues, as well as economic opportunities.  

Recognizing the economic challenges facing the legal cannabis industry, the panel also calls on Health Canada to reduce the financial and administrative burden it places on those operating in the legal industry. Recognizing calls for excise tax reform, the panel calls on changes to excise taxes with higher-potency products being subject to more tax than lower-potency products.

Although the panel acknowledges industry calls for a greater THC potency limit for edibles, the panel says that, on balance, the increased risk to public health outweighs those concerns. Because of this, it recommends maintaining the current 10mg THC limit for edibles. 

The panel also calls on changes to federal regulations to allow an in-person access model for medical cannabis through pharmacies, and suggests that home cultivation of cannabis has not raised any issues.

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SNDL reports $112 million loss from cannabis operations and $4.9 million in retail cannabis earnings

Alberta-based SNDL reported an operating income loss of $112 million for its cannabis operations and net earnings of $4.9 million for its retail cannabis operations in 2023.

After calculating restructuring costs and asset impairments, the total adjusted operating loss for its cannabis operations was $52.4 million.

The newest annual report also shows $24.6 million in net earnings from SNDL’s alcohol businesses, for an operating income loss of $162.8 million for 2023. Part of this loss is attributed to restructuring charges of $19.6 million and goodwill impairment of $29 million.

Despite these losses, SNDL says it is well positioned in 2024 given its recent acquisition of The Valens Company Inc., the closing of its facility in Olds, Alberta, and the transition of its remaining cultivation activities to Atholville, New Brunswick, and manufacturing and processing activities in Kelowna, British Columbia.

SNDL’s cannabis operations include the operations of Valens from January 18, 2023, to December 31, 2023.

The company’s cannabis operations segment achieved a record net revenue of $87.1 million in 2023, a 96% increase from $44.4 million in 2022. Net revenue for the fourth quarter of 2023 was $26 million, up 111% from $12.3 million in the same quarter of the previous year. 

Gross margin was negative $20.6 million in 2023, compared to negative $13.3 million in 2022. Gross profit for the fourth quarter of 2023 was negative $1.1 million, compared to negative $9.0 million in the fourth quarter of 2022. This 88% improvement in gross profit during the fourth quarter is largely attributable to the strategic decision to close the facility in Olds.

Countering its overall losses on its cannabis operations side, SNDL attributes its record results in revenue, gross profit, and cash flow within its retail cannabis segment in part to its data program.

With its 63% ownership interest in Nova Cannabis Inc., SNDL is Canada’s largest private-sector cannabis retailer, operating 187 locations under its four retail banners: “Value Buds”, “Spiritleaf”, “Superette”, and “Firesale Cannabis”. 

As of March 21, 2024, SNDL had 85 Spiritleaf locations (21 corporate stores and 64 franchise stores), four Superette locations, two Firesale Cannabis stores, and 96 Value Buds stores.

Nova’s proprietary data licensing program generated revenue of $12.3 million in 2023, compared to $4.2 million in 2022, a 193% increase year-over-year. 

SNDL reported record gross profit from its retail cannabis segment, with $73.7 million in 2023, or 25% of sales, compared to $47.3 million in 2022, or 23% of sales, a 56% increase year-over-year. Gross profit for its retail cannabis segment was $20.0 million, or 27% of sales, in the fourth quarter of 2023, compared to $15.7 million, or 23% of sales, in the fourth quarter of 2022, a 27% increase year-over-year. 

Younger Canadians more likely to use cannabis than older Canadians

Over one-third of adults aged 18 to 44 years and one in seven adults aged 45 years and older had used cannabis in 2023, according to Canada’s newest National Cannabis Survey

The annual survey results were shared on March 18 and showed that 38.4% of people 18 to 24 years old and 15% of those over 45 reported consuming cannabis at least once in 2023. 

When it comes to frequent use of cannabis, 8.7% of adults aged 18 to 24, 10.3% aged 25 to 44, and 4.8% over 45 years of age reported consuming cannabis daily or almost daily in 2023.

