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BC launches new data report for cannabis producers

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Producers, Retail.

The BC LDB will soon launch a new data report that they say will help provide licensed producers with better insight into which retailers are purchasing their products. 

The report comes based on feedback from many producers in the industry who need such insight to better understand where to focus their efforts and engagement with retailers, as well as potentially address so-called “data deals” between some retailers and producers.  

In a memo sent out to stakeholders, the LDB explains that the BC Cannabis Wholesale Customer Distribution Report “will provide LPs with a list of the retailers that are purchasing their products and the number of cases purchased by each retailer, by SKU, over a four-week period.”

Beginning October 2, 2023, the report will automatically be included in LPs’ report portfolios. This report will be free for the first year. After that, the province will review the program to decide what fee structure will be needed. 

“I have a feeling this will lead to more reps coming to my door. But my big concern is if you’re making money off this, we should be getting our share because it’s our data. And I would prefer it was anonymous and it was telling them which regions.” 

Mike Babins, Evergreen Cannabis

The report will only include purchasing data for an LP’s product, not any other producers or any other data related to retailers’ sales. 

The report will include the business name and address of each retailer that purchased their product, the LDB SKU number and product name of each product purchased, and the number of cases purchased by each retailer, by SKU.

Two BC cannabis producers tell StratCann the news is welcome and needed, although one retailer says they aren’t too excited by the idea of the LDB sharing their data with producers.  

Sean Curly, the director of sales at FN Canna/All Nations, says he’s excited by the news, and that this can save struggling producers money while also allowing them to better identify which stores are most familiar with their products. 

“One of the foundations of our business is around connection,” says Curly. “We strive to create connections with all our partners, including our partner retailers. So this is a huge step forward to be able to now connect directly with those retailers that support us.”

He says it can also help address so-called “data programs” or “data deals”  where producers pay retailers for similar data. 

“If other provinces can come to the plate and deliver a service like this, I think that can help get rid of those kinds of deals. The more the government can provide transparency and allow LPs to connect directly with retailers is only going to support this industry and help create a healthy, vibrant industry.” 

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Mike Babins, the owner of Evergreen Cannabis in Vancouver, says he supports the idea behind the report and thinks it could address the “data deals”. However, he’s not too excited by the idea of his sales data being provided and potentially sold to LPs. 

“On the one hand, I think I should be the one who should be sharing the info with them,” says Babins. “On the other hand, if I were one of those doing data deals, it would hurt me, I suppose. But I’m not doing that because I think that’s not appropriate to do. 

“I have a feeling this will lead to more reps coming to my door. But my big concern is if you’re making money off this, we should be getting our share because it’s our data. And I would prefer it was anonymous and it was telling them which regions.” 

Janeen Davis, VP of sales at Joint Venture Craft Cannabis, echoes the concerns about “data deals” and the hope that this report will help combat them. 

“Data deals have hit BC now, and the unfortunate writing is on the wall that certain retailers would not stock supplier’s products unless they were paid for data. With the BC LDB and BC government coming out with this level of transparency, it will prove that many retailer data deals are simply disguised slotting fees which most suppliers cannot afford. I am proud to see BC LDB lead the charge to create a sustainable industry for suppliers as well as retailers.

OCS issues recall for two cannabis products for incorrect THC

Written by Staff on . Posted in Business, Cannabis News, Producers, Products.

The Ontario Cannabis Store (OCS) has issued a recall for two cannabis products this week for incorrect THC values.

The first recall, posted September 19, is for Nugz Reefers—Lemon Linx Reefers prerolls from Cannara Biotech Inc. The second, posted September 21, is for Banana Mints, 3.5g dried flower from EastCann.

A representative with the OCS says the Licensed Producers initiated both of these voluntary recalls as the products were labeled with incorrect THC values.

Editor’s note: This article has been changed to include the comments form OCS above.

While the first recall was for THC levels incorrectly listed as too high, the second was for the labelled THC levels lower than the COA.

The Lemon Linx Reefers are 0.3 grams each and come in a ten-pack. They were packaged on August 31, 2023. The Lot Number is 3423004P1.

The labels incorrectly listed the THC values as THC 240.1 mg/g and Total THC 349.0 mg/g.

The correct THC Values are THC 22.9 mg/g and Total THC 209.3 mg/g.

The Banana Mints from Prime Pot Inc (dba as EastCann) was incorrectly labelled with a lower Total THC value in comparison to Total THC value on the Certificate of Analysis.

The OCS currently lists the product as having from 30 percent to 38.5 percent THC.

Although the Lemon Linx Reefers prerolls are not currently listed on the OCS website, a cached version of the listing advertiser the product having 205.00 – 270.00 mg/g THC (20.50 – 27.00 percent).

Health Canada has not yet posted a recall for these products as of the publishing of this article. 

Cities in BC still asking for their share of cannabis tax

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Government.

Cities in BC’s Lower Mainland are asking for what they say is their share of cannabis excise tax revenue from the province.

In a resolution to be considered at this week’s annual Union of BC Municipalities (UBCM) convention, the government of Port Moody, with support from the Lower Mainland Local Government Association, is calling on the provincial government to share up to half of its portion of the federal excise tax.

The resolution could be considered this week at the convention in Vancouver, held from September 18-22. 

The Federal government provides 75 percent of the excise tax it collects when cannabis producers sell into a provincial market or through the medical market. The federal tax is collected at a rate of $1/gram or 10 percent of a producer’s selling price, whichever is higher. The federal portion of cannabis excise tax revenue is capped at $100 million a year.

Under an agreement first signed prior to legalization, provinces successfully argued they would need to deal with the bulk of enforcement and regulations when it came to cannabis, especially municipalities, and should, therefore, get a large portion of the federal tax. But munis in several provinces, including BC, say they have not received that tax money. 

A representative with BC’s Ministry of Finance explains that the excise tax is remitted to the federal government by a licensed cannabis producer and is then distributed back to provinces from the federal government. This cannabis excise tax revenue then goes into the province’s Consolidated Revenue Fund for programs like health care, education, and child care.

As of September 1, 2023, BC has received $226.99 million in federal excise duty payments on cannabis since March 1, 2019: $6.42 million in 2019, $24.84 million in 2020, $51.34 million in 2021, $70.83 million in 2022, and $73.57 million so far in 2023.

In 2020, the Union of BC Municipalities (UBCM) said a survey of their membership showed $11.5 million per year in local government incremental costs for the three years following cannabis legalization.

Earlier this year, a representative with BC’s Ministry of Finance said the agency had not provided any of this tax revenue, but they are in talks on the subject with the UBCM as part of a long-term plan. 

“In general, provincial taxes, including PST, revenue flow into the Province’s consolidated revenue fund to provide the programs and services people rely on, such as health care and education,” notes the Ministry representative. “To date, the BC government has not provided any excise tax revenue to local governments. 

“We’re currently working with the Union of BC Municipalities on a review of local government finance systems in BC, including signing an MOU in 2022 laying out that we’ll work together over the next few years. Cannabis revenue sharing is one of the items we will be looking at over the longer term. As the cannabis market continues to mature, we are working cooperatively with UBCM through this process to promote local governments’ financial resiliency.”

Although the resolution notes that several other provinces, such as Ontario, Quebec, and Alberta, have shared this revenue with their municipalities, the BC government has never made a commitment to do so. 

The resolution reads:

“Whereas the Canadian federal government has clearly stated its expectation that provincial cannabis tax revenue be shared with local governments and such revenues are currently being shared between the provinces and local governments in Ontario, Quebec, and Alberta, but not in British Columbia; And whereas the sharing of cannabis tax revenue will provide much needed funding for local governments: Therefore be it resolved that UBCM ask the Province to share up to 50 percent of provincial revenues generated from the production and sale of cannabis products with BC local governments.” ~NR31 Provincial Cannabis Tax Sharing with Local Governments Port Moody

UBCM raised the issue in 2016, 2017, 2018, 2019, 2020, and 2022, as well.

Munis in other provinces want their share, too

Cities in other provinces have raised similar concerns about what they say is their share of the federal excise tax from cannabis. Earlier this year, municipalities in New Brunswick were asking for 25 percent. In 2021, the Association of Manitoba Municipalities released a position paper that called on the province to share 25 percent of its cannabis tax revenue with its municipalities. More recently, the provincial government in Manitoba said there were few “societal costs” with legalization.

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The same issues were raised in the association’s pre-budget plan. The report notes that the Federation of Canadian Municipalities (FCM) says that municipal administration and local policing costs related to legalization will total $3-4.75 million per 500,000 residents, representing a range of approximately $210-335 million per year in costs incurred by municipalities across Canada.

“According to the Federation of Canadian Municipalities (FCM), municipal administration and local policing costs linked to cannabis legalization will total $3-4.75 million per 500,000 residents on an annual basis,” wrote the AMM in an email to StratCann at the time. “Since these costs should not be downloaded to municipalities, it is imperative that municipalities be included as meaningful participants in revenue-sharing conversations. We continue to urge the federal and provincial governments to co-develop a revenue-sharing model that respects municipal authority.”

Additional resolution

A second resolution, NR30, the Cannabis Control and Licensing Act, was brought forward by the Okanagan-Similkameen regional district. It calls for a change to the provincial Cannabis Control and Licensing Act (CCLA) that would allow cities and Indigenous governments to opt out of giving the province feedback on a retail licence application. Currently, the provincial licensing process requires input from a city before a licence can be issued.

Both resolutions could be voted on this week and are among 205 to potentially be debated, pending time. You can read about other cannabis-related resolutions at UBCM 2023 here.

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Cannabis software company receives $1 million from Government of Canada

Written by Sarah Clark on . Posted in Business, Cannabis News, Government, International, Ontario.

GrowerIQ, a seed-to-sale software company for cannabis producers, has now secured just over one million dollars in funding from the federal government. 

In a press release today, the Ontario-based company announced the completion of its latest funding round, securing CAD $1,080,000. GrowerIQ says the funding, which comes through the Federal Economic Development Agency for Southern Ontario (FedDev Ontario), will be used to improve its cannabis tracking system.

The announcement comes following the recent news of Barbados selecting GrowerIQ as the exclusive cannabis tracking partner for the country. 

Andrew Wilson, CEO of GrowerIQ, says the funding round will help the company continue to grow as not only a Canadian brand but a global one. 

“We are thrilled to have secured this funding to accelerate our mission of transforming the cannabis industry,” said Andrew Wilson, CEO of GrowerIQ. “This investment will allow us to further develop our cutting-edge technology and expand our global footprint. We are committed to providing cannabis producers with the tools they need to succeed in an increasingly competitive market.”

“Our goal is to bring together all systems, processes, advisors, and capabilities into one place, to help simplify what can easily spiral into something very complex,” Wilson previously told StratCann about his approach to the service. “We built the seed-to-sale platform from the perspective of the grower, and coded those insights right into the system’s process flows. So, users of GrowerIQ benefit from those decades of agricultural experience just by using the system.”

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Reported cannabis use in Canada not increasing with legalization

Written by David Brown on . Posted in Business, Cannabis News, Government, Research.

The number of Canadians who reported ever smoking or vaping cannabis did not increase from 2021 to 2022, according to new figures from the federal government.

The figures are part of new survey results released by Health Canada’s Canadian Tobacco and Nicotine Survey (CTNS) 2022. The survey measures the prevalence of cigarette smoking, vaping, cannabis, and alcohol use among Canadians aged 15 years and older and is conducted by Statistics Canada on behalf of Health Canada. The data this year also includes figures on cannabis edibles. 

The results are based on responses to an electronic questionnaire or a telephone follow-up interview from 12,133 respondents across all 10 provinces, which represents a weighted total of 32 million Canadian residents aged 15 years and older.

While about 40 percent of Canadians aged 15 and older reported ever smoking cannabis in 2022, only around 10 percent reported doing so in the past 30 days. Just over 12 percent reported ever vaping cannabis, while those who reported vaping cannabis in the past 30 days were about five percent. All of these figures are similar to those reported in 2021.

About six percent of Canadians aged 15 and older reported consuming cannabis edibles in the past thirty days.

Just over three percent of Canadians aged 15 and up reported daily smoking of cannabis in 2022, down from four percent in 2021. One percent of Canadians over the age of 14 reported vaping cannabis on a daily basis, unchanged from the previous year. Fewer than 1 percent of this same group reported consuming cannabis edibles on a daily basis.

Demographics

Those Canadians with less than a high school education were less likely to report using cannabis in the past 30 days (including those still in school), while those with secondary education but no post-secondary education were the most likely to consume in any of the three reported forms. 

Those who identified as visible minorities reported lower levels of smoking, vaping, or eating cannabis in the past 30 days, but the reported use of vaping and smoking cannabis was higher among those Canadians who identify as Indigenous than those who did not. Consumption of edibles was not higher amongst those identifying as Indigenous.  

Those Canadians aged 15 and up who identified as lesbian, gay, bisexual, or another sexual orientation that is not heterosexual (LGB+) were more likely to report smoking, vaping, and consumption of cannabis edibles in the past 30 days.

In general, Canadians over the age of 14 years who reported using cannabis were more likely to be those who reported their “general health” and “mental health” as “fair” or “poor” compared to those who rated it as excellent, very good, or good.

Those Canadians with a disability were also more likely to report cannabis use than those that did not report a disability.

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BZAM cuts more than 90 personnel as company refocusses to two production sites

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Ontario, Producers.

BZAM, a Canadian licensed producer behind several successful brands, has let more than 90 personnel go as part of a corporate restructuring and the recent sale of several facilities in BC. 

The company also says it is “focusing the scope of activities” at its Pitt Meadows, BC facility and “concentrating other activities at its Ancaster, ON facility” as part of its final phase to “unlock company-wide synergies” following its merger with Ontario-based The Green Organic Dutchman (TGOD) in 2022. TGOD’s (now BZAM) greenhouse is located in located in Ancaster, near Hamilton.

At the time, the merger was touted as a way to emphasize TGOD’s market strength in Quebec and Ontario with BZAM’s strong presence in western Canada. A representative with BZAM confirmed with StratCann via email that the layoffs occurred Monday, September 18.

BZAM’s Pitt Meadows facility was said at the time to provide TGOD with low-cost THC distillate and extraction capabilities.

In their most recent quarterly report in August, BZAM said it had recently sold its facilities in Midway, BC and Maple Ridge, BC and referenced a focus in 2023 on “streamlining” operations. The report also referred to the recent divestment in their Puslinch, ON facility and Edmonton, AB facility. BZAM had previously purchased a hotel in Midway to house its employees at the outdoor farm near the US border.

However, the same quarterly report referred to the Pitt Meadows facility as one of its two “core” facilities, the other being the one in Ancaster, ON acquired through the merger with TGOD.

BZAM’s plan included getting rid of what it called “redundant facilities” and focusing production activities on its remaining sites, as well as reducing “selling, general, and administrative expenses,” which it noted include reducing its headcount “by more than 90 additional personnel.”

BZAM recently posted several job listings for its Pitt Meadows and Hamilton (Ancaster) sites.

Cannabis consumption space provides examples for BC government

Written by Sarah Clark on . Posted in British Columbia, Business, Cannabis News, Government, Research.

The BC government should take lessons from one of the province’s only indoor cannabis consumption spaces, says a new research paper.

An indoor consumption lounge inside one of Canada’s oldest compassion clubs offered members a chance to consume cannabis in a safe space, with the club itself serving as an example of a community-based model of cultivation, distribution, and consumption, says the study. 

The study was recently posted in the peer-reviewed journal, Contemporary Drug Problems, which publishes research on alcohol and other psychoactive drugs, licit and illicit. The authors present a case study of the Victoria Cannabis Buyers Club (VCBC) and its consumption space, affectionately called “The Box”.

The Box was a small room inside the VCBC’s former location that was used as a cannabis consumption space by many of the club’s members. The Box closed in February 2023 when the VCBC was forced to move locations due to enforcement from the province, but the research paper argues it can serve as an example for the province as it continues to look at cannabis consumption spaces. 

With research beginning in 2021, The Box was at the time closed due to pandemic-related restrictions, but information was collected through a survey sent out to members. The survey was open between January and March 2022 and was completed by 104 respondents. Although the club says they have 8,000 members, the number of current, active members is not provided.

Survey results showed members used The Box for an array of reasons, from socializing to learning more about cannabis. Respondents reported using The Box as often as several times a day to one or two times a month. Many reported using the space because of a lack of space to consume at home, with smoking being the most common mode of consumption.

The BC government can learn from this model, concludes the research paper, especially given that the government is currently looking at rules for consumption spaces. Although those potential rules will specifically exclude indoor smoking and vaping, the usefulness of these spaces for those using cannabis for therapeutic purposes needs to be taken into account, it says.

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Week in Weed – September 16, 2023

Written by David Brown on . Posted in Business, Cannabis News, Government, International.

This week at StratCann, we shared our correspondence with Health Canada, showing 28 targeted inspections and three compliance verifications so far this year to verify THC levels, as well as a break-in at Tricanna’s BC facility and Seed & Stone receiving approval from the city of Pitt Meadows for the first retail store in the city, expected to open next year.

We also shared the story of the Conservative Party of Canada rejecting a proposal to make the removal of medical cannabis a party platform, and the Manitoba Liberals calling for greater enforcement against the illicit cannabis market, covered BC cannabis retailer TruGreen working towards a community consumption space, and covered that the Victoria Cannabis Co is moving one step closer to their cannabis farmgate licence.

Last but not least, STU Farms, a cannabis facility in Arthur, Ontario, is looking for a buyer, and High Tide announced a new consumer-facing digital magazine to expand their sometimes controversial Cabanalytics data program.

Events

There were two prominent cannabis industry events this week: the Elevate Cannabis Expo from September 12–15 at the Mirage Banquet Hotel in Toronto, and the Montreal Cannabis Expo at the Palais des congrès, from September 13–14.

Hall of Flowers is coming to the Enercare Centre in Toronto on September 19 and 20.

And, of course, StratCann’s Growing Relationships event series will be in Winnipeg on October 16.

Cannabis Education

OCS launched a new “social impact platform,” Good All Around,” to help people learn about how they are driving positive change and exploring their OCS’s social responsibility work.

Jenna Valleriani, Senior Manager, shared that Social Responsibility for the Ontario Cannabis Store,  “I’m grateful to be a part of building something new that will help demonstrate transparency and accountability to Ontarians around how we are driving positive change, establishing meaningful partnerships, and promoting cannabis literacy across the province.”

A free public information session about medical cannabis is happening on Saturday, September 16, at the WISH Centre in Chatham, Ontario. The Unifor Local 127 Retirees chapter organized the event to talk about removing the stigma from medical cannabis use.

Speakers include Tina Lively, a clinical pharmacist with Thamesview Family Health Team, and scientist and educator Abhishek Chattopadhyay of Chatham-based AgMedica Bioscience, Inc.

Business

Custom Cannabis Inc., an Alberta-based cannabis company, was adjudged bankrupt on August 31, 2023, on application by Connect First Credit Union Ltd. Connect First is owed over $12 million.

Custom Cannabis is a 65,000 sq ft facility on 4.5 acres in Claresholm, Alberta, about an hour south of Calgary. The company received their cultivation licence in 2019.

High Tide shared its Q3 2023 financials, with a gross profit of $34.6 million compared to $25.8 million during the same period in 2022. Net loss was $3.6 million, compared to $2.7 million during the same period in 2022.

Sales from High Tides Cabanalytics “business data and insights platform” increased to $6.5 million from $5.5 million during the same period in 2022. High Tide is the largest Canadian non-franchised brick-and-mortar cannabis retailer, with 156 Canna Cabana locations operating nationwide and a loyalty base exceeding 1.1 million Cabana Club members. Its stated long-term goal is 250 locations across Canada.

Avtar Singh Dhillon, a former B.C. doctor turned cannabis stock promoter, has admitted to the US Securities and Exchange Commission (SEC) that he participated in a massive billion-dollar stock fraud scheme partly orchestrated from Vancouver. Dhillon directed Vancouver-based Emerald Health Therapeutics, a medical cannabis producer, and had served as a board chair with the Cannabis Council of Canada (C3).

Nextleaf Solutions’ Board of Directors announced the departure of Paul Pedersen from his role as CEO and President, effective September 8, 2023. Pedersen had been Nextleaf’s CEO and President since inception and remains on the Board of Directors. Nextleaf welcomes Emma Andrews to the role of Interim CEO.

The SQDC’s total sales between March 26 and June 17, 2023 reached $142.6 million, compared to $139 million during the first quarter of the previous fiscal year. there were 25,675 kg of cannabis sold legally during this quarter. The branch network sold 23,961 kg of cannabis, for a total amount of $133.5 million.

Fire & Flower completed its sale to FIKA Cannabis. Retail chain Fika had previously won an auction to purchase Fire & Flower. Fika currently lists 19 locations in Ontario. Fire and Flower lists 79 locations across Canada.

Pelham Today ran a story on Tilray closing the RedeCann facility on Foss Road. Residents and politicians say the loss of jobs is unfortunate but point to ongoing odour complaints from the community as now being rectified. 

Residents in Middleton, BC, are again complaining about odours coming from a cannabis production facility operated by Avant Brands (Formerly GTEC), a parent company behind cannabis brands like BLK MKT and Tenzo. These are ongoing complaints, with Avante saying they had previously “been able to satisfactorily address all inquiries from the City of Vernon and Health Canada concerning odour at the facility.” 

In this most recent complaint, one city councillor says she can attest to the aroma, while another mistakenly referred to the BC government as a relevant regulatory authority. The licensing authority, in this case, is Health Canada.

International

The Australian Greens’ legalization bill, introduced in parliament in August, was referred to the Senate Legal and Constitutional Affairs Legislation Committee on September 14. A report is due from the committee by May 31, 2024.

Rolling Stone did a writeup on the cannabis industry’s “transformative phase” as countries worldwide embrace the medicinal and adult-use potential of the plant. 

Reuters had a sober analysis of what rescheduling to Schedule III would mean for the cannabis industry. It’s not known when, if ever, the DEA will respond to the HHS recommendation reported by Bloomberg in August. 

Dentons also provided some analysis of some ongoing issues in the US cannabis market.

A bill allowing “Amsterdam-style cannabis cafés” to open in California cities has been approved by both chambers of the state Legislature and only needs the governor’s signature to be turned into law. If signed, it will come into effect on Jan. 1, 2024, and the “cafés” would only be allowed in cities and counties that approve them. 

The legislation would authorize cannabis stores to sell food and non-alcoholic drinks and provide live music or other performances on the premises.

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A German Government plan for the “controlled legalization” of cannabis that could come into force next year has met with opposition from a range of groups, including the German Medical Association, judicial and law enforcement officials, as well as those who favour decriminalization but say it is too bureaucratic, reports The Lancet. 

Klaus Reinhardt, President of the German Medical Association, says the proposed age of access of 18 is too low and that the judicial and regulatory bodies in Germany are “hopelessly overburdened” and would be unable to handle enforcing cannabis regulations. These echo similar concerns previously posed in Canada that are yet to come to fruition.

Law enforcement

Galen Simmons at the Beacon Herald covered a recent meeting with the Stratford Police Board on September 13, with local police saying they won’t be focussing on a local unlicensed dispensary.

Indigenous-owned retail store Organic Solutions operates within Stratford city limits in a mixed industrial and residential neighbourhood. Despite the store not being licensed by the city or the province, Stratford police Inspector Mark Taylor told the board that there had been no further discussion of enforcement with either the Crown or local bylaw office.

After conversations with the chief, Chair Tim Doherty said that the board was satisfied with the “status quo” while waiting for further direction. “I don’t think there needs to be any extra attention paid to this particular business. We’ll carry on as we have in the past,” Doherty said.

The BC Supreme Court has ordered the extradition of a BC man to the US to face charges as part of an investigation alleging a drug ring moving cocaine and cannabis between the US and Canada.

The Attorney General of Canada said the record of the case submitted by the US is sufficient to show that Ellingson furthered that conspiracy by recruiting pilots to traffic cannabis and cocaine, arranging meetings to coordinate conspiracy efforts, and arranging for encrypted communications for the smuggling group to avoid legal detection in the early 2000s. 

The Sûreté du Québec and the Royal Canadian Mounted Police (RCMP) carried out operations on September 14 to dismantle outdoor production sites for illegal cannabis in several regions of Quebec. Police say these seizures of plants will be added to the provisional results of operations that began last June. During this season, thousands of illegal cannabis plants have been seized throughout Quebec, tickets relating to the Cannabis Control Act have been issued, and arrests have been made under the Cannabis Act. 

Sorel Tracy Magazine ran images from one of the raids where 600 plants were seized and hauled away via helicopter. 

On September 8, a Vancouver Provincial Court judge sentenced a Port Coquitlam man to a one-year conditional sentence for selling marijuana products to Vancouver police who were posing as teens. Al Karim Khaki, 62, operated Planet Rock, a marijuana accessories shop in the 1000-block of Granville Street in Vancouver.

And finally, Police in Ontario seized thousands of cannabis plants from an illegal facility.

Cumberland cannabis retailer working towards community consumption space

Written by Contributor on . Posted in British Columbia, Business, Cannabis News.

Nestled in the heart of Cumberland, BC, Trugreen Cannabis is pioneering a project that promises to transform the landscape of cannabis consumption spaces. Under the visionary leadership of Michael Arneja, President of Trugreen Cannabis, this endeavour is set to establish one of British Columbia’s first outdoor cannabis consumption lounges.

This ambitious project first took root with a series of pop-up spaces adjacent to Trugreen Cannabis, serving as a summer pilot project. The goal was to gather insights and pave the way for a more permanent and official community space, slated to be unveiled by the end of 2024 under the moniker “CUB,” short for the Community Urban Bazaar. 

Arneja’s vision extends beyond the mere creation of a cannabis consumption area: it seeks to nurture “a stigma-free space where the community can gather and celebrate the cannabis culture with a responsible blend of cannabis use and community building.”

“We’ve been operating these pop-ups to see what the space could look like, and to get feedback from the community on what they want it to look like,” he adds, highlighting the project’s community-driven nature.

An artist rendering of the future Community Urban Bazaar

The space, occupying an adjoining lot next to Trugreen, was initially conceived as an “incubator” for local entrepreneurs. However, the overwhelming interest from existing businesses in the area has led to the expectation that CUB will soon house a bakery, coffee shop, fish and chips establishment, and serve as a venue for community activities like yoga and live music.

Guiding this unique endeavour alongside Arneja is Max Oudendag, who has been instrumental in curating a space that seamlessly combines family-friendly community activities with responsible cannabis consumption. Their mission is clear: prioritize being kid and family-friendly while establishing a legal and community-accepted cannabis consumption area.

“We’re excited to be in a position to explore how to break down the stigma of cannabis consumption and find a way to integrate that into a healthy community gathering space,” Oudendag emphasizes.

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Their dedication has not gone unnoticed. The project is on a “shortlist” to become one of the first legal consumption spaces in British Columbia. Earlier this year, British Columbia released a “What We Heard” report, soliciting input on the nature of cannabis consumption spaces in the province. This feedback will significantly influence provincial decisions regarding the allowance and regulation of such spaces.

British Columbia’s stance on indoor smoking and vaping restrictions has made outdoor consumption spaces like the one in Cumberland an attractive option. Arneja recognizes that the ability to promote and formally consume cannabis in an outdoor setting is vital for the success of their venture.

“We still have a lot of work to do, but we hope to be the first, if not one of the first, community consumption spaces of this kind in British Columbia.”

As the journey unfolds, Cumberland’s cannabis culture landscape is set for a remarkable transformation. Trugreen Cannabis and the Community Urban Bazaar aim to redefine how cannabis is perceived and enjoyed, all while fostering a vibrant and inclusive community hub. In this pioneering project, British Columbia may find a blueprint for responsible and community-driven cannabis consumption.

~Michael Arneja

For inquiries and further information, please contact Michael Arneja at [email protected] or 250-400-0420, and @cub.space on Instagram.

Join the movement and witness the evolution of cannabis culture in Cumberland, BC.

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High Tide announces new consumer-facing digital magazine

Written by Staff on . Posted in Alberta, Business, Cannabis News, Retail.

The owner of a chain of cannabis stores across Canada is launching a new consumer-facing digital magazine.

High Tide, the owner of the Canna Cabana chain of retail stores, is launching Cabanalytics Consumer Insights, which they say will be an extension of their Cabanalytics “business data and insights platform”.

Canna Cabana currently has 156 locations across Canada, making High Tide the largest retailer in the country. 

Beginning September 14, and continuing monthly, the company says in a press release that over 1.1 million ELITE and Cabana Club members will receive the free digital publication, covering topics such as the best-selling cannabis products and accessories and reports on consumer behaviour.

Over time, the company plans to expand their distribution into other markets like the US.

“Innovation is a key part of High Tide’s DNA, which led to the launch of our unique discount club model two years ago and our paid membership tier ELITE almost a year ago,” said Raj Grover, President and CEO of High Tide in a press release while acknowledging the program’s success is subject to provincial and federal regulations. “Today, I’m thrilled to announce the launch of Cabanalytics Consumer Insights, an extension of our highly successful Cabanalytics business data and insights platform.” 

Grover adds that the company aims to monetize the platform by utilizing a captive audience of consumers, and he hopes to expand its coverage to include topics such as data on hydroponics, cannabis seeds, and growing equipment. 

High Tide’s third-quarter results will be published on September 14. Cabanalytics data sales were $6.4 million in the second fiscal quarter of 2023, compared to $5.1 million for the same quarter last year and $6.6 million in the first fiscal quarter of 2023. Gross profits in Q2 2023 for High Tide were $31.6 million.

STU Farms investment opportunity

Written by Contributor on . Posted in Business, Cannabis News.

Why build something from scratch when you can buy this turn-key experience? Discover an exciting business purchase opportunity within the cannabis industry. This investment offers substantial profit potential and a bright future. Seize this chance for success today!

Welcome to STU FARMS, your gateway to pioneering cannabis cultivation solutions with a focus on profitability and efficiency.

We invite you to delve into a tour of our state-of-the-art facility, located in Arthur, Ontario, tailored to meet the needs of your business.

  • A Commitment to Your Business’s Success: STU FARMS is designed to elevate your business’s cannabis cultivation operations. Our modern, environmentally conscious design signifies a commitment to sustainable practices, aligning your brand with responsible and ethical cultivation.
  • Advanced Grow Rooms for Your Business: Within our facility, you’ll find four cutting-edge grow rooms, each meticulously designed to cater to different growth stages. Precise climate control, customized lighting replicating natural sunlight, and automated nutrient systems ensure consistent, high-quality yields, optimizing your production process.
  • Beginning with Propagation: Your business starts with our dedicated propagation room, where young plants are expertly nurtured from seeds or cuttings. This controlled environment fosters robust germination and early-stage growth, setting a strong foundation for your crop.
  • Unparalleled Flowering Potential: The heart of STU FARMS lies in our three larger grow rooms, fine-tuned for the flowering phase. Tailored light schedules and CO2 augmentation stimulate substantial flower growth, resulting in amplified harvests and potency – precisely what your business needs to thrive.
  • Efficiency at Every Step: In our processing area, your harvested plants undergo precise trimming, drying, curing, and packaging, all optimized for quality and efficiency. With cutting-edge machinery and a skilled team, you can trust in the consistency and excellence of your cannabis products.
  • Smart Storage Solutions for Business: Efficient storage is vital for minimizing overhead costs. Our facility includes secure, climate-controlled storage spaces for harvested cannabis products, packaging materials, and equipment, ensuring your inventory stays fresh and ready for market.
  • Maximizing Business Profit Through Innovation: At STU FARMS, we’re synonymous with efficiency and cost reduction. We harness renewable energy sources, employ automated systems, and utilize finely tuned cultivation techniques to minimize operational expenses. Our advanced monitoring and data analysis capabilities enable you to optimize yields and profitability continually.

STU FARMS represents the pinnacle of cannabis cultivation, offering a strategic partnership that merges cutting-edge technology with expert horticultural practices to enhance your business’s profitability. Your purchase of STU FARMS is not just an investment; it’s a strategic move toward increased productivity and success in the cannabis industry. Explore our tailored solutions for your business needs and experience the difference today!

For information and enquiries, contact Alroy Brouwer, Broker Realty Executives On The Bay Inc., Brokerage at 705-220-8758 or [email protected].

Content sponsored by: Alroy Brouwer, Broker Realty Executives On The Bay Inc.

Week in Weed – September 9, 2023

Written by David Brown on . Posted in Business, Cannabis News, Government, International.

This week in weed, StratCann looked at the RCMP considering changes to their cannabis policy for some employees, the trend of large amounts of illicit Canadian cannabis finding its way to foreign shores, the Victoria Cannabis Co. seeking support for their farmgate application, and a cannabis producer and nursery teaming up to bring polyploid cultivars to the Maritimes. 

We also looked into a story of two unlicensed cannabis stores raided in New Brunswick and ran a profile on Harrison Jordan and his Substance Law legal practice. 

In other cannabis news in Canada and around the world…

On Friday morning, demonstrators gathered outside the Manitoba Legislative Building to protest the provincial law banning home cultivation of cannabis, organized by Jesse Lavoie and Toba Grown. The rally preceded a hearing at the Winnipeg courthouse where final arguments were heard in a lawsuit arguing Manitobans’ right to home-grown cannabis.

Lavoie says he expects a decision in the case soon.

“We are confident that the Court will understand that Manitoba’s prohibition is actually criminal law in nature because it allows for significant penalties such as imprisonment for up to one year, whereas Quebec’s law imposes only a very small fine,” said Kirk Tousaw, one of TobaGrown’s lawyer’s, in a press release.

“This law was unconstitutional when it was drafted, and it is unconstitutional now given the significant differences between the law as written in Quebec and the law as written in Manitoba,” said Jack Lloyd, another of TobaGrown’s lawyers. “It is clear the Murray-Hall (Quebec) decision does not bind the Manitoba courts given the significant differences between the two laws.”

You can read more on the case on StratCann.

A study looking at cannabis-involved traffic injury emergency department visits after cannabis legalization and commercialization is making the rounds this week in the media, with even US outlets like CNN picking it up. The study looks at traffic injury emergency visits after cannabis legalization in Ontario. 

The cross-sectional study says that, initially, legalization was not associated with increased cannabis involvement during traffic injury emergency department visits, but “market commercialization” from March 2020–December 2021 was. 

A “cannabis-involved” incident is one that cannabis is associated with but is not necessarily the cause of the incident. However, cannabis-involved traffic injury ED visits were, on average, far more severe than injury ED visits not involving cannabis, with higher rates of hospital and ICU admission. Almost half of the cannabis-involved traffic injury ED visits also had documented alcohol involvement. Cannabis-involved traffic injury ED visits increased while alcohol-involved traffic injury ED visits decreased over time during the study.

Another new study looks at blood and urinary metal levels among cannabis users, finding lead and cadmium in their bodies. In this representative study, researchers found higher levels of cadmium and lead in blood and urine among participants reporting exclusive cannabis use when compared with participants who used neither cannabis or tobacco. 

According to Statistics Canada, alcohol sales are dropping in Canada, while cannabis sales are up, writes Sylvain Charlebois. This raises questions about whether Canadians are substituting alcohol with cannabis, the author says.

Hub International Limited (Hub), a global insurance brokerage and financial services firm, announced that it has acquired GJJK Inc. GJJK is located in Mississauga, ON and provides commercial and personal insurance to clients and specializes in the cannabis industry. 

A Canadian psychotropics company, Lucy Scientific, is acquiring the American cannabis media brand High Times’ intellectual property. Also included in this deal are existing licensing agreements for the brand High Times and the Cannabis Cup. The deal involves share transfers and semi-annual payments for the next five years. High Times was founded in 1977.

Aurora Cannabis announced the launch of Honour, a new cannabis cultivar designed “for veterans, by veterans,” and the second offering from Aurora’s Strain for Heroes portfolio. Five percent of net profits from the sale of Strain for Heroes products will be used to support veteran organizations across Canada. Honour is available under the MedReleaf brand and was developed in Aurora’s Comox facility (Occo).

Aurora also announced that it is expanding its hemp-derived CBD portfolio into Brazil. In partnership with Herbarium, a Brazilian company in herbal medicine, Aurora will launch the company’s full-spectrum, single-source 3 percent CBD oil under the Herbarium brand, available under the direction of medical doctors. The CBD oil is produced at Aurora’s production facility in Uruguay.

Heritage Cannabis announced that products from its Pura Vida brand have been approved for listing by Société québécoise du cannabis (SQDC) for retail and online distribution in the province. “When it comes to sales, Québec is the fourth largest market in Canada, and this was an important market for us to directly address,” said David Schwede, CEO of Heritage. 

Ghost Drops announced a strategic partnership with Tokyo Smoke. Twenty selected Tokyo Smoke stores across Ontario will feature Ghost Drops-branded installations featuring Ghost Drops products and merchandise.

The press release also says that Ghost Drops launched several products on the Ontario Cannabis Store’s (OCS) Flow-Through platform late last year, allowing the brand to offer new strains each week.

A report from MJBiz shows that Australia and Israel were the largest markets for medical cannabis exports from Canada in 2022. In the April 2022–March 2023 fiscal year, Canada’s exports of medical marijuana flower were 59,986 kg, a 48 percent increase over 2021’s 40,640 kg.

Nearly 80 percent (47,332 kg) went to Australia and Israel. According to Health Canada data, Germany was third, accounting for 9,560 kilograms, or approximately 16% of the total.

The data also highlights that while exports are a current hot topic, they are still only a small portion of the total market. At the end of the 2022 fiscal year, Canada had nearly 1.3 million kilograms of cannabis in unpackaged inventory and another 92,590 kg in packaged inventory with licensed producers. Distributors and retailers had another 55,935 kg of cannabis in inventory. Overseas markets are also not likely to rely on Canada for imports long-term, as the countries develop their own domestic supply.

International

The Conversation ran an interesting article on cannabis legalization and policy in the Australian Capital Territory, including a study that explores the experiences of cannabis growers in the ACT and the limitations of home grow rules. “Our research provides important lessons for policymakers across the nation who are considering whether to allow home-growing as a legal source of cannabis supply,” writes the author.

A lawyer in Costa Rica argues that the Central American country would benefit from following Canada’s lead in legalizing recreational cannabis.

Police in Taiwan say they have arrested a Canadian national for growing cannabis, seizing four plants and 472 grams of dried cannabis. The individual, identified only by his surname, Chen (陳), arrived in Taiwan earlier this year to work as a foreign language teacher.

CertiCraft

Victoria cannabis grower seeks support for farmgate application

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Micro, Producers.

A cannabis producer in Victoria, BC, is trying to generate support for its application with the city for a cannabis farmgate licence. 

The Victoria Cannabis Company (VCC), located at 340 Mary Street in Victoria West, has filed an application with the province for its producer retail store licence, also called a cannabis farmgate licence, but still needs municipal approval for the location. If approved, the application will go back to the province for final approval. 

The province began accepting applications for producer retail stores (PRS) in November 2022. The program allows micro cultivators, standard cultivators, and nurseries to sell their own products in a retail cannabis store at their own production facilities or sites, as well as an array of products from other producers. 

Only two producers have applied so far, with the first, ShuCanna located in Salmon Arm, receiving their licence in August 2023. The province charges an application fee of $7,500, plus a first-year licensing fee of $1,500 and an annual renewal fee of $1,500.

“We are not located in an industrial park on the outskirts of town. Our store is just minutes from the sea wall in Lime Bay and has the potential to become a tourist destination.”

Kyp Rowe, VCC President

The VCC’s farmgate application comes before Victoria City Council on September 14, they have posted a petition to show community support for their application. 

“By signing below, the undersigned provides support for the proposal and, specifically, encourages Council to approve the retail sales of cannabis via the farmgate proposed for 340 Mary Street,” reads the petition, in part. 

Kyp Rowe, president of VCC, tells StratCann their goal is to create a dynamic storefront that can show off not only their own unique cannabis products from cannabis grown on-site, but also other small craft producers in BC. VCC’s location is near the E&N Rail Trail, a popular bike path. 

“We are very excited at the opportunity to be among the first potential Production Retail Store locations in British Columbia,” says Rowe. “What sets us apart from other locations is the amount of frontage traffic we have in Vic West. We are not located in an industrial park on the outskirts of town. Our store is just minutes from the sea wall in Lime Bay and has the potential to become a tourist destination.  

“Our goal will be to focus on British Columbia producers as well as featuring our own flower grown and packaged on-site. Now, more than ever, small provincial craft producers need an opportunity at the retail level to showcase their products. With all of the pay-to-play for shelf space and the discount retail chains, more and more small producers are getting edged out by large corporations. We want to be able to tell BC’s rich craft cannabis story, and we feel this new farmgate store will give us this opportunity.”

The rezoning application for VCC was first heard by council in May 2023 and passed first and second reading on August 3. The September 14 meeting is a public hearing, after which the application will go to third and final reading. The application says the majority of products the store will carry, if licensed, would be produced on-site. A previous council meeting referenced concern about competition from a nearby cannabis retailer. 

Two other provinces, Ontario and New Brunswick, also have cannabis farmgate licenses, with a handful of stores licenced in each province.

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Week in Weed – September 2, 2023

Written by David Brown on . Posted in Business, Cannabis News, Government, International, Producers, Research, Retail.

This week, we covered Atlantic Cultivation’s purchase of the Tantalus brand and products, looked at the case for government to help fund cannabis emissions testing, and the story of a Vancouver cannabis store that avoided penalties after an employee sold cannabis to a minor. We profiled Substance Law which offers services for cannabis clients across Canada, focusing on the Ontario retail cannabis market.

We also ran a reminder that some of Health Canada’s COVID-19-related “flexibilities” expire September 30, took a look at a recent seizure of illicit cannabis in the Netherlands that was en route from Canada to Germany, and a new program for budtenders from Canadian cannabis recruitment company CanMar.

Police also shut down an illicit cannabis store in Mississauga, with the city using large concrete blocks to seal up the store.

In other cannabis news this past week,

The US Department of Health and Human Services (HHS) recommended that cannabis be moved from a Schedule I to a Schedule III listing. While the decision is with the US DEA, many are hopeful it will come to fruition, although the DEA rejected a call to do so in 2016. The recommendation from HHS came at the request of Biden to look into the issue (archived link to WaPo article).

The greenhouse in Niagara-on-the-Lake that Tweed once occupied appears to have been sold, reports Thorold Today. Canopy closed the location in 2021, and it had previously been listed online for $32 million.

An online website that lists property transfers shows the greenhouse sold for $21,800,000 in May to a company that grows mushrooms, but neither the realtor nor Canopy Growth responded to calls or emails from local media to confirm.

MJBiz shared a report that says cannabis exports from Canada increased in the 2022-23 fiscal year, with $160 million shipped overseas—a 50 percent increase compared to 2021-22’s $107 million.

On that note, Decibel Cannabis announced that it had entered into a supply agreement to provide dried medical cannabis flower to 4C LABS, a healthcare, technology, and pharmaceutical company in the United Kingdom and Channel Islands. The three-year agreement is expected to see its first shipment by year’s end, with minimum purchase commitments and exclusivity over certain genetics and the QWEST brand in the UK.

Entourage Health announced its financial results for the three and six months ended June 30, 2023. The Company reported second quarter total revenue of $13.37 million, and net revenue of $10.17 million and a loss of $9.6 million. Entourage offers six cannabis brands on its medical platform: Color Cannabis, Saturday, Starseed, Syndicate, Royal City, and Mary’s Medicinals.

MTL Cannabis Corp. also posted a net revenue of $12,763,787 and gross profit of $3,274,781 for their Q1 2024 results.

MTL is the parent company of Montréal Medical Cannabis Inc., an LP in Quebec, Abba Medix Corp., an LP in Ontario, IsoCanMed Inc., an LP in Québec, and Canada House Clinics Inc., with clinics across Canada that work directly with primary care teams to provide specialized cannabinoid therapy services to patients.

Research and other International Cannabis News

MediPharm Labs’ subsidiary Harvest Medicine published a study in the American Journal of Endocannabinoid Medicine on medical cannabis’ impacts on anxiety and depression outcomes in fibromyalgia patients, in which 75 percent of patients saw a significant decrease in their self-reported illness severity. The study also reported reductions in depression and anxiety scores. Details on the study can be viewed on the American Journal of Endocannabinoids Website.

Mamedica, a medical cannabis clinic in the UK, says it will be launching its own branded cannabis products there soon, supplied by BC licensed producer Miracle Valley. 

“We are delighted to announce that our partnership with Miracle Valley has cleared UK customs and marks the launch of our first own-branded strains of Canadian THC-dominant cannabis to the UK market,” said Mamedica CEO and founder Jon Robson in a press release. 

Researchers at the University of Auckland in New Zealand say they have found a sustainable solution to help tackle the medicinal cannabis industry’s waste problem. In collaboration with medical cannabis producer Greenlab and support from the New Zealand government, the researchers are developing processes that will help protect the environment by transforming cannabis waste into valuable resources such as biofertilizer.

Greenlab sells white label cannabis products by Canada’s Valens Company and Mile High Labs UK, and also sells products in Australia and lists Valens and Canadian-based MediPharm Labs as “Extraction Affiliates” on their website. The company also signed an R&D agreement in 2021 with a Canadian cannabis company Purple Farm Genetics to develop unique cultivars through breeding.

Reminder: Some of Health Canada’s COVID-19-related “flexibilities” expire Sept 30

Written by Staff on . Posted in Business, Cannabis News, Government.

Health Canada is reminding federal cannabis licence holders that some of its COVID-related “flexibilities” will end on September 30, while others will continue. 

The federal health regulator originally sent a memo out in May of this year, informing licence holders it would be extending certain administration and enforcement adjustments beyond the previously set September 30, 2023 cut-off. 

The federal health authority has previously extended some of these “flexibilities” on several occasions. These had originally been put in place early on in the pandemic to give licence holders more options for compliance given some COVID-19 related limitations.  

The flexibilities that will remain in place beyond the September 30, 2023 deadline include:

1. Allowing licence holders to submit additional security clearance applications to fill key positions (responsible person, head of security, master grower, quality assurance person, and their alternates), provided that a rationale for the additional clearance is provided.

2. Activities that do not require physical possession of cannabis can be conducted off-site by licence holders, provided that all requirements of the Cannabis Act and its regulations are complied with, and records are kept and made available to Health Canada upon request. Specifically, the activities that can be conducted off-site are:

Quality Assurance

  • Investigating complaints received in respect of the quality of the cannabis, provided that a complete investigation can be conducted off-site.
  • Batch record approval by the quality assurance person from a remote location, provided the quality of the cannabis can be adequately assessed without physical possession of cannabis before it is made available.

Facilitating Sale of Cannabis

  • Answering phone calls
  • Registering medical patients
  • Helping individuals to navigate a website
  • Providing product information
  • Taking orders
  • Fulfilling recordkeeping and reporting requirements
  • Entering data and information to comply with monthly reporting requirements for the cannabis tracking system

3. Witnessing the on-site destruction of cannabis by licence holders can be done virtually (using a camera or another device), provided that a copy of the video is retained and is included in the destruction records required to be maintained under the Cannabis Regulations.

4. Permitting holders of an import or export permit to use different ports of entry/exit than those indicated on their permits, provided that all other requirements of the permit are respected.

5. In situations in which a security clearance holder is required to accompany cannabis for off-site antimicrobial treatment or destruction, permitting the security clearance holder to not enter an off-site facility that is authorized, as per the Cannabis Regulations, to possess and produce cannabis. This is permitted so long as the security clearance holder otherwise accompanies the cannabis before it enters and, if applicable, after it exits the off-site facility. 