Chart 1: Prevalence of daily cannabis use among all Canadians by age group and gender, 2023
Prevalence of daily cannabis use among all Canadians by age group and gender, 2023

Unsurprisingly, flower remains the most commonly consumed product, with 62.1% of all age groups. Edibles followed closely behind at 57.1%.

Those under 45 were much more likely to consume dried flower, vape pens, and concentrates, while those over 45 were much more likely to consume oral cannabis oil and topicals. 

Nearly 72% of consumers responded to getting their cannabis products exclusively from the legal regulated market, while just under 2% reported getting their products exclusively from the illicit market. Another 7.2% reported sourcing their cannabis from both types of access points.

The most commonly reported reason for choosing a legal source for cannabis was product safety (38%), followed by convenience at 16.9%, a desire to follow the law at just 12.9%, a belief in product quality at just 5.8%, and product selection or variety at 5.2%.

Another recent survey showed that household spending on legal cannabis in Canada has continued to increase while spending on illicit cannabis has decreased. Household expenditures on cannabis from the unlicensed sector were at a low of $465,000 in Q4 2023, down from about $1.2 million in Q4 2018.

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Ontario Chamber of Commerce calls on province to modernize cannabis sector

The Ontario Chamber of Commerce has called on the province to modernize the Ontario cannabis market as part of its 2024 provincial budget submission. 

The Chamber’s annual budget submission makes numerous recommendations as part of Ontario’s budget consultation process on how to strengthen Ontario’s business community, including three key points that relate specifically to the legal cannabis sector. 

The Chamber calls for changing provincial regulations to allow licensed producers and retailers to “have a direct relationship” to pursue lost tax revenue from underground markets by creating tougher penalties for noncompliance, coupled with intensified audits, and calling on the Ontario Cannabis Retail Store to provide quarterly updates on its progress around the 16 recommendations in the Auditor General’s value-for-money audit report released in December 2021.

Those 16 recommendations include a call for a more structured, consistent, and transparent approach to its product listing calls and product listing selections, improving transparency about the product delisting process, improving customer service, and numerous calls for greater oversight of its distribution partner Domain Logistics. 

A cyberattack in 2022 on the parent company of Ontario Cannabis Store’s (OCS’) third-party operated distribution centre, Domain Logistics, briefly crippled the cannabis distribution system in Ontario. 

The Auditor General’s 2023 report revisited those 16 recommendations, noting that 79% had been fulfilled and 13% were in the process of being fulfilled. Only 3% showed little progress, while 5% were no longer relevant.  

The two recommendations that showed little to no progress were a call to explore tools such as Ontario’s Digital Identity Program to strengthen controls over online ordering of cannabis by individuals under the age of 19. The report also says the OCRC has not required Domain Logistics to incorporate more extended data retention requirements into all subcontractor agreements. 

However, the OCRC informed the Auditor General that its Privacy and Freedom of Information team is planning to perform a privacy impact assessment to determine appropriate data retention requirements and plans to implement these recommendations by March 2024.

Featured image of True North Cannabis in Grand Bend, Ontario

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Week in Weed – March 16, 2024

This week at StratCann, we looked at the changing landscape of Canadian cannabis events and how some producers are distinguishing themselves with low-THC products. We also asked when the cannabis industry will receive the kind of relief being provided to other comparable industries.

We looked into Nova Scotia’s annual sales report, including more than $111 million in sales, and the story of a Kelowna, BC, cannabis store receiving a one-week suspension for selling to a minor

BC’s Good Buds Company posted a notice of intent and a path to debt restructuring. Village Farms shared their newest quarterly report, as did High Tide, who also announced they were purchasing Queen of Bud for $1 million in shares and cash. 

Manitoba’s LGCA had planned to revisit the province’s ban on public consumption but paused pending direction from the new NDP government.

Police in Niagara are investigating an armed robbery at a provincially-licensed cannabis store, while OPP raided three “sovereign” cannabis stores in the Niagara region.