6. Permitting a packaging date on cannabis products that is plus/minus 4 days of the printed packaging date on the label, provided records of the actual packaging date are kept alongside other required packaging and labelling records as stated in Cannabis Regulations paragraphs 224(2)(b) and 225(2)(b), in the event of recalls. For more information on Packaging and Labelling requirements please consult the Packaging and Labelling Guide. 

Health Canada also notes that licence holders will be given “ample advance notice” in regard to administration and enforcement of these provision changes.

Measures that WILL end September 30, 2023

Previously, Health Canada had allowed medical cannabis producers to accept verbal attestations from patients when filling out their registration application to become a client for medical purposes, rather than requiring patients to provide a signature when they are not able to do so. This allowance will not be extended beyond the September 30, 2023 date. 

Health Canada also reminds stakeholders of their ongoing public consultation on potential amendments to the Cannabis Regulations, which is open until May 24, 2023. 

Health Canada is seeking feedback on potential amendments to the Cannabis Regulations around licensing, security measures, production, packaging and labelling requirements, and record-keeping for licence holders.

In addition, in a 60-day notice of intent published on Friday, March 24, the federal health authority that oversees the cannabis file said it’s considering potential amendments to the Canadian Cannabis Regulations that would seek to streamline and clarify existing requirements, eliminate inefficiencies in the regulations, and reduce administrative and regulatory burdens where possible. Some of these potential amendments relate to some of the pandemic flexibilities. 

The notice also points out that this proposal is separate from the current legislative review of the Cannabis Act, which is primarily focused on the societal impacts of cannabis legalization rather than a regulatory review.

Vancouver cannabis store avoids penalties after employee sells cannabis to minor

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Other, Retail.

A cannabis retailer in BC has avoided penalties after an employee sold edibles to a minor in a sting operation. 

A court has found that the company was not responsible for an employee failing to check the ID of a customer due to an extensive training program in place. While the employee was fired for their oversight, the retailer, Eggs Canna, did not have to face a $7,000 monetary penalty or shut down for seven days. 

Here is the sequence of events: On March 26 of this year, as part of an inspection, two BC Liquor and Cannabis Inspectors entered a cannabis store in Vancouver, including one “minor agent” who was only 18 years old. The age of legal access to cannabis in BC is 19. 

The “minor agent” then asked the employee if she could purchase edibles. The employee then directed the inspector to a display where the 18-year-old inspector selected what court records described as a package of Real Fruit Raspberry Chews containing THC 5mg per unit.

Although the staff member advised the minor agent of a 15 percent discount, they did not ask the minor agent what her age was, nor did the employee ask for any identification from the underage agent.

Once the two inspectors left the store with the purchased edibles, a third inspector entered the store, informed the staff member that he had sold cannabis to a minor, and asked for their Selling It Right certificate, which the staff member provided.

Two days later, on March 28, an inspector issued an electronic notice of non-compliance, which led to the issuance of a Notice of Enforcement Action (NOEA) dated April 4, 2023.

In court, the same inspector confirmed that the Licensee, Eggs Canna, had no history of non-compliance and that the contravention alleged in the NOEA was a first offence within a twelve-month period. Because of this, the Liquor and Cannabis Regulation Branch fine would be the lowest penalty as set out in Schedule 2 of the Regulation for a contravention of this nature, either $7,000 or a seven-day licence suspension. 

Eggs Canna opted, if found responsible, for a seven-day suspension. 

However, the court found that the owners of Eggs Canna had taken the necessary steps to train their employees to check for IDs as part of a three-day “New Hire Orientation” training program. Eggs Canna’s regional manager also confirmed that the employee who sold cannabis to a minor had been fired following the incident. Eggs Canna also had a policy in place at the time requiring employees to ask for the ID of anyone who appeared to be under the age of 40, and the store’s point of sale system included prompts to ask for ID.

Although the Liquor and Cannabis Regulation Branch argued that Eggs Canna was liable for the employee’s noncompliance, the court ruled otherwise, finding the store had a “strict culture of compliance prohibiting the sale of cannabis to minors.”

The representative for Eggs Canna told the court that she would like to see BC’s regulatory branch more willing to work with industry in a more collaborative manner, using discretion, and not penalizing operators “for missteps as the regulatory framework evolves.”

Eggs Canna has three locations, two in Vancouver and one in Kelowna, and is a legacy-era cannabis retailer. 

Featured image of the interior of an Eggs Canna location.

Atlantic Cultivation purchases Tantalus brand, products

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Newfoundland and Labrador, Producers.

A cannabis producer in Newfoundland has completed a purchase of cannabis from a BC producer as it deals with restructuring.  

Atlantic Cultivation in St. John’s, Newfoundland, a cannabis producer that also operates retail stores in Newfoundland, recently completed a purchase of cannabis from Tantalus Labs, located in British Columbia, as well as control of the Tantalus brand.

The sale includes the transfer of 70,853 units of packaged and unstamped inventory, including dried flower, pre-rolls, and infused pre-rolls, and 33,919 units of seeds, as well as some equipment like trimming machines and fans.

Tantalus products will soon be available in Atlantic Cultivation’s retail stores in Newfoundland and Labrador. 

“This acquisition is founded upon our shared values, reflecting our unwavering commitment,” said Chris Crosbie, the founder and COO of Atlantic Cultivation, in a press release. He went on to say that the deal reflects the two companies’ shared values. “We persist in our mission to elevate cannabis quality and ensure its widespread accessibility.”

The move was part of a sale approved by the court following Tantalus Labs’ recent announcement that it had given notice to its creditors and would be pursuing bankruptcy. 

Outside Tantalus Labs in Maple Ridge, BC

A court ruled in July that the sale could happen despite efforts by the CRA to destroy the products, as its excise licence was set to expire on July 10, 2023. Any sales of products would require an excise licence. 

CRA told the court that on June 12, 2023, Tantalus had agreed to terms that would include seven monthly payments of $35,000 to begin June 30, in addition to its 11 ongoing payments for monthly excise taxes due, all pending notice of intent from Tantalus.

According to court records, the CRA agreement with Tantalus also stated that if the payments were not made on the agreed timeline, the CRA “may have to take legal action without further notice, including garnishing income, directing the sheriff to seize and sell assets, and use any other legal means to collect the amount due.”

Tantalus’ creditor, Sungrown Mortgage Corporation, had threatened to enforce its security against the property where Tantalus operates unless the latter agreed to several key points, including recognizing a debt of over $5.5 million owed to Sungrown as of June 28, 2023. Total debts for Tantalus were listed as over $14 million, including more than $4 million to the CRA. Tantalus’ total debts were listed as $14,023,083.82.

The property, including the 69,000 sq ft greenhouse with 38,000 sq/ft of growing space and a five-bedroom home, is currently listed for $5.56 million. 

Tantalus said rushing the sale of its inventory of cannabis would force it to accept a lower price than if its excise licence was extended to allow it to pursue a more profitable deal.

Tantalus told the court it had approximately 345 kilograms of packaged inventory ready for sale, and 865 kilograms of bulk unpackaged cannabis inventory (trimmed and dried). The most recent court filings show that the remaining cannabis inventory as of July 25, 2023, consisted of 70,853 units of packaged and unstamped inventory, including dried flower, pre-rolls and infused pre-rolls, and 33,919 units of seeds. 

A July filing shows Tantalus sold approximately 1,300 kilograms of bulk unpackaged cannabis inventory (trimmed and dried) to Atlantic. The sale proceeds were received on July 24, 2023, which court filings show to be for at least $1 million. 

Public Documents available here.

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Week in Weed – August 26, 2023

Written by David Brown on . Posted in Business, Cannabis News, Government.

At StratCann this week, we continued to cover the rather curious claims made by the AGLC in regard to their ruling that CBN is a minor intoxicating cannabinoid, we looked at a new Health Canada report on regulatory fees, how paperwork and security requirements are challenging for small producers, and new figures showing Canadian retail cannabis sales passed $420m in June 2023. 

We also looked at the BC LBD’s latest quarterly report for cannabis sales, UBC launching a new Biology of Cannabis course, a new study once again showing high levels of pesticides in samples from the illicit market, and reports of three fires started at Canna Cabana locations in Ontario. 

We also shared our feature on the new Elevate Cannabis Industry Expo in Toronto, September 12-15, an in-depth look at Cannabis taxation’s multiplier effect in our newest deep-dive, and Nova Scotia’s focus on supporting local growers.

In other cannabis news:

Health Canada is reminding licence holders of an online course: Cannabis Act and Regulations – Understanding Compliance and Enforcement. This self-paced course helps federal cannabis licence holders understand their obligations under the Cannabis Act and the Cannabis Regulations.

Health Canada’s quarterly financial report for the quarter ended June 30, 2023 shows increases in authorities available for spending in fiscal year 2023-24 were $6,975 million at the end of the first quarter as compared with $5,687 million at the end of the first quarter of 2022-23. This includes $131.1 million in funding for the renewal of the federal framework for the legalization and regulation of cannabis in Canada.

In an interview with Radio Canada, clinical psychologist Julia Santo says the legalization of cannabis has complicated, but also simplified, the exercise of her profession. 

Village Farms announced the appointment of Orville Bovenschen as President of Pure Sunfarms effective immediately. Mandesh Dosanjh has stepped down from his role at Pure Sunfarms and will move into a strategic advisory position for a transitional 90-day period. Bovenschen joined Village Farms as VP of European Business Development and Operations and was later named COO of Pure Sunfarms. He also formerly held several senior roles in cannabis, during which, among other things, he oversaw innovation and new product launches.

BZAM announced its financial and operating results for the three and six months ended June 30, 2023 (“Q2 2023”). Quarterly gross revenues were $30 million during Q2 2023, up 89 percent from Q2 2022, and quarterly net revenues were $19.3 million, up 66% from the previous year.

Loss from operations for the quarter was $12.1M compared to $11.7M in Q1 2023. BZAM says the increase in loss was driven by lower gross profit, and partially offset by the decrease in SG&A quarter-over-quarter. 

The company has sold its Midway, BC facility (completed August 4, 2023), expects the Maple Ridge, BC facility sale to be completed in September 2023, and has achieved EU-GMP certification for its Ancaster, ON facility.

New products:

Organigram announced it is launching new THCV gummies, CBG infused pre-rolls, and a high-potency 1×0.5g pre-roll under its Trailblazers brand. 

Canopy announced several new pre rolls.

SNDL and Nova have again extended their date for the closing of their previously announced strategic partnership due to the continued review of the deal by a province. The two companies have previously had to push back the date for the same reason. 

Lastly, AgriCann, which operates Craft Nurseries Canada Ltd., announced it will now be offering products through BC’s Direct Delivery program. 

Cannabis sales continue to increase in Nova Scotia, with local products now more than 30% of sales

Written by Staff on . Posted in Business, Cannabis News, Government, Nova Scotia.

Nova Scotia sold $29.1 million worth of cannabis in its first quarter of 2023, from April 1, 2023-July 2, 2023. 

This represents a 6.7 percent increase in cannabis sales compared to the same period last year. 

Nova Scotia cannabis sales led growth in local products sold through the Nova Scotia Liquor Corporation (NSLC), with a 22.2% increase in sales to $9.5 million. 

Nova Scotia cannabis accounted for 32.6 percent of all cannabis sales in the province, which NSLC says is the largest seen to date. The province has said in the past that it is focussing on partnering with local cannabis producers to help fight the illicit market.

The price of cannabis sold in the province also continues to decline.

“This quarter, the average price of cannabis per gram was further reduced 2.1 percent to $6.02, compared to last year, as we work to impact illicit sales in the province,” said NSLC president and CEO Greg Hughes. 

The average price per gram in Nova Scotia was $6.94 in their fiscal year-end report for 2021-2022.

The NSLC manages the sale of beverage alcohol and cannabis in Nova Scotia, with all of its profits going to help fund public services. 

The NSLC released their year-end annual report earlier this year, with more than $100 million worth of cannabis sold. 

Nova Scotia lists 49 authorized cannabis stores.

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Elevate Cannabis Industry Expo is in Toronto, September 12-15

Written by Staff on . Posted in Business, Cannabis News, Events, Ontario, Retail.

Elevate Cannabis Industry Expo is the first cannabis conference brought to you by Canadian retailers, delivering four full days of immersive training and education, a trade show floor, and plenty of networking mixers to build and strengthen the community.

The event takes place September 12-15 at the Mirage Banquet Hotel in Toronto.

Acknowledging the challenges that retailers, budtenders, and licensed producers are currently navigating, “the intent of this event is to bring transparency and collaboration to the forefront of our industry,” says Jazz Samra, Owner and Founder of VIP Media Group and Sativa Bliss Cannabis Boutique.

“We are providing a safe space to be vulnerable, ask questions and gain insight into some best practices from successful members of our industry, while surrounded by like-minded people – this is an invaluable opportunity to connect, elevate and grow, together.”

Samra says he decided to launch his own industry conference after feeling like other events weren’t quite meeting the industry’s needs from his perspective as a retailer. 

“Some of the events I’ve attended have been so disappointing. They are totally disconnected from the needs of the industry. Conferences like this are the best way to bring the industry together and create opportunities. We need more education; we need more training. So I wanted to make a conference that is heavily focussed on education, with three days for education and training, and one day for the trade show.”

The conference’s theme is “We rise by lifting others,” and Samra says his mission is to empower retailers, budtenders, and LPs to elevate their businesses and thrive in the current and future climate. The event is designed to foster a collaborative environment, focusing on education, training, and inclusion to build a robust, cohesive, thriving industry here in Canada. 

“We called it Elevate because we want to elevate the industry and create our own ecosystem where we’re supporting each other and keeping our money within the industry,” Samra adds. We’re from this industry and contributing to this industry, and this is how we all succeed, by elevating others.”

With a variety of registration options to choose from, the Elevate Expo includes:

  • Day 1: Store Managers/Owners Training Day
  • Day 2: Budtender Training Day (hosted by CanMar)
  • Day 3: Licensed Producers & Brand Rep Training
  • Day 4: Industry Trade Show + Additional Social Networking

For more information and registration, please visit elevatecannabisexpo.com.

BC cannabis sales increase as prices continue to drop

Written by Staff on . Posted in British Columbia, Business, Cannabis News.

Cannabis sales continue to increase as prices continue to drop in BC, according to a new wholesale quarterly report for April, May, and June, 2023.

Sales of smaller SKU dried flower, such as 1-gram and 3.5-grams, declined overall, while larger formats, such as 7-gram, 14-gram, 28-gram, and 30-gram, increased. Sales of cannabis extracts, including the increasingly popular infused pre-roll category, saw the most significant year-over-year increase of 76.4 percent in total units sold and a 51.5% increase in year-over-year sales.

The BC LDB, which oversees wholesale cannabis sales and distribution in the province, saw more than thirty thousand kilograms of wholesale cannabis sales (30,655,160 grams), a more than 32 percent increase from the same period last year. Wholesale increased by nearly 16 percent to more than $127 million, while the number of stores in BC increased from 442 in the same period in 2022 to 487 at the end of June 2023.

The average price of cannabis also continued to decline in the province to a new low of $4.14, while the average cost of dried cannabis dropped to $3.40 a gram.

Chart via BC LDB

Total dollar sales of 1-gram, 3.5-gram, 7-gram, 14-gram, and 28-gram offerings of dried flower priced at more than $5 a gram all declined significantly compared to the same period last year. Eighths selling for $5 a gram or less increased, as did 7-gram and 14-gram SKUs. The 28-gram offerings priced at $3 a gram or less increased while all other prices declined.

Dollar sales of beverages increased by just over 20% year-over-year, while edibles sales increased by just 0.3 percent. Overall, dried flower sales were down 4.4 percent, and ingestible extracts like cannabis oils and capsules, driven by high sales of now-discontinued products like Jolts and Glitches, were up by 5.6 percent.

Inhalable extracts like vape pens, shatter, hash, and rosins, as well as infused pre-rolls, increased by a whopping 56.5 percent, pre rolls sales increased by 14.2 percent, while seeds sales dropped by 7.1 percent and sales of cannabis topicals decreased by 11.1 percent.

BC’s direct delivery program, which launched in August 2022—allowing some small-scale cannabis growers located in the province to ship products directly to retailers without going through the LDB’s central distribution warehouse—saw 779,775 grams sold for a total of $3,665,299 in sales.

The average price per gram sold through the direct delivery program was $4.70, or $4.02 for flower.

Canadian retail cannabis sales passed $420m in June 2023

Written by Staff on . Posted in Alberta, British Columbia, Business, Cannabis News, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Quebec, Retail, Saskatchewan, Yukon.

Cannabis sales in Canada passed the 420 million mark again in June, following a slight decline after the Christmas shopping season.

Total retail sales of cannabis in June 2023 were over $426 million, up from $415 million in the previous month and a peak of $425 million in December 2022.

Like sales in many retail sectors, cannabis sales have dipped in the months following the Christmas shopping seasons over the last three years, before again building on an ongoing, upward trend. 

The number of retail stores across Canada also continues to grow, although the pace has slowed considerably compared to the first four years of legalization. 

  • BC: 506 public and private stores as either open or “coming soon”
  • Alberta: 746
  • Saskatchewan: 177
  • Manitoba: 189, 109 of which are in Winnipeg 
  • Ontario: 1,748 as authorized to open 
  • Quebec: 98
  • New Brunswick: 25 public stores, plus six private stores and six farmgate stores 
  • Nova Scotia: 49
  • PEI: 4 
  • Newfoundland and Labrador: 45
  • Yukon: 6 cannabis stores
  • Nunavut: 1 licensed store
  • Northwest Territories: 6 brick-and-mortar locations, plus one online store

Regulatory fees, paperwork, security requirements more challenging for small producers

Written by David Brown on . Posted in Business, Cannabis News, Government.

A new review of Health Canada’s cost recovery program for cannabis licence holders found the organization recovered less than half of the cost of administration of the cannabis licensing program in the first four years of legalization.  

While Health Canada brought in just over $160 million in fees from 2018-2022, the cost of managing application screening fees, security screening fees, import/export fees, and annual regulatory fees was more than $430 million. 

The review, shared this week by Health Canada, looked at the effectiveness of the cost recovery program. The program was a recommendation from the federal cannabis legalization and regulation task force and is common in other industries in Canada.

The review also notes that micro licence holders say they are more negatively impacted by regulatory fees, security requirements, and paperwork compared to larger standard licence holders.

The program has been increasing its ability to cover costs each year since legalization, with only 4.5 percent recovered in the first year of legalization, then jumping up to 45.8 percent in the second year, 26.5 percent in the third year, and 65.8 percent in the fourth.

Excluding 2018-2019 because it was only a partial fiscal year for the legal cannabis market, the Government’s cost recovery rate from 2019-2020 to 2021-2022 was 46.2 percent of total cannabis regulatory program costs.

Application screening fees brought in about $2.5 million, security screening fees more than $11 million, import/export fees were about $1.8 million, and the annual regulatory fees were nearly $145 million. 

Infograph via Health Canada

As of April 1, 2022, the application screening fee for standard cultivation, standard processing, and sale for medical purposes classes of licence applications was $3,527. The fee was discounted to $1,765 for micro-cultivation, micro-processing and nursery classes of licence applications.

As of April 1, 2022, the security clearance application fee was $1,781 for all relevant licence holders, which includes cultivation, processing, nursery and sales for medical purposes licences which are subject to fees. Industrial hemp licences, research and analytical testing licences, and manufacturers or importers of health products containing cannabis, do not pay fees.

As of April 1, 2022, the import/export permit fee was $658 for all relevant licence holders.

Infograph via Health Canada

For the annual regulatory fee, standard cultivation, standard processing and sale for medical purposes classes of licences are subject to a rate of 2.3 percent of cannabis revenue or $23,000, whichever is higher. 

For micro-cultivation, micro-processing and nursery licence holders, the rate is 1 percent of cannabis revenue up to $1 million (and 2.3 percent on any revenue over $1 million), or $2,500, whichever is higher. The ARF rate for micro and nursery class licences is discounted between $13,000 and $20,500 per year compared to the ARF rate for standard class licences.

The goal of the annual regulatory fee is to recover the total costs of administering the federal cannabis regulatory program, which is not covered by transactional fees.

In their survey about the cost recovery program, Health Canada sent out 642 questionnaires to licence holders between August 2021 and March 2022. They received 72 responses. Two responses were from nurseries, 27 were from micros, and 42 were from standard licence holders. 

The report found that the regulatory fees, compliance, and federal excise taxes have a greater impact on smaller producers like micro licence holders, given the economies of scale. 

Micros were more likely to report spending more than 10 percent of their costs on security requirements compared to standard licence holders, despite having fewer security requirements than standards.

The same was true for record-keeping, with more than one-quarter of micros (26.9 percent) reporting spending more than 10 percent of their total costs on the record-keeping and reporting, compared to only 13.5 percent of standard licence holders. 

Analytical testing was another area where micros reported spending a more significant portion of their total costs compared to standard licence holders, with 28 percent of micro licence holders spending more than 10 percent of their total costs compared to just 5.1 percent for standard licence holders.

(Note: Due to the small respondent size of nursery licence holders, Health Canada has used the term “micro” to represent micro and nursery licence holders.)

Infograph via Health Canada

Timelines for security clearances, which go through RCMP and have long been a sticking point for applicants, continue to be a problem as well, said survey respondents. 

Licence holders said these fees were another barrier to profitability, although they were only a small portion of total operating costs. While one-fifth (20.5 percent) of standard licence holders said these fees represented over 10 percent of their total operating costs, almost twice as many micros (37.5 percent) reported the same.

Most respondents to the survey (63.9 percent) said the application screening fee was reasonably priced given the service provided, while 60 percent said the same for the import and export fee. Just under half (47.7 percent) said the services provided for the security screening fee were worth the cost, while only 41.8 percent said the annual regulatory fee was.

Although not specifically within the regulatory fee scheme, the survey also asked licensed holders about excise duties on cannabis products.

Just over half (54 percent) said the federal excise tax (which generally works out to $1 per gram of dried cannabis and $0.01 per mg of THC on extracts, edibles and topicals) represents less than 1 percent of their total costs. Another 30 percent said it represents more than 10 percent of their total operating costs. The report also notes that these fees are applied to all cannabis producers, regardless of their profitability. Newer producers may sell cannabis, but it can take several years to see any revenue from those sales. 

Three-quarters of cannabis excise taxes go to the province, while Ottawa keeps one-quarter. 

The cannabis excise tax is applied when producers sell cannabis into a provincial market or through the medical program. Cannabis producers have long expressed frustration with the high level of taxes on cannabis, which can be upwards of 30 percent of sales revenue for producers. Currently, wholesale prices for dried cannabis flower in Canada can range from less than $1 per gram to around $4 or $5.   

Another issue, according to survey respondents, is getting into most provincial markets, arguing that provincial cannabis boards are favouring low-cost, high-THC products. Issues such as payment schedules, recall insurance, and return policies were also commonly noted challenges here, as was access to capital. 

Health Canada says this review, along with the current legislative review of the Cannabis Act, will help inform the government as to the progress of legalization as it enters its fifth year. 

AGLC says CBN policy based on federal guidelines, while Health Canada, provinces say otherwise

Written by David Brown on . Posted in Alberta, Business, Cannabis News, Government, Producers, Products.

While Alberta’s AGLC maintains it has considered CBN within the THC limits on cannabis products like edibles, concentrates, or topicals, based on guidance from Health Canada, four other provincial cannabis agencies say they have received no such guidance.

A representative with Health Canada does confirm it is currently considering the development of a guidance document for licence holders concerning what it considers intoxicating cannabinoids other than delta-9-THC. They have not made any changes to the federal regulations at this time. 

The information comes in the wake of Alberta’s provincial distributor, the AGLC, reportedly telling some cannabis producers that it was including CBN within the federal 10mg THC limit for edibles. The AGLC says this was based on guidance from Health Canada, but points to a guidance document Health Canada published earlier this year that made no reference to CBN, only delta-8-THC and delta-10-THC.

While the AGLC tells StratCann that the regulatory change came into effect in February of this year, representatives from four other provincial cannabis agencies—New Brunswick’s Cannabis NB, BC’s LDB, Ontario’s OCS, and Quebec’s SQDC—tell StratCann that they have not received any guidance or directive from Health Canada regarding minor cannabinoids in general, nor CBN specifically. 

Cannabis NB:

“No, Health Canada has not provided guidance to Cannabis NB in regard to minor cannabinoids. Cannabis NB will continue to sell products that meet Health Canada guidelines and regulations,” writes Angela Bosse, a communications specialist with Cannabis NB.

BC LDB:

“The BC Liquor Distribution Branch (LDB) has not received any recent direction from Health Canada regarding minor cannabinoids and the THC limit for edibles,” says Kate Bliney, a communications officer with the LDB, who also notes that in December 2022, the LDB advised licensed producers that it would not be registering or replenishing any products that contain delta-8-THC.

“At this time, the LDB has not issued any directives regarding other minor cannabinoids,” she adds.

The SQDC:

“The SQDC has not received any regulatory change or directive on regulatory application regarding minor cannabinoids,” writes Fabrice Giguère, communications advisor and spokesman for the SQDC, in an email to StratCann.

“We currently don’t have a policy on the matter. We have no reason to believe that any of our suppliers’ edible products are not compliant with both the federal and provincial regulations relating to the limit of THC. Hence, we’re not planning on delisting or removing any edible products.”

“In Québec, the maximum THC content allowed for ready-to-eat products is set at 10mg per package and 5mg per distinguishable unit contained within the package. As for ready-to-drink products, the maximum THC content allowed is set at 5mg per distinct unit.”

The OCS:

“The OCS is unaware of any formal guidance provided by Health Canada to Licensed Producers (LPs) of cannabis relating to suggested limits on intoxicating cannabinoids,”  Daffyd Roderick, Senior Director, Communications and Social Responsibility at the OCS.  “Should Health Canada issue formal guidance, the OCS will work with its LPs to understand the impacts and to support their compliance, as appropriate.”

While the AGLC told StratCann via email last week that the Ontario Cannabis Store also implemented the same requirements in regard to CBN based on Health Canada’s recommendations earlier this year, the OCS notes the only change they made was in reference to delta8-THC, not CBN or any other minor cannabinoids. 

“In December 2022, OCS made a proactive decision to begin limiting the sale of products containing delta-8 THC in response to health and safety concerns raised in the United States. At that time, the OCS communicated with both LPs and licensed cannabis retailers to notify them of this change, which was made out of an abundance of caution while the industry waited for formal guidance and direction from Health Canada on whether amendments are required to the Cannabis Act and its Regulations to address intoxicating cannabinoids and other synthetic derivatives not explicitly captured within the framework.

 “OCS remains committed to enabling a vibrant cannabis marketplace that offers adult consumers access to innovative, legal cannabis products, transitioning consumers away from unregulated sources and promoting social responsibility in connection with cannabis. Clear and specific regulatory guidance from Health Canada on the matter of intoxicating cannabinoids is critical to achieving these objectives.”

While the AGLC claims the change came into effect in February 2023, several producers tell StratCann that the AGLC continued to accept orders of products that contained CBN and fell outside of the province’s interpretation of these products by having more than 10mg THC, with CBN included in that total. 

AGLC points to a document they sent out in February as being the notice in question, but that document referred only to delta-8-THC and delta-10-THC, not CBN or any other minor cannabinoids. 

The AGLC also says the policy applies to any cannabis product “containing any combination of natural or synthetic intoxicating cannabinoids that exceed the THC limits set out for edibles and extract products in the Cannabis Regulations (10mg & 1000mg, respectively, per retail pack), including products with CBN.”

The 1,000mg THC limit would apply to concentrates and topicals. 

From an AGLC memo sent to producers and retailers on February 15, 2023

The Alberta cannabis agency also maintains that this rule about CBN was communicated to all LPs on Feb 15, 2023, when it says it requested LPs contact their respective AGLC category management specialists if they had any available products that were impacted by this policy. 

“It recently came to our attention that there are certain SKUs which remain non-compliant with this requirement and so we have begun notifying affected LPs,” an AGLC comms person tells StratCann via email. 

The AGLC says the list of cannabinoids it considers intoxicating is still changing and more could be added to the list in the future, which it says it is doing based on guidance from Health Canada.

“The cannabis plants make over 100 different minor/rare phytocannabinoids and there are also synthetic intoxicating cannabinoids created in lab,” continues AGLC’s communications team in an email to StratCann. “As such, the category of novel and minor intoxicating cannabinoids is still evolving. AGLC does not determine if a cannabinoid is intoxicating but instead follows guidance provided by Health Canada.

“The following are a few examples of intoxicating cannabinoids:

  • Natural: delta-8-tetrahydrocannabinol (delta-8-THC), delta-10-tetrahydrocannabinol (delta-10-THC), cannabinol (CBN), tetrahydrocannabivarin (THCV), hexahydrocannabinol (HHC) etc.
  • Synthetic cannabinoid derivatives (currently not allowed in Alberta):  – tetrahydrocannabiphorol (THCP), tetrahydrocannabutol (THCB), tetrahydrocannabinol-O-acetate (THC-O) etc.

“As AGLC receives Health Canada guidance, it will continue to work with stakeholders to ensure LPs are aware of potential changes.”

A representative with Zelca, who was told by their category manager that one of their products was being immediately delisted, now says the AGLC has somewhat walked back their initial claim and will allow the sale of the in-stock Zelca product in question but will not be filling future orders.

Part of the confusion appears to be the inclusion of CBN as a “minor intoxicating cannabinoid” (MIC). While internal messaging shared with StratCann shows Health Canada is currently considering cannabinol (CBN) as a MIC, along with delta-8-THC, delta-10-THC, delta-6a-10a-THC, THC-O, HHC, THCV, THCP, and THCB, there is nothing official from Health Canada on the subject. However, the federal regulator has not issued any official regulator changes or guidelines regarding CBN to the provinces.  

“Health Canada is also currently considering the development of a guidance document that would help licence holders understand the application of the Cannabis Act and its regulations on intoxicating cannabinoids other than delta-9-THC,” Anna Maddison, senior media relations advisor with Health Canada, tells StratCann via email.

“As with other topics and issues, Health Canada has regular discussions with licence holders and industry associations such as the Cannabis Council of Canada, National Cannabis Working Group of the Canadian Chamber of Commerce, and C-45 Quality Association. The topic of intoxicating cannabinoids other than delta-9-THC has been raised in these discussions.”

Week in Weed – August 19, 2023

Written by David Brown on . Posted in Alberta, British Columbia, Business, Cannabis News, Government, International, Manitoba, New Brunswick, Newfoundland and Labrador, Ontario, Quebec, Saskatchewan.

This week at StratCann, we covered an ongoing story about a decision made by the AGLC to include CBN within the total allowable THC in a cannabis product (more to come on this soon), the issuance of the first formal cannabis farmgate licence in BC, and looked at Ontario projecting $463 million in revenue from cannabis sales, taxes for 2023-24.

We also covered Canopy Growth entering into an agreement for the sale of its Hershey Drive facility in Smiths Falls, the Australian Greens tabling a bill to legalize cannabis, a new study showing legal, medical cannabis lowers individual market health insurance premiums in the US, and reported on a large raid in Ontario of an unlicensed facility. 

Elsewhere in cannabis news:

CBC covered a new private cannabis store in New Brunswick, McCannabis in Salisbury. New Brunswick currently lists six private cannabis stores, six farmgate stores, and 26 Cannabis NB locations. 

In Newfoundland, Taylor Giovannini, co-owner of Oceanic Releaf, is making news again along with Atlantic Cultivation’s CEO Chris Crosbie as they discuss cannabis excise taxes and the absurd $1 per gram federal rate, 75 percent of which goes back to the province. 

The Prince George Citizen featured the region’s newly-licensed micro cultivator Kush Mountain Craft Cannabis. The owners were the recipients of a $150,000 loan from Community Futures to assist in the $3 million start-up. 

Winnipeg Free Press covered the impending closure of the Cronos cannabinoid factory in Winnipeg. The 84,000-square-foot facility was purpose-built for Apotex in 1990 at a cost of about $50 million. Cronos Group Inc. bought the former Apotex Fermentation plant in 2019 for an undisclosed sum, partnering with Boston-based Ginkgo Bioworks Inc. to produce cultured cannabinoids. 

The first year of enhanced entrance security at the Saskatoon Ex resulted in “a tremendous amount of marijuana” being seized. 

Tilray announced it is taking on full ownership of the cannabis beverage company it ran with Molson Coors Canada, Truss, which is behind the XMG, Little Victory, Mollo, Veryvell, House of Terpenes, and Bedfellows Liquid Arts brands.

The New York Times ran a feature on Smiths Falls and the sales of the old Hershey Factory from Canopy back to Hershey. Since April, Canopy has sold seven of its buildings across the country, the latest being the plant at 1 Hershey Drive in Smiths Falls.

Finance & Markets

Auxly Cannabis Group Inc. shared their Q2 2023 financial report, with total net revenues of $22 million, a decrease of $2 million or eight percent from the previous quarter and a decrease of $5.3 million or 20 percent compared to the same period in 2022. The company says it still managed to retain the #5 LP position in Canada with a 5.2 percent market share and continued to improve sales in the pre-roll segment, with Back Forty Wedding Pie growing to become the #1 non-infused pre-roll SKU nationally in the quarter.

Approximately 85 percent of cannabis sales during the period originated from sales to British Columbia, Alberta, and Ontario. Net losses for the three months ended June 30, 2023, were $12.9 million.

Organigram announced a deal to supply 4C LABS cannabis for distribution to medical cannabis patients in the UK. Under the terms of the agreement, OGI expects to supply approximately 600 kilograms. The Canadian producer now has international supply agreements in place with Israel, Australia, Germany, and the United Kingdom.

MediPharm Labs Corp. announced financial results for its second quarter, which ended June 30, 2023. The company completed its first commercial delivery to the United States. The delivery consisted of clinical trial material for a fully funded large-scale phase two clinical trial.

MediPharm’s Canadian medical cannabis revenue for Q2 2023 was $3.8M versus $0.2M in Q2 2022 and $0.6M in Q1 2023, driven by the integration of the VIVO medical channel, Canna Farms. International Medical revenue in Q2 2023 was $3 million. The growth of International Medical was largely driven by the integration of VIVO’s Australian business, Beacon Medical Australia.

Revenue for Q2 2023 of $9.6 million increased approximately 120% versus Q2 2022 and 64% versus Q1 2023.

High Tide announced a new store in Oshawa, Ontario, their 51st in Ontario. High Tide’s Canna Cabana now has 155 locations across Canada. 

Delta 9 Cannabis released its Q2 2023 report. The cannabis producer, retailer, and distributor had net revenue of $18.3 million for the second quarter of 2023, an increase of 4% from $17.5 million for the same quarter last year. Gross profit was $5.2 million, an increase of 12% from $4.6 million for the same quarter the previous year. Loss from operations was $3.5 million for the second quarter of 2023 versus a loss from operations of $3.4 million for the same quarter last year. The release also included earnings reports from Q1. 

Rubicon Organics shared their Q2 2023 financial results. The certified organic producer reported net revenue of $11.3 million (28 percent increase) and $20.1 million (44 percent increase) for the three and six months ended June 30, 2023.

This quarter included the introduction of three new flavours of live rosin edibles under its brand, 1964 Supply Co.

SNDL released its Q2 2023 report. Revenue for its cannabis retail locations was $71.9 million for the second quarter of 2023, with a $17.8 gross margin and $2.3 million in earnings. The report also notes its “data licensing program is driving improved profitability and supplier relationships.”

SNDLs cannabis production saw net revenue of $20.9 million, a gross margin of -$1.2 million and a loss of $14 million. After recently “rightsizing” its Alberta facility, SNDL has now centralized most manufacturing activities and consolidated processing, labelling, and excising at its Kelowna, BC facilities.

SNDL’s business is operated and reported in four segments: Liquor Retail, Cannabis Retail, Cannabis Operations, and Investments. With its ownership interest in Nova, SNDL is Canada’s largest private-sector cannabis retailer, operating 196 locations under its four retail banners: Value Buds, Spiritleaf, Superette, and Firesale Cannabis.

As of August 11, 2023, the Spiritleaf store count is 98 (21 corporate stores and 77 franchise stores), the Value Buds store count is 91 corporate stores, the Superette store count is five corporate stores, and the Firesale store count is two corporate stores.

Fire & Flower announced that Fika Cannabis was the winner of an auction for aspects of the cannabis retail company and brand. The deal still needs to be completed, and more details are expected. 

MTL Cannabis received final approval to list its common shares on the Canadian Securities Exchange under the trading symbol “MTLC” and to commence trading at the opening on Monday, August 21, 2023. 

MTL Cannabis is the parent company of Montréal Medical Cannabis Inc., Abba Medix Corp., IsoCanMed Inc., and Canada House Clinics Inc.

​​International Cannabis News

Police in Trinidad say they seized 6.48 kg of cannabis illegally imported from Canada.

Two BC cannabis companies in conflict over payment

Written by David Brown on . Posted in British Columbia, Business, Cannabis News.

Two BC cannabis companies are at odds over payment for a large quantity of cannabis, according to two filings in BC court this past week.

In a filing from August 10, cannabis grower Okanna Craft said that Joint Venture Craft Cannabis (JVCC), a cannabis processor, owes it payment for 76 kg of cannabis based on a purchase price of $3.41 per gram. 

In their statement of defence, JVCC denies the claims and says their agreement with Okanna Craft was based on consignment, not a set purchase price, and that it had difficulty selling cannabis for Okanna due to issues with quality. 

Okanna Craft is located in Kelowna and has two micro cultivation licences, a micro processing licence, and a nursery licence. JVCC is located in Salmon Arm and is a processor that packages and processes cannabis and brings it to the provincial retail markets in Canada on behalf of growers.

The Notice of Civil Claim from Okanna Craft alleges that the two companies entered an agreement in 2021 that would allow JVCC to process, package, and market Okanna Craft’s cannabis to the provincial retail markets, at which point Okanna would receive payment. 

Okanna further alleges that it has made 13 separate shipments of cannabis to JVCC since August 2021, each sold at different prices, for a total of 167,295 grams. The company says JVCC has paid Okanna Craft for 75,975 grams and argues JVCC still has 64,629 grams of unsold cannabis in their processing facility in Salmon Arm. 

Okanna also alleges that JVCC refuses to pay them the agreed-upon price of $3.41 per gram, is charging additional fees for marketing they say was not part of the original agreement, and has failed to sell their cannabis in a timely manner. 

In their statement of defence, JVCC denies Okanna’s claims and argues that Okanna Craft maintained ownership of all cannabis in its possession through a consignment deal, whereby the grower would be paid once cannabis was successfully sold. JVCC denies that it had an agreement to purchase the cannabis outright and maintains that the agreement for payment took into account “various deductions for costs and expenses, as well as other factors such as the retail price for the cannabis.”

In addition, JVCC alleges that it applied various price deductions for these fees with each batch Okanna Craft delivered to be processed, and the cultivator continued to deliver subsequent batches of new cannabis to be processed.

The statement of defence goes on to argue that JVCC had a written agreement that Okanna Craft did not guarantee a specific price, and that the price per gram for its cannabis “may vary based on demand and the offers to purchase from wholesalers” and was “exclusive of transportation costs, customs, tariffs and duties, insurance, and any other similar financial contributions or obligations relating to the sale” of the cannabis, as well as costs related to packing, crating and boxing, and that the agreed purchase price would be for salable product only.”

JVCC argues that the cannabis it received from Okanna was of poor quality and it possesses a “small amount” of Okanna’s cannabis that it was unable to sell, which it claims Okanna has refused to take back. 

None of these allegations have been proven in court.

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Okanna Craft on their long transition into the legal rec market

Okanna Craft on their long transition into the legal rec market

March 21, 2021
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Canopy Growth enters into an agreement for the sale of Hershey Drive facility in Smiths Falls

Written by Staff on . Posted in Business, Cannabis News, Ontario, Producers, Quebec.

Canopy Growth says it has entered into an agreement to sell its Hershey Drive facility in Smiths Falls, Ontario, back to Hershey.

The cannabis producer famously purchased and took over the facility when licensed in 2013.

Earlier this year, the company announced it was laying off 800 workers and would move to an “asset-light model,” moving cannabis flower production from Smiths Falls to its Mirabel, Quebec facility. Rumours have been circulating for months that Hershey would be repurchasing the factory. 

The facility will be sold to Hershey Canada, Inc. for approximately $53 million.

“We are pleased to have reached an agreement with Hershey on this important sale. This is the latest milestone in our focused effort to reduce costs and further enhance our balance sheet,” said David Klein, Chief Executive Officer of Canopy Growth. “Each of the steps we have taken as part of our transformation to a simplified, asset-light operating model supports our ability to deliver in-demand products from brands our customers love, with greater agility and less execution risk. Once again, we have demonstrated Canopy Growth’s ability to achieve significant organizational and operational change to position the Company for future growth in the Canadian market.”

“Our intent to purchase the Hershey Drive property in Smiths Falls is another example of the strategic investments we’re making in our supply chain network and our Canadian operations to support growth,” added Jason Reiman, Chief Supply Chain Officer, The Hershey Company.

Once the sale is complete, the Smiths Falls facility will be the seventh property sold by Canopy Growth for an aggregate gross of approximately $155 million since April 1, 2023. Canopy says the proceeds of the sale will pay down their senior secured credit facility.

The sale of the facility follows the centralization of post-harvest manufacturing at the Company’s former beverage facility in Smiths Falls and the consolidation of all flower cultivation in the Company’s purpose-built sites in Kincardine, Ontario, and Kelowna, British Columbia.

Canopy’s stock fell below $1 a share earlier this year, causing it to be delisted from the TSX. 

Ontario projects $463 million in revenue from cannabis sales, taxes for 2023-24

Written by Staff on . Posted in Business, Cannabis News, Government, Ontario.

The Ontario government expects to bring in $269 million from its portion of the federal cannabis excise duty for the 2023-24 fiscal year.

The provincial government also projects another $194 million in revenue from the Ontario Cannabis Store, out of more than $204 billion in total revenue for the province projected for the current fiscal year. 

These figures show an increase from the $253 million the province brought in from their portion of federal cannabis taxes in the 2022-23 fiscal year, $215 million in the year prior, and $106 million in the 2020-21 fiscal year. 

This compares to the $617 million the province projects to bring in from tax revenue from the sales of beer, wine, and spirits in the province and $840 million from the tobacco tax in 2023-24.

The Ontario Cannabis Store brought in $67 million in revenue in 2020-21, $186 million in 2021-22, and $225 million in 2022-23.

Ontario, like most provinces, receives 75 percent of the $1 per gram excise tax charged at the federal level. Only Manitoba opted out of the initial tax-sharing agreement, although the provincial government is currently in talks with the federal government to take part in that.

Earlier this year, the Ontario Cannabis Store announced it would lower its margins and move to a fixed-price model. The change comes as part of a commitment to improving process transparency in its 2022-2025 Business plan, which includes a review of the OCS pricing structure. With this new change, the OCS projects that margin reductions will contribute approximately $35 million to the marketplace in 2023–24. 

Ontario sold more than 63 million grams of legal cannabis in the first three months of 2022, representing over $405 million in sales. This data is from the most recent financial reports from the OCS since it stopped issuing quarterly reports. The next report is expected later this year. 

Ontario sold more than $1.5 billion of cannabis in fiscal year 2021 ($405,000,000 in Q4, $398,700,000 in Q3, $393,900,000 in Q2 and $307,000,000 in Q1).

Ontario Portion of the Federal Cannabis Excise Duty

Legal medical cannabis lowers individual market health insurance premiums in US

Written by David Brown on . Posted in Business, Cannabis News, Government, Research.

US States that have legalized medical cannabis see a significant decrease in health insurance premiums compared to states that keep it illegal. Legalizing cannabis nationwide could save Americans more than $16 billion in health insurance costs. 

A new research paper in the US that looked at health insurance premiums in various states found that individual market health insurance premiums decreased after the implementation of medical cannabis laws. 

Following the legalization of cannabis for medical purposes, these states saw a small reduction in premiums in the first five years, followed by a reduction in year six of about $500. The biggest effects were not immediate. 

“We find a statistically significant decrease in health insurance premiums starting in year seven post-MCLs [medical cannabis laws], and this downward trend is persistent for following years.”

Researchers found “statistically significant” decreases in health insurance premiums starting seven years after medical cannabis became legal in a particular state, with the downward trend continuing in the following years.

In the seventh, eighth, and ninth year following the implementation of a legal medical cannabis market, researchers found a reduction of health premiums of about US$1,500-$1,700 per year.

The paper’s authors speculate that the savings increase over time as more people begin using cannabis for medical purposes, and any shifts from more conventional medications to cannabis may happen over time with a healthcare provider. 

Due to how medical insurance in the US operates, by collecting premiums from all enrollees and paying expenses for the subset of enrollees who need medical treatment, researchers also note that these lower premiums are enjoyed not just by medical cannabis users but by all in states with legal medical cannabis access. In other words, if the costs of using the medical system go down, everyone pays less. 

States with access to medical cannabis saw rates of use of the medical system decline. This is also because these health insurance premiums do not cover cannabis used for medical purposes. As individuals who may have otherwise used medication that would have been at least partially covered by health insurance are instead using cannabis, the cost to the system itself goes down, benefitting all who pay in. 

However, these effects take time. Researchers found decreases in health insurance premiums starting seven years after medical cannabis became legal in a particular state, but the downward trend continued in the following years.

“We find a statistically significant decrease in health insurance premiums starting in year seven post-MCLs, and this downward trend is persistent for following years,” the paper notes. 

“Our results are important as health care expenses, including health insurance premiums, have been growing faster than inflation and comprise an increasing share of a household’s budget.”

Researchers used figures from Arizona, Connecticut, and New Jersey as these are the only states with seven or more years of post-implementation data. The study also excluded states like California, Washington, Oregon, and Colorado that legalized medical cannabis before 2010. 

To better understand how these savings could benefit the health insurance sector moving forward, researchers looked at 18 US states that had legalized medical cannabis between 2010-2021 that were not included in the survey results because the systems there are not yet seven years old. 

If these states have a similar experience to those observed in this study (Arizona, Connecticut, and  New Jersey), researchers estimate a similar savings of about $1,600 per person annually, an annual health insurance premium savings of approximately $9.6 billion.

The paper also estimates that if medical cannabis laws (MCLs) were enacted nationally, the US could have a savings of at least $16.8 billion.

Some Winnipeg cannabis retailers concerned with province allowing sales in gas stations

Written by David Brown on . Posted in Business, Cannabis News, Government, Manitoba, Retail.

Some retailers in Winnipeg say they are frustrated by the province issuing a retail cannabis licence to a gas station/convenience store, something they worry could be a new trend.   

The province maintains that such licences—the retail cannabis controlled-access store licence—have been available since 2018, with the first issued in December 2020. Eight such locations are now licensed.

Melanie Bekevich, the owner of Mistik Cannabis in Winnipeg, says she only heard about a new cannabis “C store” in Winnipeg Beach after a friend recently visited the store for gas and overheard someone buying pre-rolls at the gas station counter. 

Although she says she’s aware of other C-Stores in Manitoba that hold a ‘store within store’ retail cannabis space, the ability for a convenience store owner to sell cannabis struck her as out of line with the province’s own rules and mandate. 

“I am shocked by it,” says Bekevich. I can understand in small, rural communities… but there should be some controls, especially if they’re saying they’re going to keep it out of the hands of youth, but then they’re directly exposing youth to the transaction. 