In other cannabis news…

A man in BC who received a lifetime ban from entering the US in 2022 after a border agent found a bottle of CBD oil in his truck’s console while he was attempting to cross the border into the US is now fighting to have the ban lifted when tests confirmed the oil had no THC.

MJBiz got their hands on a memo sent within the Department of Finance Canada’s Tax Policy Branch, updating the Minister of Finance, Chrystia Freeland, on the financial state of federally licensed cannabis producers.

The document notes several well-documented issues, such as challenges with provincial distributors, high taxes, and a growing number of CCAA listings. The report also noted that as of last summer, 83 businesses owed less than $1 million, 40 owed between $1 and $5 million, 9 owed between $5 and $10 million, and 16 owed more than $10 million.

The Mississauga News spoke with cannabis retailers in the city. Mississauga has gained 34 legal cannabis stores since council lifted the prohibition on April 19, 2023. Another 20 are in the process of getting a licence. Pop’s Cannabis and The Woods Cannabis are both featured. 

Taylor Giovannini, president and CEO of Oceanic Releaf, was one of four Newfoundland women named among the most powerful in Atlantic Canadian business.

In BC, a Cariboo Regional District (CRD) director and some of his constituents are raising concerns about a residential property growing cannabis under a personal or designated medical licence that the director says is against its zoning restrictions. The article contains the usual conflation of commercial and medical licences and passing of the buck from local police, as well as a misunderstanding/misrepresentation of court rulings behind why personal and designated medical licences are issued.

Adastra Holdings Ltd. announced a “surge” in PO’s throughout January and February 2024, predominantly from Alberta, Ontario, and British Columbia, that resulted in a record total for the period. 

Jones Soda says its recent launch of cannabis beverages in Canada with partner Tilray is doing well, and it has had to accelerate the production of its next load of inventory, with plans to expand beyond the initial launch in Ontario. Jones was originally founded in Vancouver but is now based in the US.

Cannaray Limited, a European medical cannabis company headquartered in London, announced it had signed a definitive agreement to merge with Aqualitas Inc., a Nova Scotia-based aquaponics grower. Aqualitas is joining forces with Cannaray’s medical cannabis divisions, Therismos GmbH (Germany) and Therismos Limited (UK).

Hempsana Holdings Ltd. announced that on March 11, 2024, its wholly-owned operating subsidiary, Hempsana Inc. filed a Notice of Intention to make a Proposal (NOI). The company has distribution deals with brands like Cream of the Crop, Social Lite Cannabis, Caviar Gold, and Ufeelu. In their most recent quarterly report for November 2023 the company listed $983,122 in net revenue and a $1.2 million loss. At the time, it listed $121,960 in cash on hand, $204,163 in inventory, and total assets of about $4.4 million.

Greenway Greenhouse Cannabis Corporation announced it shipped its first consumer packaged goods to the OCS, including its new MillRite brand, for the hard workin’ type folk.

Glow LifeTech Corp. launched four new cannabis products in Ontario, expanding its MOD and .decimal brands listed by the Ontario Cannabis Store.

CannaPharmaRx, Inc. announced that it has received its first purchase order covering the output of its first four harvests. This product was shipped on March 11 to another producer for distribution within Canada. CannaPharmaRx, Inc. was licensed in December 2022 and operates out of a facility in Cremona, Alberta, that was previously Aurora’s first licensed production space. The company has also announced plans to sell into Israel through Y.S.A. Holdings Ltd.

Cannabis NB says they are opening three new stores to add to the 25 stores they currently operate in the province, in addition to seven private retailers and six farmgate stores. The stores, expected to open in April, will be in Saint John, Fredericton, and Moncton. The provincial cannabis operator is also looking for a District Manager.

Cannabis NB’s Cannabis Expo is Saturday, March 16, in Fredericton. 

The CannExpo is happening March 22-24, 2024, at the Enercare Centre in Toronto.