“We’re also required to make a significantly bigger investment,” she adds. “I’m a bit confused by what is happening in the province.” 

Lisa Hansen, a communications analyst with the Liquor, Gaming and Cannabis Authority of Manitoba (LGCA), the regulatory agency that licences retail cannabis stores in the province, says all licensed cannabis retailers, regardless of licence type, cannot sell cannabis to anyone younger than 19 years old, and their staff must ask customers who appear young for ID to verify their age. 

“All staff who sell cannabis and store managers must successfully complete the LGCA’s Smart Choices Cannabis Retail Certification training before starting work in a store,” she notes. “This training focuses on legal and safety obligations such as checking ID and not selling to minors or intoxicated people.”

Sharon Clark, the manager at Big Buds Cannabis Sales Ltd, also in Winnipeg, says the government is contradicting their own rules when it comes to protecting kids because there are no controls in place to prevent young people from seeing and hearing transactions involving cannabis—something not allowed in standard retail cannabis stores. 

“They are knowingly putting youth in a situation where they are going to be watching cannabis transactions taking place. This is in direct contravention of their own guidelines and rules. That is inherently wrong because part of their mandate is to protect youth, and now they’re directly exposing youth by actively pursuing this licensing tier.”

Another double standard, according to Clark, is that the cost requirement for controlled-access stores is much less than for stores like hers, which she says can spend hundreds of thousands of dollars meeting strict provincial security standards. 

“They don’t need to make a significant investment that we did and other stores did. They just need a locking drawer and a safe place for the cannabis.”

StratCann reached out to the DOMO – Interlake C-Store in Winnipeg Beach for comment but did not hear back by press time. An employee says the store began selling cannabis in late July.

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Organigram’s application for judicial review of edible extracts ruling approved

Written by Staff on . Posted in Business, Cannabis News, Government, Products.

A judge has approved Organigram’s application for judicial review of Health Canada’s decision that Jolts “ingestible extracts” were in contravention of the federal Cannabis Regulations.

The judgement, posted on August 8, states that Organigram’s application for judicial review has been granted. The matter will now be sent back to Health Canada for redetermination, taking the judge’s reasons into consideration.

The filing, posted March 31, 2023, as Organigram Inc. v. Minister of Health et al., falls under Section 18.1 Application for Judicial Review. Judicial review is a process by which the courts can ensure that the decisions of administrative bodies like Health Canada are fair, reasonable, and lawful. 

However, when all of the circumstances of the case are taken into account… I find that there was a breach of procedural fairness arising from inadequate notice of Health Canada’s reliance on a factor contained in the Compliance Promotion Statement and, as a result, that Organigram was not afforded a meaningful opportunity to respond to that concern and thereby prejudiced in its ability to respond to that concern.

Judge Cecily Y. Strickland, Organigram Inc. v. Minister of Health et al.

Organigram was seeking a judicial review following Health Canada’s move to end the production and sale of so-called “edible extracts” earlier this year. The company is one of a handful producing products in this category that were packaged exceeding the federal limit of 10mg THC per package for edibles. These were generally in the form of lozenges and gummies. 

The company had hoped to see Health Canada’s order quashed or set aside, instead requiring Health Canada to determine that its Jolts lozenges are a cannabis extract and do not constitute edible cannabis under the Regulations.

Organigram and others who have made these products contend they are compliant products. 

In early January 2023, Health Canada sent a notice to producers highlighting their concerns with these products. Companies were told they had until May 31, 2023, to cease sales and distribution. 

Health Canada issued a public warning about these products on March 3. 

“Some edible cannabis products were found to contain more than the allowable limit of 10mg of THC per package,” notes the press release. “These non-compliant products in product formats similar to gummies and other confectionery products, such as hard candy, have been incorrectly marketed and sold as cannabis extracts.”

The federal health authority also issued a new online document providing clarity on the issue of the classification of edible cannabis. The document, in part, notes that a cannabis edible is defined as any article manufactured, sold, or represented for use as food or drink for human beings, chewing gum, or any ingredient that may be mixed with food for any purpose.

“Licence holders should verify if their cannabis products are classified correctly. Licence holders are encouraged to review the definitions of, and requirements for, cannabis and cannabis products in the Guide on composition requirements for cannabis products and Packaging and labelling guide for cannabis products.”

Although Organigram had argued that Health Canada’s decision that their edible or “ingestible” extract products weren’t compliant was incorrect, the judge disagreed. Instead, the judge ruled that the federal health agency’s process to reach that conclusion was not fair and deserved further analysis. 

The judge ruled that the unfairness of Health Canada’s decision on the ingestible extracts was, in part, due to it including additional factors in its decision-making process that Ogranigram was not provided an opportunity to respond to.  

For example, court records show that Health Canada introduced a “fourth factor” in the decision that was omitted from the Notice of Non-Compliance that it issued to Organigram. The judge argued this factor—the product’s sensory and physical characteristics—is not found in Health Canada’s Guidance Document because Organigram was not given an opportunity to respond to Health Canada’s objection to the Jolts size and shape or suitability for sublingual and buccal absorption.

Organigram was not afforded a meaningful opportunity to respond to that concern and thereby prejudiced in its ability to respond to that concern,” wrote the judge in their analysis.

“Given my finding that Health Canada breached the duty of procedural fairness by relying on a product classification factor found only in the Compliance Promotion Statement, which was published after the decision was issued, I need not address Organigram’s further procedural fairness submission based on delay, nor the submissions as to the reasonableness of the decision,” concluded judge Cecily Y. Strickland. 

“I am satisfied that a lower level of procedural fairness was owed to Organigram and that several opportunities to respond were provided to it throughout the decision-making process, with which Organigram engaged,” the judge also wrote in their ruling. “However, when all of the circumstances of the case are taken into account… I find that there was a breach of procedural fairness arising from inadequate notice of Health Canada’s reliance on a factor contained in the Compliance Promotion Statement and, as a result, that Organigram was not afforded a meaningful opportunity to respond to that concern and thereby prejudiced in its ability to respond to that concern.”

The case will now go back to Health Canada for their opportunity to respond. 

Health Canada initially issued warnings to some producers or manufacturers of so-called “edible extracts” in January, warning them they were not compliant with federal regulations. One producer, Vortex Cannabis, confirmed they received an order from Health Canada to stop sales of their Full Spectrum THC Jelly Cubes due to these being inaccurately classified as extracts rather than edibles. 

The Vortex Jelly Cubes came in 10mg THC squares, sold with multiple units per pack.

Several other companies make similar products, including Indiva, Organigram, Loosh Brands, and Aurora Cannabis.

The court documents also reference the Vortex Jelly Cubes, which caused one woman to be taken to hospital where she was told she had overdosed on cannabis after consuming several of the product, assuming they contained only 10mg THC for the entire container, rather than 100mg THC.

Cronos closing cannabis fermentation facility in Winnipeg, Manitoba

Written by Staff on . Posted in Business, Cannabis News, Manitoba, Producers.

Cronos Group says it will be winding down its cannabinoid “fermentation facility” in Winnipeg, Manitoba, with the intent to list the facility for sale.

As part of its second quarter results for 2023, the Canadian-based cannabis company says it will be closing a facility in Manitoba used to produce “cultured cannabinoids.”

The facility, operated in partnership with hands-on expertise from its partner, Ginkgo Biologics, has been used to engineer strains of yeast that can produce cannabinoids through a fermentation process, rather than through cultivation and then extraction of cannabis.

This process is accomplished, in part, by transferring the DNA sequences for cannabinoid production into organisms like yeast and E. coli. The cultured cannabinoids are identical to those extracted from the plant using traditional methods.

Ginkgo’s website says its cannabinoid program has run eight million tests of more than 10,000 engineered strains in the course of just two years. “These efforts yielded several strains with industry-relevant titers for multiple rare cannabinoid compounds, the first of which is beginning commercial scale production.”

In August 2021, Ginkgo and Cronos announced the achievement of its first “equity milestone” for cannabigerolic acid (CBGA). Then in October 2021, Cronos launched its first cultured CBG product. In 2022, the two companies announced their third equity milestone for tetrahydrocannabivarin (THCV).

Cronos utilized the novel cannabinoids in its gummies sold under the Spinach brand, which it says is the number one edible in Canada. 

In 2021, it recorded impairment charges of $4.8 million related to its Ginkgo exclusive licenses for CBGA and CBGVA “for the difference between the fair value of the licenses and the consideration paid.”

Another company, Willow Biosciences, has also produced CBG through fermentation. 

In the same quarterly report, Cronos said it had successfully exited the US hemp-derived cannabinoid market, a plan first announced earlier this year in order to “streamline” operations. Cronos first entered the sector in a $300 million (US) deal in 2018 when it purchased Lord Jones, a CBD brand it says it plans to now bring to the Canadian market by Q4 2023.

The company reported net revenue and gross profit both down in Q2 2023 compared to the previous year, which it blames on lower sales in Israel, as well as “an adverse price/mix shift in cannabis flower sales in Canada,” among other issues like the weakening Canadian and Israeli dollars. 

Despite these lower sales in Israel, Cronos has also recently signed an agreement with one of the leading distributors of medical cannabis in Germany, which the company hopes to begin exporting to soon under the Peace Natural Brand. Peace Naturals was one of the first federally-licensed commercial medical cannabis producers in Canada. Cronos purchased it in 2016.

In 2022, it announced the closure of the original Peace Naturals facility, but partially reversed that decision in early 2023, leaving parts of the ”campus” open.

Featured image via ginkgobioworks.com

Changes to OCS privacy policy could mean customer data stored outside of Canada

Written by David Brown on . Posted in Business, Cannabis News, Government, Newfoundland and Labrador, Ontario, Retail.

The Ontario Cannabis Store is making a change to its privacy policy that could potentially result in customers’ personal information being stored outside of Canada.

Effective August 17, 2023, the OCS says it is making this change in privacy policy in response to consumer demands. To meet those demands, it says it will consider new technology platforms, including those that may store their data outside of Canada. 

In a public post, the online cannabis retailer says that any new technology platforms they may adopt “will maintain a high level of security and will be offered by service providers that are required to adhere to laws that protect personal information.”

“Any new technology platforms that OCS may adopt will maintain a high level of security and will be offered by service providers that are required to adhere to laws that protect personal information.”

Amanda Winton, Ontario Cannabis Store

A representative with the OCS confirms with StratCann that under this change, customer personal information may be stored in countries such as the United States. Until then, OCS assures the public that all personal information collected from customers before the policy change will continue to be stored in Canada.

“Since legalization, our customers have asked us to improve their online shopping experience on OCS.ca,” says Amanda Winton, Manager of Communications and Strategic Engagement with the OCS. “Assessing new technology platforms will allow the OCS to make enhancements to OCS.ca informed by customer feedback that supports continuous improvement and to keep up with industry best practices.

“Any new technology platforms that OCS may adopt will maintain a high level of security and will be offered by service providers that are required to adhere to laws that protect personal information,” she adds.

“OCS will continue to meet legal, privacy and security requirements and standards. This is done by employing organizational, contractual, technical and physical security measures to protect personal information. This includes ensuring that each country where data may be securely stored is assessed and the appropriate data security measures are in place.”

The OCS has previously affirmed their commitment to keeping such data in Canada. Its privacy policy currently includes the statement: “All personal information collected from customers before the policy change will continue to be stored in Canada.”

In 2018, Canada’s Privacy Commissioner cautioned consumers against purchasing from retailers who stored their personal data outside the country.

Shopify, the eCommerce platform currently providing backend services for the OCS online cannabis store, also provides these services for several other provincial online stores. In 2022, Cannabis N.L. informed consumers who bought cannabis from Newfoundland’s online cannabis store that Shopify, which hosts the website, would be transferring consumer data from servers in Canada to servers in the United States as of July 31, 2022. 

Shopify did not respond to a request for comment for this article.

“The personal information of cannabis users is … very sensitive. For example, some countries may deny entry to individuals if they know they have purchased cannabis, even lawfully,” noted a report from the Privacy Commissioner in 2018. 

Newfoundland and Labrador Liquor Corporation chief marketing officer Peter Murphy told CBC that the company was notified of the transfer by Shopify in 2021. 

Brenda McPhail, the acting executive director, master of public policy in digital society at McMaster University and the former director of privacy, technology and surveillance with the Canadian Civil Liberties Association, says there is always some risk when a company stores information outside of Canada and that the risks increase when the information connects an individual to the purchase of a product that is still illegal in other jurisdictions.

“The data will be subject to the laws of that jurisdiction and it’s worth noting that many countries, including the US, don’t extend the same (or sometimes any) privacy protections to non-citizens, so even if there is a data protection law in that jurisdiction, it may or may not help a Canadian whose personal information about cannabis purchases is stored there. 

“The promise on the Ontario Cannabis Store website that data will only be stored in countries with data protection laws is insufficient without additional assurance that those laws will protect Canadians’ data to the standard of Canadian law,” she adds. “For people to feel safer about this move, the Cannabis Store should at a minimum be transparent about where data will be stored, what laws will apply, and what contractual provisions they have negotiated (and there should be some) to provide additional protection for Canadian’s sensitive data in a foreign jurisdiction.

“It’s worth asking why they seem to have decided that ‘an improved online shopping experience’ cannot be created using a platform that has servers in Canada, or better yet, by a Canadian or even an Ontarian platform, rather than subjecting customer’s information about cannabis purchases to any level of risk.”

Brenda McPhail, McMaster University

McPhail says consumers should share any concerns they have with the OCS, or any other retailer before a deal is signed, as well as shopping in person and using cash. 

“It’s worth asking why they seem to have decided that “an improved online shopping experience” cannot be created using a platform that has servers in Canada, or better yet, by a Canadian or even an Ontarian platform, rather than subjecting customer’s information about cannabis purchases to any level of risk.”

Sam Andrey, the managing director at The Dais, a public policy and leadership institute at Toronto Metropolitan University also questions why the changes require using a service outside of Canada, but says customers of the OCS online store will have little recourse.  

“It isn’t clear why this is necessary—there are a variety of e-commerce solutions that allow customer data to be retained within Canada. Short of advocating for stronger privacy laws, there is little that OCS customers can do in this situation.”

“Unfortunately Ontario privacy law does not require users to consent to their personal data being transferred outside of Canada, and there are not meaningfully enforced limits on the transfer of data to jurisdictions with insufficient protection against unauthorized access or surveillance.”

Andrey says that in a survey that our team conducted in 2020, 86 percent of Canadians supported requirements to keep Canadians’ data within Canada.

“Only BC and Nova Scotia require public organizations to keep personal data stored in Canada,” he adds.

Week in Weed – August 5, 2023

Written by Staff on . Posted in Business, Cannabis News, Government, International.

It’s been another busy, news-filled week at StratCann, where we ran a piece looking at CannStandard’s Dried Flower Price Outline 2021-2023. 

We also covered: UBC and Aurora Cannabis looking at developing better outdoor cultivars for Canada; Metro Vancouver rethinking regulation of cannabis VOCs; Alberta’s consideration of white label cannabis products; a Conservative Party policy proposal to abolish medical cannabis tax; the AGCO and OCS rolling out a new POS data platform; and a new study that calls into question the accuracy of field sobriety tests for cannabis. 

We also noted that Stats Canada says some cannabis users are one toke over the line, and that BC is reviewing cannabis sampling rules for producers and retailers.

In other cannabis news… 

CBC ran a story on upcoming changes to the OCS’ wholesale pricing in September, an announcement the province made earlier this year. The article includes comments from George Smitherman of C3, OCS president and CEO David Lobo, and Cameron Brown of The Hunny Pot.  

Globe and Mail ran an interview with Anne McClellan, former Chair of the federal government’s Task Force on Cannabis Legalization and Regulation says she is surprised at the lack of research on the health effects of cannabis use. “The big disappointment coming out of the legalization project is that governments and researchers have not stepped up in the way that we had hoped after legalization to do a lot of that research,” Ms. McLellan said. “There is a lot that we do not know that we are going to need to know.”

Total in-house research and development expenditures in Canada

MediPharm announced the first delivery of its pharmaceutical cannabis product for an NIH-funded clinical trial, following an import permit from the US Drug Enforcement Agency (DEA) and a Health Canada export permit. This is the first US FDA Audit of a purpose-built commercial cannabis facility in Canada. This clinical trial material is cannabis oil that contains both CBD and THC. To the company’s knowledge, this is the first Phase 2 clinical trial of its kind sourced from a Canadian Licenced Producer.

Labstat says it would like to see tax revenue from the federal and provincial governments used to fund comprehensive product research and testing. “We need stronger collaboration between industry and government to provide transparent health information to consumers,” said Labstat President Michael Bond.

The law firm McCarthy Tetrault shared a recent ruling from the Alberta Gaming, Liquor and Cannabis Commission (AGLC) in its decision in the matter of Canna Cabana Inc., in which, Acting on a public complaint, the AGLC’s Regulatory Services Division (RSD) investigated and determined that a tagline and customer reviews from a recent promotional newsletter were non-compliant with AGLC policy. The RSD imposed an administrative penalty of $25,000 or a 100-day suspension.

The panel found the tagline that used the phrase “get higher” was promoting overconsumption, that customer reviews were prohibited testimonials or endorsements and claimed positive impacts from the usage of cannabis products: in particular, the enhancement of recreation. The authors of the article conclude that a judicial review of the decision is likely, given the significant penalty imposed and the potential consequences to the retailer of subsequent contraventions.

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Brands and Products

Glow LifeTech Corp, a Canadian-based biotechnology company focused on producing nutraceutical and cannabinoid-based products, announced the launch of two cannabis consumer brands in Canada, MOD and .decimal, with both featuring Glow’s portfolio of “liquid and powder cannabis ingredient technologies.” 

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Cannabis brand BC Bud announced three new extracts available in the BC market. The brand house works with several BC producers like Cedar Organics, Habitat Life, Blackrose Organics, Tricanna, and more, as well as Manitoba brand Toba Grown. 

Organigram announced new “tube style” pre-rolls in 10×0.4g packs, taking aim at a sector dominated by products like Redees.  

Aurora announced new infused pre-rolls available through its medical platform, Aurora Medical, “tested at 52.8% total THC.”

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Phoena Holdings Inc. (formerly CannTrust) has pulled out of cannabis production entirely and revoked the licence on their 2nd Ontario production facility. “This announcement was really just a formality,” Mayor Marvin Junkin tells Pelham Today. “The last harvest was two months ago, and since then, the company has entertained a steady stream of interested buyers and tire kickers. Like all others in the town, I am anxious to see the next chapter unfold for this property.”

Greenway, a cannabis producer in Ontario, reported its audited annual financial statements for the year ended March 31, 2023. The company notes an average cash cost per gram expensed for the year of $0.76. Greenway reported $5,621,933 of revenue, a 183% increase in revenue over the prior fiscal year but a loss of $2,605,705.

The Oakville News did a feature on Buzzed Buds, a new retailer in Mississauga also seeking to serve the Oakville area with deliveries. While Mississauga recently moved to allow cannabis stores, they are still banned in Oakville.

The Pointer ran a story on the progress of new cannabis stores in Mississauga and the support they are receiving from the local business community. 

Powassan, ON, two hours east of Sudbury, finally considering allowing cannabis stores. OPP told council: “since the laws changed, I’m not aware of a single issue that’s been brought forward to any of our policing location regarding cannabis retail stores.”

Matt Lamers ran an interview with Bedrocan founder Tjalling Erkelens about the medical cannabis market. “People were asking me, ‘Why don’t you do rec?’ I said that would take my focus off what I’m really trying to do. I think adult use in the end will be a bear market – the lowest price will prevail,” he said in an interview with MJBizDaily.

Solomon Israel ran a feature on consolidations in the cannabis sector, with comments from equity analysts Nadine Sarwat and Jesse Redmond.

The Global Cannabis Intellectual Property Symposium 2023 will be from September 28th-29th at McGill University in Montreal. 

Following up on news from last week, Avicanna has closed the previously announced acquisition of the Medical Cannabis by Shopper’s business from Shoppers Drug Mart® and is pleased to announce the launch of an all-new medical cannabis care platform, MyMedi.ca.

According to the 2023 Cannabis Global Price Index (CGPI), Toronto is the 7th highest city in the world, at least in terms of how much cannabis they consume, while Montreal has the cheapest cannabis in the world. Cannabis consumption figures were collected from cities in countries around the world. The City of Toronto ranked 7th for annual cannabis consumption, supposedly smoking 16.7 metric tons a year. Four other Canadian cities were also in the top ten for cheapest weed, with Notre Dame (a suburb of Montreal), Vancouver, Charlottetown, and Annapolis, NS, helping fill out the ranks. 

The CBSA is again reminding people entering or leaving Canada not to bring cannabis. 

In international news, Axios covered the termination of a merger with Cresco Labs, a Chicago-based cannabis producer, and New York-based rival Columbia Care, which would have created the largest U.S. cannabis company by sales.

The Australia Greens a new what we heard report on their upcoming, revised cannabis legalisation bill they plan to table soon. Read the full report here. It includes the allowance for people to make their own edibles at home and to grow up to six plants per household. The sale price is estimated to start at $13 a gram and go down to $6 after five years of operation.

The Greens have four seats in the Senate, where the bill will be introduced. To get anywhere, the bill will need support from the ruling Labour government, which has not indicated any support for legalization.

And finally, a Canadian man caught with cannabis worth €700k in Dublin airport is in custody with local officials.

North Vancouver Cannabis Education Expo

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Retail.

The North Vancouver Cannabis Education Expo takes place from 11am-7pm on Saturday, August 26th, at the aptly-named North Vancouver Shipyards “Pipe Shop” venue.

The one-day event is expected to bring together more than 30 local cannabis producers, brands, and retailers for a day of networking and information-sharing. 

Tyler Atkins of 1st Cannabis in North Vancouver, who is leading up this inaugural event, says his goal is to bring the local community together in a positive space. 

“Education is the key to understanding, so we hope that partnering with brands, producers, and agencies behind legal cannabis, we can help to make a difference,” says Atkins.

This event is inclusive to all and is not put on or sponsored by any cannabis stores. The goal is to bring the community together and keep the education growing, as well as to normalize the industry.

Tyler Atkins, 1st Cannabis

“As someone who has been in the industry since legalization in the recreational market, I have clearly seen the gap in education. These events have no slant towards stores or brands and this allows the community to come and ask questions as well as giving an additional space for people within the community to connect.”

“This event was created out of love for our community and with the hopes of increasing education,” he adds. “We also see this as an opportunity to continue to remove negative stigma from the industry. We hope to see the event become annual as well as visit other cities that are looking for education and an opportunity to bring the community together and remove stigma.”

The event will feature CBD yoga, a community art project, a photo wall, a live DJ, rolling lessons, giveaways and a raffle, and an after-party at a nearby pub.

While Atkins says much of the event is geared toward those working in the space, he points out all are welcome. 

“This event is designed for everyone, from your grandmother wanting to ask questions but not ready to visit a store, to your OG user wanting to talk up processing methods to pick his favourite producer, to a first-time grower that wants advice on growing their first legal plant. The goal is to have an event that suits anyone interested in cannabis. We know that even our budtenders in the industry don’t get as much face time as they would like with brand representatives, and this opens up that opportunity.”

Although Atkins works at a local cannabis store, he points out the event stands on its own.

“This event is inclusive to all and is not put on or sponsored by any cannabis stores. The goal is to bring the community together and keep the education growing, as well as to normalize the industry. Cannabis needs to be viewed the same as any other business and be represented, taxed and have the same opportunities.”

BC gov reviewing cannabis sampling rules for producers, retailers

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Producers, Retail.

The BC government is reviewing its rules about cannabis sampling between producers and retailer stores.

While some provinces allow cannabis producers to provide product samples to retailers, others say BC is lagging behind. 