Quebec hopes its Crown corporations like the SQDC can help the province find an extra $1 billion in net revenue over five years.

David Lobo, President and CEO of Ontario Cannabis Store, will be taking part in Queen’s University 2024 Donald Matthews Faculty Fellowship Symposium on Friday, March 22.

A new academic review says there was no consistent positive association between greater cannabis retail and increased frequent cannabis use in adolescents, healthcare service use potentially related to cannabis, or increased adverse neonatal birth outcomes. However, the study shows there may be a positive association between greater cannabis store access and increases in “cannabis-related harm.”

Police in Longueuil, Quebec, seized 1,337 cannabis plants, 20 kilograms of bagged cannabis, and eight kilograms of hashish from a building in a busy commercial district. They also seized hashish presses and other equipment.

Two people were arrested in two dispensary raids in New Brunswick.

And finally, Hong Kong customs officers arrested two men arriving from Vancouver, Canada, aged 48 and 67, on suspicion of smuggling 87 kg of cannabis. It was reportedly the largest passenger cannabis trafficking case at the airport in a decade.

High Tide Inc. reports increased revenue, declining losses, in newest quarterly report

High Tide Inc. is now the second-largest cannabis retailer in North America by store count, according to the company’s newest quarterly report. 

The cannabis company, which owns and operates the largest number of stores in Canada via its Canna Cabana retail chain, among other related assets, reported an 8% year-over-year increase in revenue in the first fiscal quarter of 2024, ended January 31, 2024, at $128.1 Million. The company has an adjusted EBITDA of $10.4 Million and $3.6 Million of free cash flow.

High Tide’s gross profit increased to $36 million in the first fiscal quarter of 2024 compared to $32.2 million during the same period in 2023. Gross profit margin was 28%, representing an increase from 26% in the fourth fiscal quarter of 2023 and 27% during the entirety of 2023.

The company reported a net loss of just $5,000, down from more than $3.8 million in the same quarter in the previous year.

Cash on hand as of January 31, 2024, totalled $28.7 million compared to $23.7 million as of January 31, 2023, and $30.1 as of October 31, 2023. This includes the impact of a $2.8 million one-time cash payment to pay down a convertible debenture in the first fiscal quarter of 2024.

Revenue from High Tide’s Cabanalytics Business Data and Insights platform, including ad revenue, was a record $7.3 million for the first fiscal quarter of 2024, up from $6.6 million year-over-year, and $6.8 million sequentially, representing increases of 11% and 8% respectively.

The Company also continued the rollout of its ELITE loyalty program, with membership reaching approximately 32,000, an increase of 237% year-over-year and 14% since January 29, 2024.

“I am very proud to announce that High Tide has reached break-even net income this quarter, which is a critical milestone in our ongoing corporate trajectory and is a rarity in the global cannabis space,” said Raj Grover, Founder and Chief Executive Officer of High Tide. 

“While there has been industry-wide softening of Canadian cannabis sales in the post-holiday months, and having made essentially no acquisitions in over a year, I am proud to report that our Company continues to grow organically and has never had a sequential decline in revenue since going public in 2018.”

High Tide opened seven new stores from November 1, 2023-January 31, 2024. One was in BC, two in Alberta, one in Saskatchewan, one in Manitoba and two in Ontario, for a total of 165 current locations across Canada. 

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Manitoba’s LGCA plans to review Province’s cannabis consumption ban

Manitoba’s Liquor, Gaming and Cannabis Authority (LGCA) was planning a review of the province’s ban on consuming cannabis in public this year but has paused the process as it awaits direction from the new NDP government.

A 14-page briefing, first reported by the CBC, said that the provincial cannabis regulator had planned to begin a review of the possibility of cannabis consumption sites in Manitoba, including looking at the current rules that do not allow cannabis to be consumed in public in Manitoba in any form.

“LGCA has committed to a full, in-depth review of cannabis consumption sites, including industry demand, legal permissibility, and potential regulatory implications,” the briefing stated, according to the CBC.