Provincial regulations in BC currently prevent producers from providing such samples. A representative with the province’s Ministry of Public Safety and Solicitor General—the agency that oversees the cannabis file—tells StratCann that the ministry is currently reviewing the rules about cannabis sampling between licensees, such as federal producers and provincial licensees.

Product sampling is critical to making informed wholesale purchasing decisions for licensed retailers. Sampling is also an important sales tool for producers.

Jaclynn Pehota, Retail Cannabis Council of BC

Some other provinces allowed such samples from the beginning of legalization, like Ontario and Saskatchewan, while Alberta recently began allowing them earlier this year.

A spokesperson for the Cannabis Cultivators of BC, representing a handful of producers, says its members would love to see the province create an accessible cannabis sampling program. This would allow producers to inform retailers of what is already on the market and what is coming soon.

“Allowing cannabis sampling gives retailers the ability to touch, see, and feel the products they plan on bringing into their stores, increasing transparency in the process and instilling confidence in what they recommend to their consumers.

“Items for consideration could include making sampling available for products prior to provincial launch by BCLDB and allowing producers to distribute samples directly from their own facilities: aspects which would help our sector improve speed, remove administrative burden, and remain responsive to changing consumer and retailer needs.”

Jaclynn Pehota, the executive director of the Retail Cannabis Council of BC (RCCBC), says it has been lobbying the BC government to make such changes. 

“Product sampling is critical to making informed wholesale purchasing decisions for licensed retailers. Sampling is also an important sales tool for producers,” Pehota tells StratCann. “RCCBC made a formal recommendation in April 2023 that representative samples of any cannabis product in the market should be allowed on a B2B basis in BC.”

“RCCBC has expressed to our partners in government that members are eager to see sampling implemented,” she adds. “The delay with implementation of sampling is obviously disappointing, but we are actively encouraging our regulators to take action to align BC with other Canadian markets that have already taken this important step.”

Pehota says she would also like to see producers able to ensure any such allowances are not adding additional paperwork requirements.

Jeff Guignard, Executive Director at Alliance of Beverage Licensees (ABLE BC), which recently launched its cannabis division to represent industry concerns, says it’s high time BC made such changes, especially since this is allowed in some other provinces.

“Sampling products in this industry has been part of the culture for generations, so we should be encouraging that activity in a legally licensed framework,” says Guignard. “I absolutely think that being able to provide samples to retailers in a responsible manner is a natural evolution for the industry. It’s allowed in other provinces. It’s time for BC to catch up.”

BC has yet to provide a timeline on when they will make any decisions on whether or not to allow sampling. The province recently announced they were seeking industry feedback on removing provincial rules on promoting locations for cannabis consumption and allowing cannabis consumption on patios. That feedback period is open until August 11.

AGCO, OCS rolling out new POS data platform

Written by David Brown on . Posted in Business, Cannabis News, Government, Ontario, Retail.

The Alcohol and Gaming Commission of Ontario (AGCO) and the Ontario Cannabis Store (OCS) have developed a new data platform to help simplify retailers’ cannabis reporting requirements.

The point-of-sale (POS) system is intended to help reduce retailers’ regulatory burden and improve the accuracy of data collection while integrating with existing POS systems. This new POS data platform is being rolled out with POS providers and their retail clients.

An AGCO notice says the new platform will automatically extract, standardize, and automate retailers’ monthly reports directly from their own internal POS systems, processed by the OCS through an Application Programming Interface (API) and then shared with the AGCO. 

The AGCO is committed to protecting the retail data we receive, including through robust cyber security measures, with guidance from industry standards such as National Institute of Standards and Technology – Cybersecurity Framework and International Organization for Standards ISO 2700½.

Alcohol and Gaming Commission of Ontario (AGCO)

The goal is to eliminate retailers’ need for monthly preparation and submission of reports and help improve the accuracy of the data submitted to the province.

James Manning, an account executive with Cova Software, a POS system used by many cannabis retailers in Ontario and across Canada, says the company was aware the changes were coming and has been working with the AGCO and OCS on the issue in advance.

“We’ve been working with the AGCO and OCS on this for about a year and a half now,” says Manning. “Cova will be fully integrated into the compliance reporting requirements by AGCO and OCS.” 

Owen Allerton, the owner of Highlands Cannabis, says he doesn’t see the change as very significant for his business, but says if it works correctly, it could save him some time on monthly reporting.

“As a retailer, it’s not terribly burdensome. I think they’re doing this more to benefit themselves, but from our perspective, if this goes smoothly and saves me a few hours a month, it’s immaterial.”  

Although not included in this most recent change, Allerton says he would also like to see a way for the OCS to provide sales data to LPs that would allow them to better understand which stores are carrying their products and how they are selling. He argues this would be helpful, especially for smaller producers, and thinks it would make it harder for retailers to disguise shelf-space kickbacks as “data” agreements. 

The new system will automatically pull the required provincial and federal regulatory reporting data from retailers directly from their in-store POS system.

Once processed by the OCS, the data required for provincial and regulatory reporting will then be available for federal regulatory reporting. The OCS will populate and complete reports required by Statistics Canada and Health Canada.

The AGCO says the OCS has put several security measures in place to address any concerns with data security, something the OCS has had issues with in the past.

“The AGCO takes its responsibility to protect data seriously and will continue to do so when receiving POS data from the OCS,” notes a company update. “The AGCO is committed to protecting the retail data we receive, including through robust cyber security measures, with guidance from industry standards such as National Institute of Standards and Technology – Cybersecurity Framework and International Organization for Standards ISO 2700½.”

The AGCO also highlights that they and the OCS will not be collecting any new or additional data, and the POS will be configured so that all the data that is required for provincial regulatory reporting (to AGCO) and federal Cannabis Tracking System (CTS) reporting (to Health Canada and Statistics Canada) will be collected automatically by a retailer’s POS system. 

In Ontario, the OCS is designated as the public body responsible for consolidating and reporting CTS information to the federal government.

Sasha Soeterik, the owner of Flower Pot on Dundas in Toronto, says she’s supportive of the plan, but is concerned about any of her data that goes to the OCS, given the data breach in 2022. 

“On one hand, I welcome the change as it can be annoying to remember to report,” Soeterik explains. “On the other hand, I do not share my data with the OCS so I hope we can still opt out.”

Featured image via Cova

Alberta to consider white label cannabis products

Written by David Brown on . Posted in Alberta, Business, Cannabis News, Government, Retail.

Alberta Gaming, Liquor and Cannabis (AGLC), Alberta’s cannabis regulator, is exploring the possibility of allowing white-label cannabis products in the province.

These would be products sold by retailers with their store’s branding and logo but supplied by licensed producers. 

In a memo sent recently to stakeholders, Dave Berry, the executive vice president of public engagement and CRO with the AGLC, says the agency has been hearing from many in the industry who would like to sell such products. 

It can also provide an opportunity for producers to sell product that would otherwise be sitting in their vaults given the current oversupply of dry flower in the market.

Omar Khan, High Tide Inc.

Provincial regulations in Alberta currently do not allow these kinds of products, although several other provinces do. In the past, Canna Cabana, a national retail cannabis chain, announced a white-label agreement for products sold in its Saskatchewan, Manitoba, and Ontario stores. Other companies have announced similar deals. 

Ontario’s cannabis regulator momentarily considered banning such deals in 2022 before quickly pulling back, facing industry pressure. 

The AGLC is conducting an online survey to gather input from all licensed cannabis retailers and registered representatives, such as licensed cannabis producers, brand owners, and other marketing entities.

The survey will be open until August 18, 2023.

Omar Khan, chief communications and public affairs officer with High Tide Inc., which owns the Canna Cabana chain of stores operating in Alberta and several other provinces, says they support the proposal. 

“We look forward to participating in the AGLC’s white-label consultation. Our experience in provinces like Ontario, Manitoba, and Saskatchewan indicates that the availability of white-label products allows for greater product differentiation and consumer choice while creating room for increased retail margins. These are things that can help retailers of all sizes. It can also provide an opportunity for producers to sell product that would otherwise be sitting in their vaults given the current oversupply of dry flower in the market.”

Alena Jenkins, the president of FivePoint Cannabis, with one location in Calgary, says she isn’t opposed to the proposal but doesn’t see it as a priority. Instead, she would like the ability to carry exclusive products that her competitors don’t carry, and to have producers allocate a specific amount of products to her store on a weekly basis.

“I don’t really care if my name is on it. I would prefer to have exclusive rights to products that I want,” says Jenkins, adding that this could allow her to distinguish her small, independent store from her competitors in a unique way.

Scott Morrow, president and CEO FOUR20 Premium Market, with 41 locations in Alberta, says he sees this as a positive step and would be open to carrying white label products in his stores and will help retailers create somerthing unique for consumers.

“I think it’s positive for retailers in Alberta to have access to private products to start creating some product differentiation in our space, which really doesn’t exist today, largely. We’re all ordering from the same product list on a weekly basis and have very limited opportunity to create a point of differentiation with products in our stores.”

Featured image via Numo Cannabis.

Metro Vancouver rethinking regulation of cannabis VOCs

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Producers.

Metro Vancouver’s Regional Board (MVRD) of Directors says they want to collaborate with other provincial agencies on any potential regulation of cannabis farm emissions rather than continuing to develop its own regulations. 

Several MVRD board members said they felt the staff proposal to regulate Volatile Organic Compounds (VOCs) from cannabis production facilities and farms was a backdoor route to trying to regulate the odour of cannabis itself. 

Several mayors—who serve as board members—also questioned the need to spend the board’s time and resources on regulating something that amounts to less than one percent of all regional VOCs and concerns that this will lead to regulatory creep into other types of farms. 

Metro Vancouver—encompassing 21 cities in BC’s Lower Mainland, one electoral area, and one treaty First Nation—first announced its plans to regulate volatile organic compounds (VOCs) from cannabis production in 2019, holding stakeholder meetings in late 2020 and early 2021.

In 2021, the BC Ministry of Agriculture, Food and Fisheries issued its own report that called into question Metro Vancouver’s plans, noting that cannabis production only accounts for a small fraction of overall VOCs in the region. 

“We have a very diverse agricultural community, and we want to ensure they are not over-regulated”

Nicole Macdonald, Mayor of Pitt Meadows

It estimates that indoor cannabis accounts for about 146 tonnes of VOCs per year, compared to 715 for crops and pasture land, 9,500 from plants and vegetation (non-commercial crops), and over 37,000 from other non-agricultural, human sources such as fuel, vehicles, and paints and chemical products. 

In a board meeting on Friday, July 28, Patrick Johnstone, the mayor of New Westminster, echoed these concerns, saying he would like to see the board working with the Ministry of Agriculture, and added that VOCs from cannabis production represent less than 1% of total VOC’s for the region.  

Nicole MacDonald, the mayor of Pitt Meadows, home to several cannabis growers and processors, says she was concerned about city staff’s proposed approach and how it would further “isolate” cannabis farmers from other types of farms. 

“We have a very diverse agricultural community, and we want to ensure they are not overregulated,” said MacDonald.

Mike Bose, a city councillor from Surrey, spoke of “legislative creep” and over-regulation, saying that he felt the real goal of the proposal was to find a way to deal with the odour of cannabis. 

“Agriculture is smelly, it’s noisy, it’s dirty, it’s messy,” said Bose, adding, “We’re talking about limiting the use of some of the most productive land in the country, let alone the province.”

“All we’re going to do is find a way to legislate away the smell from a greenhouse that’s growing cannabis, then tomorrow it’s a dairy farm, then the day after it’s a chicken farm, and then it’s oh my god, the blueberry farms….”

Last, Dan Ruimy, the newly-elected mayor of Maple Ridge, pointed out that Health Canada already has strict rules in place to control odour for indoor facilities, and said that such regulations could “destroy a fledgling industry.”

Staff proposed two suggestions. One was to send a letter to the Ministers of Agriculture and Food, Environment and Climate Change Strategy, and Public Safety and the Solicitor General, requesting collaboration with Metro Vancouver on developing a concerted approach for managing emissions from cannabis production and processing in the Metro Vancouver region in a manner that protects public health and regional economic prosperity.

“All we’re going to do is find a way to legislate away the smell from a greenhouse that’s growing cannabis, then tomorrow it’s a dairy farm, then the day after it’s a chicken farm, and then…the blueberry farms….”

Mike Bose, a city councillor in Richmond, BC

The second was to direct staff to continue developing options to manage emissions from cannabis production and processing as described in the June 23, 2023 report titled “Phase 2 Engagement Summary and Next Steps for Managing Emissions from Cannabis Production and Processing.”

The MVRD board approved the first proposal but rejected the second. The next step will be for staff to send the letter and report back to the board when they have more information at a future date.

The meeting can be viewed online here.

Note: This article previously attributed Director Bose’s comments to Bill McNulty, a city councillor in Richmond, BC.

UBC and Aurora Cannabis looking at developing better outdoor cultivars for Canada

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Government, Producers, Research.

A researcher at the UBC Biodiversity Research Centre is teaming up with a geneticist at Aurora Cannabis to adapt cannabis for outdoor production.

The work is one of eight new projects that have received a combined $1.84 million in funding from the Genomic Innovation for Regenerative Agriculture, Food and Fisheries (GIRAFF) program—a collaboration between Genome BC and the Investment Agriculture Foundation of BC (IAF) with support from the BC Ministry of Agriculture and Food.

Dr. Marco Todesco from the University of British Columbia and Jose Celedon, director of genetics at Aurora Cannabis, are working to develop cannabis cultivars better suited to Canadian climates and environment to address the carbon footprint of indoor cannabis production. By some estimates, about four percent of the total greenhouse gasses from Canadian agriculture come from cannabis production, primarily indoor production.

Our project uses leading-edge genomics technologies to help develop more sustainable cannabis varieties that can be grown outdoor at Canadian latitudes, reducing greenhouse gas emission from cannabis cultivation in BC and beyond.

Dr. Marco Todesco, UBC Biodiversity Research Centre

The team is working on developing more suitable commercial cultivars for use in outdoor settings by cross-breeding so-called autoflower characteristics into “elite” cannabis genetics.

Dr. Todesco, assistant professor at the Biodiversity Research Centre, University of British Columbia, says the goal is to develop cultivars better suited to not just BC but all of Canada.

“The cannabis industry plays an important role in the BC economy, but unfortunately, cannabis cultivation in indoor facilities also has an enormous carbon footprint,” says Todesco. “Our project uses leading-edge genomics technologies to help develop more sustainable cannabis varieties that can be grown outdoor at Canadian latitudes, reducing greenhouse gas emission from cannabis cultivation in BC and beyond.”

The program has a budget of $250,000 for its research and began the work in 2022. 

Dr. Caledon, the director of breeding and genetics at Aurora Cannabis, applauds the work of UBC in collaboration with the cannabis producer. 

“As a global cannabis company enabled by science, we are proud to invest in the continued advancement of cannabis cultivation that will positively impact the longevity of the industry in Canada. Our long-standing relationship with UBC has allowed for valuable, collaborative work in genomics. Our shared findings from the GIRAFF project will be applied to Aurora’s leading growing practices today and in the future, supporting a more sustainable industry.”

This is not the first cannabis breeding program involving UBC and Aurora, which operates its cannabis breeding facility on Vancouver Island, Aurora Coast, which hosts the Occo research centre. In 2020, more than $4.2 million in federal, provincial, and industry funding was announced to aid with UBC research into enhanced cannabis cultivars, focusing on disease resistance.

The project, Fast-Track Breeding of Powdery Mildew-Resistant Cannabis, involved UBC researchers Dr. Loren Rieseberg and Dr. Todesco in partnership with Aurora Cannabis.

Aurora said they recently filed a provisional patent application on powdery mildew resistance that was discovered through this program and will take legal action to protect their research and development.

“There is a misconception amongst growers and LPs, both domestically and internationally, that you cannot protect or own the genetics around a particular cultivar, ” Aurora CEO Miguel Martin said earlier this year. “That’s completely untrue. We are licensing unique genetic markers of these cultivars that we develop, and we are able to identify those that are infringing upon that; the law is very clear on this issue. We’ll have a very strong case. You’ll start to see litigation around that, as well as those that we believe have infringed on some of our bio-synthetic assets, and that’s also an additional revenue stream for the company.” 

The project was part of a larger $56.4 million in funding from the federal and provincial government, as well as private industry and is part of 10 new genomics research projects funded through Genome Canada in conjunction with Genome BC. Genome Canada is a non-profit organization funded by the Government of Canada that seeks to use genomics-based technologies to improve the lives of Canadians. Genome BC is a not-for-profit organization undertaking similar research in BC.

Aurora also says their Coast facility has produced ten new cultivars launched during fiscal 2023, including two high-THC cultivars—Sourdough and Farm Gas— that have also launched in Europe and Australia.

Charles Pick (left), senior vice-president of science and innovation for Aurora Cannabis, and Greg Baute at Aurora’s cannabis facility in Comox, B.C.

Week in Weed – July 29, 2023

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Government, International, New Brunswick, Ontario, Provinces, Quebec, Saskatchewan.

This past week on StratCann, we covered Surrey city council’s new proposal for the city to regulate cannabis stores, and that Council sent the report back to staff to make changes before it would consider it further. We also covered Aurora closing its sale on a former cannabis greenhouse, Vancouver’s High Hopes launching a cannabis substitution project, and another look at how the media continues to misreport issues relating to hospitalizations from edibles. 

Outside of StratCann’s coverage, the big news this week was the Canadian Press story on the BC Supreme Court approving a cannabis ‘fire sale’ as Tantalus Labs entered bankruptcy, with the CRA stayed from taking any actions against Tantalus with respect to cannabis stamps and cannabis inventory. Court documents show Tantalus with more than $14 million in debt to creditors and other companies, including $4 million to the CRA.

The Tyee uncovered an auditors’ report from 2022 that says BC’s provincial agency responsible for ensuring that licensed cannabis retail stores follow the law is understaffed and lacks key tools. The 26-page report, Compliance and Enforcement of Cannabis Retail Stores, made 14 recommendations that the in-house government auditors said would improve the program and make it more efficient and effective. 

Some cannabis retailers in Saskatchewan expressed frustration at competing with what they say are unregulated cannabis retailers selling unregulated products on First Nations land in the province, including one store that made headlines recently. Local First Nations store owners say they are governed by their own regulations. 

Natoaganeg First Nation in New Brunswick announced a new therapy program run by the Gitpo Spirit Lodge, which has received $1.2 million from Health Canada for two years. Dr. Shelley Turner, a member of Pimicikamak First Nation in Manitoba and an expert in medical cannabis, will educate healthcare providers on the use of medical cannabis for this therapy, also called cannabinoid therapy. CBC reports that in Turner’s practice, she starts patients on THC and CBD in one-milligram increments.

A new research paper out of Ontario says there is an ​​association between non-medical cannabis legalization and emergency department visits for cannabis-induced psychosis. The article attributes this increase to something it calls “cannabis commercialization.” While the abstract doesn’t note why they chose this start date, the timing correlates with when edibles became more common in both the legal and illicit markets (March 2020–September 2021). Increases were seen only for those above the legal age of purchase.

In financial news, Tilray released their Q4 financials, showing a net revenue increase of 20 percent, and a net loss of USD$120 million in the fourth quarter compared to the net loss of the prior year quarter. Cannabis gross margin for Tilray increased to 61 percent in the quarter from -36 percent in the previous year’s quarter, which the company attributes to contributions from the HEXO arrangement. Tilray says its market share in Canada is about 13 percent.

On the other hand, Quebec-based producer Cannara Biotech reported Q3 2023 net revenue of $15.9 million and $39.3 million for the first nine months of 2023, a 57 percent and 63 percent increase respectively, compared to the three and nine-month period in 2022. Cannara sells under the brands Tribal, Nugz, and Orchid CBD. The company primarily sells in Quebec but has products in BC, Ontario, and Alberta.

Meanwhile, The Deep Dive had fun swimming amongst the schadenfreude that is the collapse of the once-mighty Canopy Growth—a fun read for anyone who has followed the highs and lows of this sector.

In cannabis banking news, Turtle Island News reported that the Six Nations Cannabis Commission (SNCC) has been unable to find a bank willing to work with them. The SNCC has licensed three retail stores within its territory. The regulator issued its first production licence to Bloom Cannabis last year.

CertiCraft

“I’ve met with every bank across Canada, including credit unions,” said Kathy Mair, the Six Nations Cannabis Commission’s (SNCC) chief commissioner. “Everybody takes me along, and everybody says they can help, and then something comes up, and they can’t. Nobody is willing to go against the banking charter.” 

A new medical cannabis access platform, MyMedi.ca, announced its initial product offering on its website, launching on August 1, with more than 30 brands. MyMedi says it’s providing “continuity of care” for Medical Cannabis by Shoppers Drug Mart patients following a partnership between Avicanna and Shoppers Drug Mart signed in March.

GrowerIQ, a seed-to-sale tracking system based in Canada, announced it was partnering with the Barbados Medicinal Cannabis Licensing Authority (BMCLA), the island’s regulatory body for the medicinal cannabis industry, to manage tracking and reporting of all cannabis production there for the next five years.

International

Big news in the US this week, Mastercard told financial payment companies they must stop allowing US customers to buy cannabis with its debit cards. Mastercard said the move comes after it found some stores accepted debit payments despite the federal ban.

Uruguay has sold more than 10 million grams of cannabis in the six years when first legalized. Authorized pharmacies in Uruguay have sold 10,693,210 grams between July 19, 2017, and July 19, 2023, according to the IRCCA, the agency that oversees both medical and adult-use cannabis. People can buy three different types of cannabis in the country, with varying amounts of THC and CBD, with the highest level of THC at 15 percent—not much below the averages shown by analytical testing of supplies in the US and Canada.

As of February in Uruguay, 5 grams of legal cannabis from a pharmacy costs approximately $400-450, or about $15 Canadian. There is a 10-gram per week purchasing limit, with three exclusive modes of access that someone must choose: buying through a pharmacy, growing at home, or growing as part of a cooperative.

CertiCraft

Nominations now open for Grow Up’s Awards Gala

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Provinces.

Nominations are now open for the 2023 Grow Up Awards Gala, set to take place in Victoria, BC, in early October. 

The Grow Up Conference & Expo is returning to Victoria for the second time, following its first show in BC’s capital city in 2022.

The conference expects several thousand attendees over the three-day event, from Sunday, October 1 to Tuesday, October 3. The awards ceremony will be at the Historical Crystal Garden in the Victoria Conference Centre. 

Our awards gala aims to highlight the exceptional contributions taking place in the industry, and to celebrate the achievements of our peers.

Randy Rowe, Grow Up Conference & Expo

Randy Rowe, President of Grow Up, has been hosting the expo since 2019 and says this year’s event will also honour Ted Smith, the founder of the Victoria Cannabis Buyers’ Club, with a Lifetime Achievement Award, Wanda L. James as the events 2023 Cannabis Pioneer recipient, and Kevin Jodrey as their Grow Up Hall of Fame inductee.

The gala will be hosted by Jenny West Cooney from local radio station Zone 91.3.

“We are looking forward to honouring the dedicated professionals working tirelessly to set new standards in the ever-changing cannabis industry,” said Rowe. 

“Our awards gala aims to highlight the exceptional contributions taking place in the industry, and to celebrate the achievements of our peers. The gala is also a perfect opportunity to relax and get away from the stresses of the cannabis industry, even if it’s just for a night.”

Nominations are open until Sunday, August 6, 2023. Voting takes place August 10-28, and the winners will be announced at the awards ceremony.

“We encourage everyone in the cannabis industry to participate, either by nominating those who deserve recognition, or by attending this landmark event,” Rowe added.

Tickets for the Grow Up Conference & Expo are on sale now, and information on nominations can be found at growupawards.com.

Aurora Cannabis closes sale of Sun facility

Written by Staff on . Posted in Alberta, British Columbia, Business, Cannabis News, Ontario, Producers, Provinces.