“LGCA plans to revisit its analysis in early 2024, beginning with a review of the legislative and regulatory framework and then moving to stakeholder consultations.”

That plan was reportedly paused as the agency waits for direction from the newly formed government. The Manitoba NDP formed government in October 2023. The province’s cannabis rules were put in place by the previous Progressive Conservative government.

The LGCA also reportedly noted in its briefing that public consultations in 2021 and 2022 “did not indicate either strong support or opposition” for cannabis consumption sites in Manitoba.

Manitoba is one of several provinces that have banned the public use of cannabis. Cannabis consumption is legal in public in BC, Ontario, and some parts of Alberta. Other provinces and territories have also banned it outright. 

BC recently announced changes to its rules, allowing cannabis consumption in certain patio spaces.

This restriction means that the only place to consume cannabis is on private property or in someone’s private residence. As some landlords do not allow cannabis consumption, this ban can mean some residents have little to no ability to actually consume cannabis. 

The ban on cannabis consumption is just one of the province’s rules put in place by the previous conservative government that has been challenged by activists and advocates in the province. 

Manitoba is one of just two provinces that banned residents from growing cannabis at home, along with Quebec. The Manitoba NDP and their leader, now-Premier Wab Kinew, said that they did not support the ban previous to forming the government in last fall’s election.

A court rejected an attempt to appeal the ban in 2023, but a group challenging that ban filed an appeal on March 1 against that decision. Several requests for comment on the party’s stance on home-grow bans were unanswered, but sources close to the file tell StratCann that an announcement may come from the province on the matter of home-grown cannabis in the coming weeks.

More on this story as it unfolds.

Featured Image via Exploring Winnipeg

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Village Farms’ Canadian cannabis operations report net income of $4 million for 2023

According to parent company Village Farms International’s newest quarterly report, net sales for Pure Sunfarms and Rose LifeScience increased in the last three months of 2023. 

While Pure Sunfarms (PSF) is the wholly-owned Canadian subsidiary of Village Farms, the company also owns 70% of Québec-based Rose LifeScience.

Net sales increased 14% from $38.2 million in the same quarter in 2022 to $43.6 million in Q4 2023, while retail branded sales increased 5%, international (export) sales decreased 66%, and non-branded (wholesale) sales increased 339%.

The cost of sales also declined from $27.8 million in the same quarter in 2022 to $25.2 million in Q4 2023.

Despite this increase in net sales, the company still reported a $1 million loss after expenses for its cannabis operations in Canada. This is a decrease from a net loss of $3.8 million in Q4 2022. The company reported $22.2 million in excise taxes in Q4 2023 and $78.3 million for the year ending December 31, 2023, on sales of $232 million, an effective rate of nearly 34%.

For the year ended December 31, 2023, Village Farms’ Canadian cannabis operations saw $154 million in sales and a net income of $4 million. The company reported $109 million in net sales and a net profit of $200,000 in the previous year.

Village Farms’ US cannabis venture, Balanced Health Botanicals, saw net sales of $5.1 million compared with $5.3 million in Q4 2022 and a net loss of $13.7 million compared to $20.9 million in Q4 2022.

For Q4 2023, retail branded sales were $56.1 million of total sales, while international sales were $1.1 million. Non-branded sales accounted for another $7.9 million.

Michael DeGiglio, President and Chief Executive Officer of Village Farms, says the Canadian market is slowly rebounding from excess supply and record low prices, and he expresses optimism at the possibility of future excise tax reform.

“Our Canadian Cannabis business remains the undisputed leader in that market, with record sales and another quarter of positive adjusted EBITDA and cash flow in the fourth quarter,” said DeGiglio.

“We reclaimed the number two national market share rank across all categories and are steadily closing the gap on the top position. Record retail branded sales were complemented by another especially strong quarter for non-branded wholesale sales. In our non-branded wholesale channel, we took advantage of improved supply conditions and pricing created by the shift of many of our peers to asset light models, significantly reducing our non-brand-spec inventory. While these close out sales are temporarily affecting gross margin and adjusted EBITDA, they are generating additional cash flow, and will support more efficient, higher cash conversion inventory turnover this year and beyond.”

Village Farms is also the only North American cannabis company with a production facility in the Netherlands as part of the country’s early pilot-project approach to regulating cannabis supply for its cannabis “coffee shops”. Production is expected to begin later this year, with its first sales in 2025.

It is also exporting cannabis from its Canadian production to markets in Europe and Australia. Nine of the company’s cultivars in Canada are now being sold across four international medical markets. The Company has a strategy in place to accelerate international export sales in current markets while expecting to launch products in additional European markets this year.

In addition to their US cannabis venture, Village Farms is also preparing for the potential for full legalization in the US through its connection to one of the largest greenhouse operations in the country (more than 5.5 million square feet in West Texas), as well as the operational and product expertise gained through Pure Sunfarms’ cannabis success in Canada.

“On the international front,” adds DeGiglio, “earlier this year we started the build out of our first production facility in the Netherlands, where we are proud to be the only North American participant in the first legal recreational cannabis market in a major European country. Production is targeted to begin later this year. We expanded our export program for the European medical market to the United Kingdom, with additional markets expected to be added this year. Notably, recent positive progress around German medical use regulation provides us with additional opportunities going forward as the market grows.”

BC’s Good Buds Company posts notice of intent, path to debt restructuring

BC outdoor cannabis growers Good Buds Company Inc. filed a notice of intention to make a proposal pursuant to the Bankruptcy and Insolvency Act.

In a memo from March 6, a representative for the Salt Spring Island-based company emphasized that it has not filed for bankruptcy, nor is it in receivership. 

It’s not uncommon for companies to file such notices as a way to restructure their debt rather than going into bankruptcy proceedings. 

According to the formal notice, the company remains under the control of its management team. “The NOI creates a stay of proceedings and allows the Company a period of up to thirty days to prepare and file a proposal to its creditors unless the period is extended by the court upon application by the Company,” it continues. 

The company also reportedly continues to operate, and all amounts owed as of the date of the NOI will be dealt with as part of the proposal, which is to be filed at a future date.

The company lists more than $18 million in amounts due claimed by creditors, with the most significant amount being $10.6 million to Good Buds Company International. The company also lists Farm Credit Canada claiming to be owed nearly $3.2 million, nearly $3.2 million to the Receiver General of Canada for excise, $26,000 to Health Canada, and about $11,000 to the BC Ministry of Finance.

These amounts are not necessarily in arrears but can simply represent ongoing expenses.

Featured image of Good Buds field on Salt Spring Island

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Kelowna cannabis store takes one week suspension for failure to ID minor

A cannabis store in Kelowna, BC, will have to close for a week in April after an employee was alleged to have sold cannabis to a minor.

The minor worked for BC’s Liquor and Cannabis Regulation Branch (LCRB) as part of the province’s Minors as Agents Program (MAP).

The penalty for such an offence is a minimum $7,000 fine or closing the business for seven days. The store, Prime Cannabis, opted for the seven days, scheduled to begin on April 3, 2024.

The incident occurred during an LCRB inspection on November 30, 2023.  Following standard procedure for such a visit, an adult inspector conducted an in-store risk assessment before giving the 16-year-old minor agent the clearance to enter the store. 

The minor entered the store and purchased a single pack of cannabis-infused gummies, paying cash. The employee working at the time did not check her ID. Upon leaving the store, the minor handed the product to one of the two adult LCRB agents. The other agent re-entered the store to inform the employee that they had just sold cannabis to a minor, an offence under BC’s regulations.

In their defence, the owner of Prime Cannabis, which has two other locations in addition to the Kelowna store, one in West Kelowna and one in Cranbrook, says they have internal policies instructing employees to check IDs. However, the March 6 ruling concluded that the store’s owner had not taken enough steps to ensure employees properly followed such rules. 