Aurora Cannabis has closed the sale of its Medicine Hat, Alberta facility to Bevo Farms, a subsidiary of Bevo Agtech Inc.

The facility, dubbed Aurora Sun, was to be a 1.63 million square foot cannabis greenhouse, but construction was suspended in late 2019. Aurora said they would only build approximately 238,000 square of the 1.63M square foot facility by 2020, with the rest completed when market conditions improved.

The Aurora Sun Facility was sold via Bevo Farms’ acquisition of one of Aurora’s wholly-owned subsidiaries. Aurora has a controlling interest in Bevo as of 2022. Founded in 1986, Bevo operates 63 acres of greenhouse in British Columbia.

Bevo could pay “up to” $15 million to Aurora in connection with the Aurora Sun transaction as long as Bevo Farms successfully achieves specific financial milestones at the Aurora Sun facility.

“I am pleased that this transaction will achieve the dual objectives of improving Aurora’s cash flow, while benefiting Bevo as they proceed with the expansion of their business,” said Aurora’s CEO Miguel Martin in a press release.

Leo Benne, CEO of Bevo, added, “Bevo’s ability to deliver propagated plants directly from Medicine Hat to the Alberta greenhouse industry and beyond delivers a win for the Alberta greenhouse industry, the City of Medicine Hat and its residents, for Bevo, and for Aurora. We would like to express our gratitude to the City of Medicine Hat for their essential contributions to this transaction. We look forward to further developing our partnerships in Alberta in the years to come.”

Other facility closures

Aurora announced the sale of another facility in Alberta, Aurora Polaris, earlier this year. 

Originally located next to the now-defunct Aurora Sky facility, the company first announced the plans for a 300,000 square foot Polaris project in 2019, at an estimated cost of $50 million. The building was originally intended to serve as Aurora’s “centre of excellence for the industrial-scale production of higher margin, value-added products, such as edibles.”

CertiCraft

In May 2022, Aurora announced the closure of Aurora Sky, with 214 lost jobs. Martin points out that Bevo had already taken over the Aurora Sky facility.

 “Bevo has successfully repurposed the Aurora Sky facility in Edmonton, and we’re excited to further support their continued growth. Bevo’s acquisition of the Aurora Sun facility further demonstrates the close synergies between our companies and the value that our partnership creates for shareholders.”

In September 2021, the company announced their plans to close the Polaris facility, representing a loss of eight percent of its global workforce. A news report at the time noted an Alberta government website listed the Aurora Polaris facility as being around 2,800 square meters “with one-third of the space dedicated to warehousing and distribution of cannabis products and the remainder hosting product manufacturing.”

In 2022, Aurora closed down the 200-acre “Aurora Valley” cannabis farm in BC. A spokesperson for Aurora Cannabis told StratCann at the time that the Thrive Cannabis location replaced the need for the Aurora Valley site.

In 2020, Aurora sold a massive Ontario greenhouse for $17 million, which it had inherited when the company acquired medical cannabis producer MedReleaf. In their most recent quarterly report, Aurora reported a net loss of $87 million.

Surrey City Council to consider framework to approve cannabis stores

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Provinces, Retail.

Surrey City Council may soon consider allowing cannabis stores in BC’s second-largest city. 

Surrey initially banned cannabis stores entirely. In March, Mayor Brenda Locke told StratCann that the city is developing a plan to potentially consider applications. 

The city’s Planning & Development Department and the Engineering Department posted a staff report on July 20, to be considered at the next council meeting on July 24, that seeks council approval of a policy framework for regulating cannabis retail stores.

Staff are proposing a general framework for regulating cannabis retail stores in Surrey and recommending a city‐owned site at 13455–72 Avenue in the Newton Town Centre as an initial “pilot” location for a cannabis retail store.

“This framework is going to result in a lengthy implementation timeline.”

Jasroop Gosal, Surrey Board of Trade

The plan would also initially limit the number of store locations to one in each of Surrey’s six Town Centres as designated in the Official Community Plan (City Centre, Guildford, Fleetwood, Newton, Cloverdale, and Semiahmoo), with a preference for a city‐owned site in each Town Centre.

For these locations, the city would hold a competitive process to select a business operator based on specific criteria and a scoring system that is still to be determined. If no city-owned site is available in a Town Centre that meets locational criteria, a competitive process would be held to select both a site and business operator.

If Council supports the Newton Town Centre pilot site location, staff will prepare a city‐initiated rezoning proposal for Council’s consideration in the Fall of 2023, along with a concurrent selection process of a business operator for this location.

Staff also recommend that the city close and refund application fees for two locations previously filed with the city before any regulatory framework. These locations are 7380 King George Boulevard (7923‐0066‐00) and 13650–102 Avenue (7923‐0048‐00).

If Council approves the recommendations in this report, city staff will bring forward a more detailed report regarding the retailer selection process, licensing conditions and criteria, as well as a proposed monitoring and reporting process for council’s consideration.

“I understand that each city and community has its own specific needs. I am enthusiastic about collaborating with the City of Surrey to ensure the success of their approach.”

Vikram Sachdeva, Seed & Stone

Vikram Sachdeva, the CEO of Water Leaf Management Services, a Songhees Nation business initiative, says he’s pleased with these initial plans for a cannabis policy framework. Acknowledging that the city has taken a cautious approach to cannabis retail policy compared to other municipalities, Sachdeva says, “I wholeheartedly embrace this unique approach because I understand that each city and community has its own specific needs. I am enthusiastic about collaborating with the City of Surrey to ensure the success of their approach.”

CertiCraft

Water Leaf Management provides operational services to all Seed & Stone and Songhees Cannabis stores. Seed & Stone holds the distinction of being the first to obtain licenses in Delta, Hope, and Coquitlam, and has recently applied to be the first retailer in Pitt Meadows. 

Pitt Meadows, another BC city that banned cannabis retailers at the beginning of legalization,  just announced its plans to begin hearing applications on a case-by-case basis.

The Surrey Board of Trade released a report earlier this year calling on the local government to begin allowing cannabis retailers to operate in the municipality. Jasroop Gosal, Policy & Research Manager for the Surrey Board of Trade, says it has concerns at how long the proposed plan will take to implement.

“This framework is going to result in a lengthy implementation timeline,” said Gosal in a press release. “Many cities from across the province allow retail operations to occur on private land, which meet the prudent criteria put in place by the Provincial Government. The report also doesn’t indicate a timeline for the pilot, initial phase, or future phases.”

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Featured image of Queensborough Cannabis Co in Delta, on the border with Surrey. Both images via Google.

Editor’s note: This article has been updated to include new comments from the Surrey Board of Trade.

Week in Weed – July 22, 2023

Written by Staff on . Posted in Alberta, British Columbia, Business, Cannabis News, Manitoba, Ontario, Provinces, Saskatchewan.

It’s been busy on StratCann this week, where we shared our newest insight piece on the cannabis distribution systems in Manitoba and Saskatchewan. 

We also broke the story of an apparent robbery of a cannabis producer in BC, as well as a new BC muni now accepting cannabis retail applications, a new “sovereign” cannabis store in Saskatchewan, the OCS allowing new smaller-vehicle deliveries to their DC, and an update on the court challenge in Manitoba against home grow bans. 

We also covered how the MBLL is handling a strike in Manitoba, and how the Alberta government is auctioning off a strange outfit originally intended for a cannabis education campaign. 

Outside of that, it was a relatively slow week in cannabis news in Canada.

Several news agencies made rage-bait hay by reporting that Aurora’s CEO Miguel Martin received a base salary of about $590,500 as well as about $3.8 million in share-based options and almost $1.1 million in option-based awards in the past fiscal year, as well as about $815,000 in non-equity incentive plan compensation and $416,000 in other compensation.

High Tide filed a preliminary base shelf prospectus to replace an expired base shelf prospectus. The prospectus was filed in each of the provinces and territories in Canada.  

Mission, BC Mayor Paul Horn says he wrote to Canadian health minister Jean-Yves Duclos on July 6, describing the impact legalization has had on his community, especially regarding the impact of designated and personal grows. The mayor also expressed concern with licensed commercial production sites. 

Stats Canada’s Monthly Retail Trade Survey collects data on sales, e-commerce sales, and the number of retail locations by province, territory, and selected census metropolitan areas from a sample of retailers.

New monthly figures from Stats Canada show that cannabis retailers sold more than $415 million in May 2023—an increase of about $5 million from the previous month and an increase from $373 million in May 2022. The monthly increases were seen across most provinces and territories, with declines in BC and PEI. Sales in BC were down about 5 percent from the previous month, while sales in PEI were down nearly 36 percent ($1,868,000 vs $1,196,000). 

Meanwhile, police in Ontario say a 20-month-old baby in Prince Edward County was treated in hospital after consuming a quantity of cannabis chocolate. The origins of the edible were not reported. 

Also, a Canadian man was charged with importing cocaine and cannabis into Bermuda. According to prosecutor Carrington Mahoney, the cannabis in question has an estimated value of almost $474,000, and the cocaine has a value of about $201,300.

Finally, Lauren Kelly, a Pharmacologist and Associate Prof at the University of Manitoba, tweeted that she has finally received approval to conduct research on cannabinoids for drug-resistant epilepsy.

Manitoba taking steps to mitigate strike’s impact on cannabis sales

Written by David Brown on . Posted in Business, Cannabis News, Government, Manitoba, Provinces.

Manitoba Liquor & Lotteries’ Cannabis Operations team says it has a plan in place to ensure a strike action from the Manitoba Government and General Employees’ Union does not impact cannabis producers’ ability to send products to suppliers and retailers in the province.

In a memo sent to cannabis producers on July 21, Manitoba Liquor & Lotteries (MBLL) says that while it is “severely impacted” by the work stoppage from the Manitoba Government and General Employees Union (MGEU), it has developed a contingency plan in advance to mitigate any industry concerns. 

The government regulator was informed on July 14 of the pending job action by the MGEU, which includes staff from Cannabis Operations. The union issued a one day walk out on July 19, which has now developed into a more long-term strike.

During the strike, the MBLL’s Cannabis Operations are required to operate with a skeleton staff, limiting the ability to process new purchase orders. As such, the agency will be pausing or delaying these activities:

  • Support resolving order discrepancies and resending packaging slips.
  • Issuing financial credits and refunds.
  • Tracking open purchase orders and providing status updates.
  • Providing Cannabis Customer Self Service troubleshooting support.
  • Password resets and account set-up support (for CCSS and MBLL Partners) will continue with some delays.
  • Limited to no product price changes or new product set-ups in the product catalogue.
  • Cannabis Tracking and Licensing System (CTLS) (seed-to-sale) reporting on behalf of Retailers Account administration (changes to supplier and retailer information).
  • The Cannabis Contact Centre, Cannabis PO, and Cannabis Buyers email accounts will be monitored for urgent matters, but responses will be limited or delayed.

Any suppliers dealing with a product list status change should still inform the MBLL, who will take action when they can.

If a supplier has a list status change (to a Pending/Terminated status), continue to advise MBLL, they will take action accordingly as time and resources permit.

The union has been striking to bring attention to their contract negotiations, shutting down several liquor stores, and the union says some workers will continue to strike on Thursday. The MGEU has over 1,400 Manitoba members and says they have been working under an expired contract since March last year.

Job actions in other provinces have caused challenges for producers and retailers. In 2022, British Columbia’s central distribution system was temporarily halted due to a government employee’s union strike. Strikes in Quebec have also temporarily closed or otherwise impacted some stores in the province.

While the MBLL does not run a warehouse for cannabis like other provincial governments, it does approve products and suppliers into the province. Producers can then ship directly to retailers, or go through private distribution systems.

Michael Gruber, the owner of Parrot Pot Shop, with two locations in Winnipeg and a third on the way, says his main concern is if sales are impacted. Customer loyalty is important in such a highly saturated market like Winnipeg. 

“Our main concern would be if we can’t service customers. That’s what really counts. If there are issues with purchase orders or credit notes, it can wait. As long as we can get product to our customers the rest can wait.”

Kerri Michell of Farmer Jane Cannabis, with five locations in Winnipeg, says she is optimistic that this will not negatively impact her business, as long as the strike doesn’t go on very long.

“MBLL has been really good with communicating so far and seem to care about the impact on the industry.”

Gord Nichol, the owner of North 40 Cannabis, a micro producer in Saskatchewan that sells into the Manitoba market, says he’s happy with how the MBLL is handling the issue.

“I’m glad to see them focusing on making sure that products are still flowing. We’ll get the returns fixed up, any overages or any issues, those can go on the back burner because that’s not going to affect anyone’s ability to do business. So it sounds to me like they’re focused on the right things.

Featured image via MGEU on Twitter

Team fighting Manitoba’s home grow ban are back in court in September

Written by David Brown on . Posted in Business, Cannabis News, Government, Manitoba, Provinces.

The group challenging Manitoba’s ban on home-grown cannabis will head back to court in September to make new arguments for why the provincial ban is unconstitutional. 

Jesse Lavoie, who has been leading the charge against the provincial ban through his organization TobaGrown, says he and his legal team are filing a brief on July 21, with a scheduled court date of Friday, September 8.

Lavoie and his two lawyers, Kirk Tousaw and Jack Lloyd, will be arguing that the recent Supreme Court ruling that upheld Quebec’s ban on growing cannabis at home does not create a precedent to be followed in Manitoba.

While Quebec’s law banning home-grown weed is based on civil fines, Manitoba’s is based on criminal penalty, something Tousaw says is not in the purview of the provincial government. 

Quebec and Manitoba were the only two 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. 

The province’s ban does not extend to those authorized to grow cannabis for medical purposes, who have been protected by federal court.

“The argument being advanced this September in Manitoba is that the decision of the Supreme Court of Canada in the Murray-Hall case is not binding authority,” explains Tousaw. “This is because that decision was based on Québec’s very specific provincial legislative scheme, which includes the creation of a state monopoly—and which does not, unlike Manitoba, penalize home growing with the potential of up to a $100,000 fine and one year in prison. We say that Manitoba has improperly exercised the criminal law power in a way that is quite different from what Quebec did.”

“Ultimately, issues like this are best resolved in the legislature, so long as the legislature does not overstep its constitutional bounds,” he continues. “Irrespective of the outcome of the court case, it would be best for the citizens of Manitoba if the legislature simply allowed Manitobans to grow their four plants like every other Province except Quebec does.”

In the Quebec case, the provincial government had successfully argued in a lower court that they had the right to ban growing cannabis at home entirely, and were doing so to protect young people. The Supreme Court then dismissed an appeal of that ruling, concluding that the provincial government’s ban on growing cannabis at home was not in conflict with the federal law allowing Canadians to grow up to four plants at home.

Federal regulations allow Canadians to grow up to four cannabis plants per home. Provinces are allowed to place restrictions on that allowance, such as limiting the number of plants and/or requiring them to be grown in a secure area or out of view of the public. 

In developing the Cannabis Act and Regulations, the federal government argued that limiting the number of cannabis plants to zero or banning them outright would be out of the scope of their powers. 

This is similar to the federal age limit of 18 for access to alcohol, but provinces can raise this amount. All provinces and territories in Canada except Alberta and Quebec have established 19 as the age of access for cannabis. Alberta’s is 18, and Quebec’s is 21.

Lavoie, who launched his challenge of provincial law in 2020, says he’s frustrated that the current government continues to maintain the ban on Mantiobans’ ability to grow a few cannabis plants at home.

“This lawsuit has been going on for three years now, and it’s very disappointing to witness our opponents, the Elected Government, pushing for a lazy victory with a lack of their own evidence,” says Lavoie. “Despite Quebec’s ruling being based on protecting a Cannabis monopoly that doesn’t exist in Manitoba, our Opponents’ lead argument has been “We can because Quebec can”. Our legal team has spent countless hours preparing for this September 8 legal showdown, and I’m confident that we will prevail in this case.”

Jack Lloyd, another lawyer working with TobaGrown on the case, who also worked on the challenge in Quebec, filed by Janick Murray-Hall, agrees that the Quebec case does not, in his estimation, provide cover for Mantioba’s ban. 

“The situation is significantly different in Manitoba, which means that in our view, Manitoba’s legislation cannot escape judicial scrutiny on the back of the SCC’s ruling in Murray Hall.”

The Manitoba government will have until August 18 to file their response. The two groups are scheduled to meet in court on September 8. TobaGrown says it has received permits to have over 1,000 people on the front steps of the Manitoba Legislative building from 8:30 a.m. to 9:30 a.m. on September 8, 2023, before the team heads to court at 10:00 a.m.

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OCS DC now accepting deliveries from smaller vehicles

Written by David Brown on . Posted in Business, Cannabis News, Government, Micro, Ontario, Producers, Provinces, Retail.

The Ontario Cannabis Store is making it easier for cannabis producers to send smaller shipments to their distribution centre.

As of July 17, the OCS Distribution Centre (DC) will accept deliveries from sprinter vans carrying up to 260 master cases per delivery and “alternative vehicles” carrying up to 60 master cases per delivery. 

The OCS says the changes will address industry demands for smaller businesses with smaller shipments to engage directly with the world’s largest cannabis distribution centre. Many smaller producers have partnered with larger companies to address this previous gap.

This decision permits LPs to consolidate shipments, leading to significant time savings for both LPs and receivers. No longer will trucks be dispatched for small loads that occupy as little as one or two percent of the total vehicle space.

Kayla Nguyen, Ontario Cannabis Association (OCA)

The Ontario Cannabis Association (OCA), representing around 50 cannabis producers, says it’s happy with what it says is a “long-awaited” change that helps out cannabis producers across Ontario.

“After years of requests, the OCS has made a ground-breaking decision to allow the type of delivery that optimizes operations and streamlines the delivery process,” said Kayla Nguyen, director of membership and outreach with the OCA, in a press release. 

“This decision permits LPs [licensed cannabis producers] to consolidate shipments, leading to significant time savings for both LPs and receivers. No longer will trucks be dispatched for small loads that occupy as little as one or two percent of the total vehicle space.

”The change represents another small step the cannabis distributor is taking to better address the needs of smaller cannabis companies. While Ontario’s cannabis distribution centre is primarily built around addressing the needs of companies shipping the larger batches of products that dominated the market at the beginning of legalization, the industry has shifted towards smaller micro and craft producers.

While many of these smaller cannabis growers and processors still work with larger companies to gain access to provincial markets, Ontario has been refining its massive distribution centre to address small-batch needs. As one example, while the OCS still does not allow producers to send products directly to retailers, it has been expanding the Flow-Through program that allows retailers to order from a list of products not traditionally stored at the distribution centre. 

The OCS DC operates within 220,000 square feet of space, shipping and receiving the equivalent of approximately 1,100 kg of dried cannabis every day from more than 250 of Canada’s federally licensed cannabis producers. A team of about 400 employees operates the facility 24 hours a day, connecting almost 1,700 privately owned retail stores across Ontario with more than 3,000 products. 

Every week on average, 1.7 million units—equivalent to almost 7 million grams of cannabis—arrive at the Distribution Centre operated by third-party Domain Logistics, not including products sold through OCS’ Flow-Through program. 

Weekly, the OCS also ships roughly the same amount of product 1,100 kg of cannabis is transported to Ontario’s retailers daily.

Images via the OCS

First Nations community near Regina opens “sovereign” cannabis store

Written by David Brown on . Posted in Business, Cannabis News, Government, Provinces, Retail, Saskatchewan.

One First Nations community in Saskatchewan has recently opened a retail store under their own local regulations. 

Miyo Askiy Cannabis Co is located within the Piapot First Nations, which is a Cree First Nation in southern Saskatchewan near Regina. They had their grand opening on Wednesday, July 19. The Piapot First Nations own the building itself, which operates under Piapot cannabis regulations. 

Saskatchewan recently passed legislation that said First Nations in the province would no longer need to get a permit from the Saskatchewan Liquor and Gaming Authority (SLGA) in order to operate on-reserve cannabis stores. The SLGA is the provincial agency regulating the liquor and cannabis industries. 

The provincial rule change also gives more enforcement authority to local First Nations, something some community leaders have called for.

First Nations assert their jurisdiction and maintain community safety by creating laws under the Indian Act, land codes, and other federal legislation, but there have been difficulties in enforcing these laws in the courts.

Darcy Bear, Chief of the Whitecap Dakota First Nation

However, the province says First Nations cannabis rules must essentially mirror provincial rules and will still require products to be purchased through federally-regulated producers. Not all First Nations leaders agree—Piapot First Nations leadership among them. 

In a press release shared in June, the Nation said the business is licensed to operate under the Piapot First Nation Cannabis Act and will comply with the Piapot First Nation Cannabis Regulations, which it says will “meet or exceed the provincial and federal regulations with respect to cannabis.” 

“The Piapot Nation is committed to exercising its sovereign right to pursue economic opportunities that benefit the Nation and its membership.” Miyo Askiy says it will give back 15 percent of its proceeds to the community. 

Images shared by the store online display an assortment of cannabis flower, extracts and edibles, with prices ranging from $5-15 a gram for dried flower, shatter around $17-20 a gram, and commercially-packaged edibles commonly found in the illicit market. 

Images of products for sale at Miyo Askiy Cannabis Co.

Peter Flaman, a business adviser with Piapot First Nation, told local media the store would be able to distinguish itself from numerous other retailers in the Regina area by “running a lot cheaper store.”  

A representative with Piapot First Nations was not immediately available for comment. 

A handful of other First Nations communities in the province have opened their own stores under similar circumstances. Another Cree First Nation in Saskatchewan located near Regina, the Peepeekisis Cree Nation, created its own cannabis regulations in 2019 and opened its first cannabis store in 2020.

The Pheasant Rump Nakota First Nation has published its own cannabis regulations as well, opening a retail store in 2019 about 2 hours southeast of Regina. At that time, Pheasant Rump Chief Ira McArthur told the Regina Leader Post that they purchase products “from a supplier that grows it in quality control conditions, and the product is tested by one of the same laboratories that Health Canada uses.” The store advertises flower, CBD and THC tinctures, capsules, concentrates, edibles, and topicals.

The Muscowpetung First Nation took a similar approach, opening its own store in 2018 based on its own cannabis regulations. The provincial government asked the First Nation to close the store, with the Nation, in turn, filing a statement of claim in the Court of Queen’s Bench in 2019. The claim sought a declaration that the Nation has an inherent right to self-government and that it has the power to sell and regulate cannabis under the constitutional rights of Indigenous people in Canada.

That store, the Mino-Maskihki, is currently listed online as being closed. 

While some First Nations in the province (and across Canada) have taken a more sovereign approach to their cannabis regulations, some have made efforts to align their own laws with provincial and/or federal regulations.

Darcy Bear, the Chief of the Whitecap Dakota First Nation near Saskatoon, praised Saskatcehwan’s changes to First Nations cannabis rules, saying they will give them the ability to better enforce the law in their communities. 

“First Nations assert their jurisdiction and maintain community safety by creating laws under the Indian Act, land codes, and other federal legislation, but there have been difficulties in enforcing these laws in the courts,” says Bear. “Through our work with the provincial government, the amendments to SOPA will give us access to prosecution and enforcement tools that will give force to our laws in areas such as environmental protection and community safety, and strengthen the place of our laws alongside federal and provincial law.”

Not everyone is happy with the possible changes, though. Chief Derek Sunshine of the Fishing Lake First Nation told CBC last year that he had no intention of pursuing an agreement with the province or SLGA.

“They have no say in my nation,” he said, noting that the band created its own licensing system, and its store operates under that authority. “They have no right to say to my nation that we need a licence.” Numerous First Nation communities in the province and across Canada have opened their own cannabis stores, operating outside provincial and federal regulations, with at least eight communities creating their own bylaws.

h/t to the Regina Leader Post

h/t to the Regina Leader Post

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BC cannabis producer loses 120 kg of cannabis in early morning burglary

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Producers, Provinces.