One oversight noted in the ruling was a lack of a written checklist that can demonstrate proof of the content of in-store training and the time spent on various topics.

“I note the absence of written documentation: no training checklist, no written quizzes, no printed text messages about ongoing reminders,” states the final ruling. “A written checklist is particularly important when staff in the three stores are being trained by different people. Signing off on a checklist by both the trainer and the trainee can demonstrate what topics were followed and the time spent on each.”

The licensee can apply for a reconsideration of the compliance order within 30 days of receiving a copy of the ruling. 

Prime Cannabis is not the first cannabis store to be caught up in the MAPs program. In February of this year, another cannabis store in Kelowna was issued a $7,000 fine for failing to check the ID of a minor in the BC government’s program. The targeted inspection was in July 2023.

BC is sometimes more lenient in its rulings. In a case heard in 2023, ​​it was found that a cannabis retailer was not responsible when an employee failed to check the ID of a customer. This was because the store demonstrated that it had an extensive training program in place. 

While the employee was fired for their oversight, the retailer, in that instance, did not have to face a $7,000 monetary penalty or shut down for seven days.

“Prime Cannabis takes full ownership over our mistake in not ID’ing and serving a minor,” said Rob Anderson, the owner of Prime Cannabis in an email to StratCann. “We take ID’ing very seriously and have increased our minimum age to ID to 40 years old. We self-audit ourselves regularly through secret shoppers. Ultimately, there is no excuse and we own our mistake.  

“We regret the inconvenience we will cause our customers not being able to provide them with product during the week of closure.  We hope our customers will continue to support us, and we will be offering a 10% discount the entire week of reopening after serving our licence suspension.”

Cannabis industry wonders when their relief is coming, too

Canada’s cannabis industry says they need the same sorts of support provided to the country’s craft brewers. 

In an announcement on March 9, the Canadian government said it plans to provide thousands of dollars in alcohol excise duty relief to Canadian businesses, particularly local craft breweries.

Canada’s cannabis industry has been asking for similar relief for years, with some noting their industry is larger and more heavily taxed and regulated than even beer makers. 

In order to help alcohol businesses, the federal government is proposing to cap the inflation adjustment at 2% for beer, spirit, and wine excise duties for an additional two years, and to cut the excise duty rate on the first 15,000 hectolitres of beer brewed in Canada by half for two years. The government says this will provide the typical craft brewery up to $86,952 in additional tax relief in 2024-25.

In a press release, with comments from Deputy Prime Minister and Minister of Finance Chrystia Freeland and Minister of Small Business Rechie Valdez, the government acknowledges the number of jobs created by the brewing industry in Canada and the contribution this makes to the broader economy. 

“This announcement is great news for breweries, distilleries, and wineries from all across Canada who contribute so much to our national economy,” said Valdez. “Not only are they producing incredible products, they are also small businesses who are creating jobs and opportunities in their local communities. Today’s relief on alcohol excise taxes will allow craft breweries to spend less on duties, and more on what matters most: growing and innovating their small businesses.”

Jonathan Wilson, CEO of Crystal Cure, a small-scale cannabis producer in New Brunswick, said he found the news difficult to swallow given how much his industry is currently struggling. 

“For the Ministers to announce this excise tax relief for alcohol today, with the core message being to support small business in peril, it’s one of two things: cold-hearted or oblivious, and I can’t tell which one. Small cannabis producers that have been suffering under the current industry ecosystem, they are the ones without the cash flow to absorb the exorbitant taxes and fees, and they can’t sell at a loss in perpetuity. These producers were supposed to be the cornerstones of the industry, and it seems everyone is fine with them being allowed to crumble.”

Deepak Anand, an industry analyst and consultant, shared similar sentiments with StratCann. 

“The federal government needs to urgently make some similar provisions available for the cannabis industry, which has been struggling much harder than the alcohol industry. Much like alcohol, there are dozens of craft cannabis cultivators who can benefit greatly from similar relief.”

For a comparison: 

“Canada’s small craft brewers are among the finest in the world, and are an important contributor to our growing economy by creating jobs in communities across the country. Today’s announcement is good news for Canadians and for the craft breweries they visit, which will now benefit from thousands of dollars in new tax relief every year,” said Freeland in the press release.

Budget 2022 called for a more streamlined approach to the cannabis industry, which included the creation of a “Cannabis Strategy Table” led by the Department of Innovation, Science and Economic Development (ISED), intending to provide an opportunity for the federal government to hear from industry leaders and identify ways to work together to grow the legal cannabis sector in Canada.

Last year’s budget noted that as the legal cannabis industry in Canada grows, there are opportunities for the federal government to “streamline, strengthen, and adapt the cannabis excise duty framework specifically, and other excise duty regimes under the Excise Act, 2001 accordingly.”

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Week in Weed – March 9, 2024

The big news this past week was Statistics Canada releasing cannabis sales figures for 2022-2023. We also took a deep dive into Alberta’s sales figures for the same time frame.

Cannabis consumption areas are beginning to emerge in a few places in BC following a recent rule change.

BC’s Budtenders Union announced a new store unionized, while we updated a previous unionized store that voted to decertify. 

Ontario passed new legislation that bans growing cannabis in childcare settings and creates more opportunities for the province to engage with First Nations communities around provincially regulated cannabis stores. 

We also shared our monthly cannabis jobs update.

In our Cannabis Insight section, we shared a piece on navigating the challenges of brand partnerships and another on five ways retailers can grow their sales.

We also celebrated trailblazing women in cannabis in recognition of International Women’s Week.

In other cannabis news…

Following the release of Stats Canada’s cannabis data for 2022-2023, many mainstream sites picked up on aspects of the figures, including a decline in alcohol sales while cannabis sales grew.

Manitoba news outlets were quick to share that Manitoba had the highest rise in recreational cannabis sales across Canada in the 2022/2023 fiscal year at 23%.

Yukon released its sales numbers for 2022-2023. During the fiscal year ending March 31, 2023, cannabis sales in Yukon totalled $11 million, a  9.4% increase from the year prior. Dried cannabis was the highest product category, accounting for 64.6%. Inhaled cannabis extracts were the second highest at 24.9%.

CanMar announced a strategic partnership with the Canadian Cannabis Exchange (CCX) and Loud Lion Supply. CCX will serve as CanMar’s exclusive B2B Cannabis Brokerage/Exchange Strategic Partner on The Hub, CanMar’s community platform.

Tilray Brands Inc. announced two new releases from Broken Coast. Cherry Cheesecake and EmergenZ are now available in Canada across select regions and retailers, including Alberta, Manitoba, and Ontario, with further expansion planned nationwide.

Ontario-based Sensi Brands Inc. announced the launch of, a new medical cannabis marketplace. Sensi Brands operates Station House, a producer in southeastern Ontario with a farmgate licence, and the Potluck and Sensimilla brands and Good Greens Medical.

A labour arbitrator says global fertilizer giant Nutrien was justified in keeping an employee out of work at the Saskatchewan potash mine until the company was satisfied the cannabis he used for sleep would not leave him impaired on the job site the next day.

High Tide Inc. opened its second Canna Cabana in Mississauga, Ontario. This opening will mark High Tide’s 164th Canna Cabana branded retail cannabis location in Canada, and the 55th in Ontario. 

Tilray’s hemp asset, Manitoba Harvest, announced its new instant Superseed Oatmeal in three flavours with hemp hearts.

Aurora Cannabis Inc. announced the availability of medical cannabis pastilles for doctors to prescribe to patients in Australia. The 30-pack pastilles are available now in three formats, including Aurora THC Pastilles in Watermelon flavour (5mg THC), Aurora CBD Pastilles in Peach flavour (10mg CBD), and Aurora Balanced Pastilles in Yuzu Lemon flavour (5mg THC, 10mg CBD), excl