The owner of a BC cannabis company says his Agassiz facility was robbed recently, with several men in a truck getting away with 120 kg of cannabis. 

Dylan King, the owner of Pistol and Paris, a BC-based cannabis processor and brand, says police were called to his small micro processing facility after several individuals broke in early in the morning on July 18. 

Around 4:30 a.m., says King, several people drove their truck through two gates at the site before cutting into a shipping container where the cannabis was being stored. Police who responded to the call briefly pursued the truck as it was leaving the facility but were unable to immediately catch them, he adds.

“It’s a big loss, financially, unfortunately,” says King. ”We’ve got a lot of demand for these products and now we’re officially out of stock.

One of his biggest concerns is trying to get back on his feet to ensure his 13 employees still have work.

“It’s really a big blow. Things are already challenging enough with the way the industry is with price compressions and all these other things. There are so many guys going out of business, it’s just so difficult to operate. So a huge hit like this is deflating. I think of all the staff and I really want to keep everyone working.” 

The individuals made off with several boxes of Pistol and Paris’ Orange Tings, Blackberry Breath, Notorious, and Pink Goo which were waiting to be packaged into pre-rolls and 7-gram SKUs. An employee who was on site at the time of the robbery said the individuals were driving a black truck.

King says he’s still holding out hope that police are able to receive the stolen product, but says the robbery was a wake-up call for him, especially because he didn’t have insurance on the product itself—something he didn’t think he needed in the legal industry. He hopes others use his experience as a cautionary tale. 

“Just because you’re legal don’t think that these rippers are going to stay away. These rippers don’t seem to care whether you’re legal or not. I wish I had insurance to be able to help with some of this loss. I’m definitely going to be changing the way I run my business.”

StratCann will provide more details on this story as they emerge.

One of the two gates broken down to enter the site
Empty boxes outside of the shipping container where cannabis was stored

High marks for distribution models in Saskatchewan and Manitoba

Written by Tim Wilson on . Posted in Business, Government, Insight, Manitoba, Producers, Provinces, Retail, Saskatchewan.

In Canada, each province and territory has a unique cannabis distribution model. Though by no means perfect, many retailers and LPs rank Saskatchewan and Manitoba among the best.

“In Saskatchewan, an LP can sell directly to a retail store,” says Ian Chadsey, VP Corporate Affairs at Delta 9 Cannabis, an LP with retail operations in the two provinces. “Manitoba also doesn’t take possession of the cannabis—there is no warehouse —but the government will take orders through its portal and add excise fees. We then deliver directly.”

In both examples, retailers have a lot of leeway in terms of ordering what they want. 

Saskatchewan, for example, allows for direct relationships with LPs. Retailers can have net terms for all orders, which is reflective of a true B2B model, and has a positive impact on cash flow. There is a wholesaling option that allows for next-day delivery and quick adjustments, with credit for defective products. Emergency orders are also possible.

“This can all be done in a timely manner, direct with producers,” says Kerri Michell, president of Farmer Jane Cannabis, which has 14 retail stores in Saskatchewan and Manitoba. “In Saskatchewan, there’s a large product selection and variety, with LPs typically giving price reductions on aged inventory, especially products that can’t be sent to the larger government wholesalers. The province is almost at the point where a retailer could use a single wholesaler for 90-95% of product if they wished.”

By comparison, Manitoba offers simplified purchasing using the MBLL portal. This is a one-stop shop for all cannabis, which ensures accuracy for orders.

“In Manitoba, a retailer can set weekly payments and credits,” says Michell. “The province can also have a larger database of SKUs than in other provinces because the products aren’t physically held in a Manitoba warehouse.”

The good and the bad

In Saskatchewan, independent distributors help LPs to get their product to market. Some of these are owned by or have special relationships with large LPs or retail chains and have been criticized for not having smaller retailers’ interests at heart.

“These distribution companies make money on the backs of the struggling retailers for their own benefit, unlike the cooperative model,” says RJ Fafard, Director of Retail Operations at the Pot Shack, which has four retail locations in Saskatchewan.  “From my perspective, the Weed Pool cooperative is the best option. It offers a two-day order turnaround, free delivery, and a low percentage markup on products, given that they’re only covering costs. There’s a large craft selection, and immediate invoicing.”

However, distributors in Saskatchewan, no matter their business model, will sometimes demand exclusivity, which can limit opportunity.

“The Weed Pool is a very good partner for us, but we can only sell to the stores they sell to in Saskatchewan,” says Alex Kratz, CEO of Western Cannabis, a family-run LP in Saskatchewan. “However, it’s normal and understandable for a distributor to want some exclusivity. In return, we get excellent support.”

Many LPs will have an exclusive contract with one distributor, and that’s it, which can place limits on market access. If multiple distributors are used, there’s a risk that an LP won’t receive favoured treatment. By comparison, in Manitoba every store has an equal chance to purchase any product they want.

“I’m a fan of how Manitoba does it,” says Kratz. “It is very open, with one distribution model that allows for all stores to have an equal chance to buy our product.  We can then support the market in various ways, including popups and swag for independent stores. Every independent store in Manitoba has bought our product—whereas I can’t say the same for Saskatchewan.”

That said, dealing with a distributor in Saskatchewan has its advantages.

“The Weed Pool ordering system is one of the best,” says Kratz. “It’s so smooth—that’s definitely one of the perks. Order, buy, ship—it’s fast and simple.”

Manitoba also has its challenges, particularly on the retail side.

“We pay upfront for products that may not hit our stores for four to six weeks,” says Michell from Farmer Jane. “We’ve seen improvement overall, but there’s little recourse for slow delivery timelines from LPs. There have been several instances of extreme delivery delays.”

Many LPS also don’t like to have to ship to every store, regardless of volumes, which can reduce the interest in Manitoba as a market.

“This can result in worse service and higher prices, with LPs preferring to do business in other provinces,” says Michell. “Although a store in Manitoba can order weekly, many producers still ship bi-weekly. This means multiple orders from the same PO can arrive at once, causing confusion with packing slips. Also, listed products sometimes aren’t in supply with producers, and when this happens, there’s no ability to sub a different product.”

Scaling what works

Given the diverse views of market participants, there are differing ideas on what would improve the distribution systems in the two provinces—if anything. For some, minimal government involvement, as in Saskatchewan, is by far the best possible route.

“The Saskatchewan cannabis market works the best for us, as we can sell directly to the retail store,” says Chadsey from Delta 9 Cannabis. “It’s similar to the cigarette industry that supplies products directly to the retail outlet. There’s no need for the provincial government to be the middle person in the supply chain.”

However, Saskatchewan is a relatively small market—its population is only 1.2 million—which may make a hands-off approach more viable. Applying this laissez-faire model to larger markets could create complications. 

“The Saskatchewan model imposes additional shipping costs on LPs, so the impact would be amplified in a larger market,” says Michell.  “However, there are lucrative offsets that may balance out those expenses.”

It’s also uncertain how private distributors would scale their operations. Could exclusivity be enforced in multiple jurisdictions, and would that be problematic? As it stands, within the present model in Saskatchewan, Kratz says that Western Cannabis’s stance has been to sell to the Weed Pool, and to explore other markets.

“As a local LP, it would be nice to be in every city in Saskatchewan that has a cannabis store, but that’s impossible with the current model,” he says. “Thankfully, both Saskatchewan and Manitoba made it so that we could survive through our first couple of years as an LP. They’ve supported us from the beginning.”

Week in Weed – July 15, 2023

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Government, New Brunswick, Ontario, Producers, Provinces, Retail, Saskatchewan.

There’s been quite a flurry of news on StratCann this week, starting with Metro Van continuing to call for regulation of cannabis farm emissions, the OCS launching a new public awareness campaign, Health Canada announcing a plan to begin testing of licit and illicit cannabis, and BC engaging stakeholders on possible (minor) changes to provincial consumption rules.

In addition, Organigram blames lower sales on THC inflation and no longer being able to sell “ingestible extracts,” and StratCann profiled BC micro Kush Mountain.

In other news…

Saint Andrews, a town in New Brunswick, rejected Cannabis NB’s efforts to open a mobile retail store. The town council said a mobile cannabis store was a step too far, with one councillor worrying about the town’s image. *

“I just see a big CBC,” said councillor Lee Heenan referring to a potential news headline, according to the CBC. “Saint Andrews, first town to have mobile cannabis truck. I don’t know if that’s the publicity that we’d like to see.”

Greenway Greenhouse Cannabis Corporation, a cannabis nursery and processor in Ontario,  entered into a debt settlement agreement with a marketing services provider, issuing 964,285 common shares at a deemed issuance price per share of $0.28 and a cash payment of $35,100.

In similar cannabis stock news, Canopy Growth signed agreements with lenders to reduce its debt by $437 million over the next six months, weeks after the Canadian firm raised doubts about its ability to continue as a going concern. The company’s total debt outstanding as of March 31, 2023, was $1.3 billion.

Saskatchewan RCMP say they are seeing an increase in cannabis-impaired driving at check stops, something RCMP Traffic Services Unit Cpl. Brian Ferguson attributes it to officers becoming more adept at “recognizing signs and symptoms of someone utilizing THC products and, as well, we do have some extra tools now that are available to us in more quantities.”

Health Canada’s Forward Regulatory Plan 2023-2025 includes references to proposing amendments to the Cannabis Regulations relating to Flavours in Cannabis Extracts. This is an extension of previous messaging from Health Canada on the subject going back to 2021. The regulator has yet to provide any new details on specifics or an expected timeline. 

CBC also reported on how veterans and frontline workers say cannabis is tackling PTSD and depression, speaking with people from CannaConnect in Saskatchewan and UBC cannabis researcher Zachary Walsh.

A new Indigenous-owned cannabis store opened in Stratford, Ontario, eschewing provincial and federal cannabis regulations, with the owner arguing that he is within the Charter of Rights to operate the store on traditional land. In a statement, Stratford police said they “recognize the complexities of the issue and want to ensure that all lawful rights are taken into consideration.”

Retail cannabis chain Trees, with about a dozen locations in Ontario and BC, announced that it has entered into a business combination agreement with 420 Investments Ltd., which operates FOUR20, a cannabis retail chain in Alberta with about 40 locations. The agreement says that 420 will undertake a reverse takeover of Trees. The move came just as BC announced they are considering lifting the 8-store cap for cannabis retailers in the province. 

Freida Butcher, Chair of the Board at 420, said they “are very proud of the performance of FOUR20 to not only survive the pandemic but to have grown from 14 stores in 2020 to our current 40 stores. We are very pleased to have found another retailer in Trees with the same values and with stores that will expand our brand in Ontario and allow us to take our first steps into BC.

Lastly, MJBiz reports that the OCS is calling on changes to cannabis packaging rules and THC limits on edibles.

  • CBC originally reported a “pop up” store had previously operated in Saint Andrews. This portion of CBC’s article has been edited to remove this section and as such we have removed it fro our recap. The store was also proposed as a Cannabis NB store, not a private store.

BC asking for feedback on changes to where people can consume cannabis

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Provinces, Retail.

The BC Government plans on making several changes to provincial cannabis rules, which it says will assist the cannabis industry and cannabis tourism in BC.

As part of a broader industry outreach initiative, BC’s Liquor and Cannabis Regulation Branch (LCRB) is seeking input from the cannabis industry and related stakeholders regarding plans to eliminate provincial constraints on promoting locations for cannabis consumption and to allowing cannabis consumption on patios, with the latter limited to areas where smoking and vaping are already permitted under provincial regulations.

Currently, BC does not allow anyone to smoke or vape cannabis on a patio, even in places where they can smoke tobacco or vape non-cannabis products. Provincial law also does not allow anyone to promote a place at which to consume cannabis. Municipalities and local First Nations may also have their own restrictions in place that would not be affected by any provincial rule changes. 

The proposed changes would not allow for in-store consumption, but are a step towards creating allowances that will allow for the formal marketing of spaces and events that can more directly cater to consumption.

BC has announced that this feedback exercise, available to stakeholders until August 11, is a crucial step in the gradual development of cannabis hospitality and tourism “experiences” in the province.

BC has been increasingly focussing on the issue of consumption spaces and cannabis tourism, launching a province-wide engagement paper last year. The What We Heard report from that engagement process was then released in January 2023. The report showed significant public support for consumption spaces, balanced with concerns from law enforcement and public health agencies.

Industry response is mixed

According to Jaclynn Pehota, the executive director of the Retail Cannabis Council of BC (RCCBC), the organization’s members are supportive of the proposed changes regarding cannabis consumption locations in BC. However, Pehota highlights that the members are primarily focused on several other industry concerns.

“RCCBC’s member retailers are pleased to see the LCRB opening consultation on restrictions around consuming cannabis in outdoor spaces. RCCBC’s members are broadly supportive of leaving decisions specifically related to the appropriateness of cannabis consumption on patios to local governments. It seems reasonable that citizens and their representatives are best equipped to decide how to integrate outdoor cannabis consumption in their communities.”

“Membership welcomes the LCRB regularly revisiting BC’s regulatory framework for cannabis. Regular policy review ensures BC’s framework remains in step with the reality of today’s sector,” she added.

“Encouraging the government to undertake a review of the wholesale fee structure has been a focus of our advocacy since the launch of the Direct Delivery program in August 2022. 

Jaclynn Pehota, Retail Cannabis Council of BC

In regard to raising the eight-store cap for cannabis retailers, Pehota says the RCCBC is cautiously supportive as long as the government takes a careful approach that can “safeguard the diverse community of small businesses that has been fostered in BC’s cannabis sector” and avoid the kind of downward price pressure seen in provinces that have a greater number of large discount chain stores.

Still, Pehota says the priority for RCCBC’s members is reducing the LDB’s 15 percent wholesale markup, especially for sales made through the direct delivery program that allows small-scale BC producers to ship products directly to retailers. The LDB charges this “proprietary fee” on products that go through its centralized distribution centre in the Lower Mainland, as well as on products that producers sell directly to retailers, without ever making their way through the central warehouse. 

Instead, RCCBC’s recommendation is a reduction to 2.5 percent or lower, which Pehota says would be more comparable to the markup for craft beer

Jeff Curtis, the owner of Boro and Beyond in BC, which offers among its services, dab bars for cannabis pop-up events in the province, says the proposed changes to allow the promotion of locations for cannabis consumption and to allow cannabis consumption on patios, while modest, are a big first step towards what he sees as a more compressive approach to consumption spaces.

“Besides being able to mitigate public nuisance impacts, consumption spaces represent a place where government can concentrate marketing efforts to educate about overconsumption and where trained professionals can give first experiences and education to reduce adverse reactions.

“Aside from these, having licensable, insurable establishments and destinations to promote 19+ events would be huge. We’ve seen how big events and festivals bring in local revenue and generate jobs, and opening up cannabis would be no different.”

15 Percent Direct Delivery fee an industry priority

While many producers and retailers say they are very happy with the direction of the Direct Delivery program, the fact producers still have to pay this fee while also taking on the extra work of distribution has made it less than ideal for others. 

“Our member retailers and our associate member producers have delivered the message loud and clear that reducing the 15 percent markup, especially in the context of Direct Delivery, is an advocacy priority,” Pehota told StratCann. “Encouraging the government to undertake a review of the wholesale fee structure has been a focus of our advocacy since the launch of the Direct Delivery program in August 2022. 

“A lower whole markup can’t come soon enough for both retailers and producers,” she adds.

The retail organization instead recommends fees comparable to what the LDB charges for craft beer producers to sell directly to retailers. In a memo the organization sent out to members earlier this month, Pehota said they hope to see changes to the fee structure sometime in 2024. 

“RCCBC continues to deliver the message that strong sectoral supports, like a reduction in wholesale fees, are desperately needed in BC as licence holders continue to fight to win market share from unregulated operators.”

The priority is saving BC craft cannabis. And in order to do so, this government has to make a substantial reduction or elimination of the wholesale markup on direct delivery.

Ehren Richards, Sunrise Cannabis

BC’s Ministry of Public Safety and Solicitor General, which oversees the cannabis file in the province, says it’s committed to reviewing the direct delivery program and is expected to “include consideration of the 15 percent markup that is applied to products registered for the direct delivery program and the program’s eligibility criteria.”

Some Vancouver retailers StratCann spoke with were somewhat more candid about their concerns over BCs focus on lifting the store cap rather than addressing the direct delivery fees. 

Ehren Richardson, the co-owner of Sunrise Cannabis on Kingsway in Vancouver, says he doesn’t see the changes in consumption as particularly significant, and doesn’t understand the call to lift the eight-store cap. Instead, he says the removal of the 15 percent fee that producers must pay to sell into the direct delivery program would benefit retailers like him because it would allow them to carry a greater variety of local products at more competitive prices. 

“I think that issue [the eight-store cap] is probably among the lowest priority issues facing the cannabis industry right now,” says Richardson. “The priority is saving BC craft cannabis. And in order to do so, this government has to make a substantial reduction or elimination of the wholesale markup on direct delivery. That’s the only thing that’s going to save us, not lifting the eight-store cap.”. 

“There seems to be a disconnect between what the industry needs and what the BC government is doing”

Feven Berhane, KushKlub Canada

Grant Pan, General Manager at La Canapa, with three locations in Vancouver, shares a similar sentiment. While the BC government says it wants to support BC’s small craft growers, Pan is skeptical. 

“It seems all their policy changes just benefit the big players. We’re a small store with three locations, and we don’t need the cap lifted. I think that’s just the big chains. That doesn’t help the BC craft industry. I don’t think the government really wants to help the little guys.”

However, Jeff Guignard, Executive Director at Alliance of Beverage Licensees (ABLE BC), which recently launched its own cannabis division to represent industry concerns, says he understands the concerns some retailers have but sees the change, if it happens, being modest in comparison to other provinces.

“I don’t think anybody wants to see a massive, single monopoly chain controlling the retail industry,” Guignard tells StratCann,“ but there are economies of scale that come from scaling up. I’m not suggesting we necessarily remove the cap. I don’t think industry so far says they support that. But there’s definitely some interest in increasing it, doubling it or increasing it to twelve, something like that.”

Feven Berhane, the co-founder of retail store KushKlub Canada, with a handful of locations in BC, Manitoba, and Ontario, says she is also unsure of why BC is prioritizing raising the store cap rather than prioritizing changing the 15 percent fee. 

“There seems to be a disconnect between what the industry needs and what the BC government is doing,” says Bernhane. “If they help the micros they help everybody. But I don’t think the BC government understands that. That is what will help independent retailers. Even lowering that fee by a few points would make a big difference.”

Organigram blames lower sales on THC inflation and no longer being able to sell “ingestible extracts”

Written by David Brown on . Posted in Business, Cannabis News, New Brunswick, Producers, Provinces.

New Brunswick-based cannabis producer Organigram says its net revenue and margins decreased in the third quarter of 2023 due to the declining price of cannabis flower.

The company also blamed a higher cost of sales, THC inflation, and Health Canada no longer allowing the sale of “ingestible extracts.”

Organigram had previously produced and sold Edison JOLTS—a cannabis-infused lozenge sold in packages containing 100mg THC, ten times Health Canada’s allowed limit of 10mg THC per package. Health Canada issued a notice to cease sale and distribution of these kinds of products earlier this year.

Organigram has filed for a judicial review of Health Canada’s decision.

The company posted its third quarter results for 2023 on June 13, with net revenue down 14 percent to $32.8 million, from $38.1 million in Q3 2022. 

Organigram’s cost of sales also increased to $32.3 million, from $29.4 million in the third quarter of the previous year, an increase of 10 percent. 

The cannabis producer blames lower sales of its cannabis flower on “the increasingly common practice of THC-inflation” by “some licensed producers” which it says are taking part in lab shopping and selective sampling. 

Citing data from High Tide’s “Cabannalytics” data program, Organigram says that the total number of SKUs in a large national retail chain of cannabis stores that were labelled as having 30% THC or higher increased ten-fold since last year, having a “profound impact” on the sales of their own cannabis flower.  

Derrick West, Organigram’s Chief Financial Officer, says the company is working to increase their own THC levels to meet market demand.

“Our results for the third quarter of Fiscal 2023 were impacted by a reduction in sales in two of our higher margin categories of international sales and ingestible extracts,” said West in a company press release.

“Further, to address the impact of THC inflation, which forced us to adjust our pricing to remain competitive, we intentionally accelerated adjustments to growing conditions to increase whole flower THC levels to meet consumer demand. This temporarily reduced our flower yields, negatively impacting our margins on all flower categories.” 

Despite these concerns, Organigram’s recreational net revenue was $92.5 million for the nine months ended May 31, 2023, an increase of $8 million over the same prior-year period. International sales for the first nine months of fiscal 2023 were also up considerably, nearly doubling from $9.5 million in 2022 to $18.4 million.  

Image via organigram.com

Week in weed – June 24, 2023

Written by David Brown on . Posted in Business, Cannabis News.

This week on Stratcann, we had stories on overall sales growth (albeit slowing) in the cannabis market, the Ontario regulator getting hip with the times and reconsidering the window covering rule, as well as data on new license applications and a look at a cannabis festival in Eastern BC

Elsewhere…

While I have a hard time believing it’s ever been hard to get your hands on some cannabis in Whistler, BC, you’ll soon be able to do so completely legally: the ski town has finally approved applications for four stores, five years after legalization. (There are still some council members unhappy about it: “Deep in my heart, I could care less if there’s a weed store in Whistler,” said lead curmudgeon Councillor Ralph Forsyth.) 

MJBiz reports that a group of Fire & Flower shareholders is opposing a proposed agreement between the cannabis retailer and its largest shareholder, an affiliate of convenience store operator Alimentation Couche-Tard.

Organigram is consolidating its shares in an effort to stay listed on the Nasdaq. The New Brunswick producer’s share price has fallen below the minimum $1 price required to be on the Nasdaq, leading to its announcement of a 4-to-1 consolidation. They’re not the only big company to do this—both Aurora and Hexo recently did the same. 

TerrAscend, a Canadian LP with operations in several US states, announced it has received conditional approval from the Toronto Stock Exchange to list its common shares.

Cannabis retail sales in Canada in April increased by just over one percent from the previous month to $411.7 million. Sales spiked to their highest level yet in December to $425.9 million, before an expected post-holiday decline in January and February, before climbing again in March and April. 

A Statistics Canada survey suggests that the risks of cannabis addiction may be higher for young men and people with anxiety. The report found that overall, around 5 percent of people are at risk for cannabis “addiction,” and the risk is elevated for particular groups (though it’s also worth noting here that many people have issues with the application of the term addiction to cannabis dependency). 

There’s been some industry reaction to a story we flagged last week where Ottawa Public Health recommended graphic warning labels on cannabis. CTV spoke to Spiritleaf Crossroads franchisee Richard Dufour, who was critical of the idea, pointing out that in most circumstances, the sale is already done by the time the customer would see the warnings anyways. 

More losses at Canopy Growth. The company reported a $648-million Q4 loss this week. On its earnings call the company also said that it is continuing to make management and staffing changes related to its troubled BioSteel sports drink business. 

April’s growth in sales was driven mostly by increased sales in Ontario and British Columbia and to a lesser degree, Saskatchewan and Alberta. Other provinces and territories saw either a decline in sales or the same as sales in March. 

Cova Software announced a new Point of Sale platform for Canadian cannabis retailers. 

Nathan Mison continues his mission to push for cannabis tourism in Edmonton, calling for Alberta festivals to officially designate cannabis consumption areas.

International

Internationally, one Canadian cannabis beverage company has its eyes on the Mexican CBD market. Hopes of legalization in Mexico have mostly faded, but Xebra Brands’ exec Rodrigo Gallardo spoke with Bloomberg this week about the long-term potential he sees in Mexico. “Everyone talks about Colombia or Costa Rica—but Mexico is the crown jewel,” he said. “We have more land than any of those countries and, more importantly, we share a border with the world’s largest consumer.”

In law enforcement news

Montreal police have arrested a suspect they allege is the head of a network that distributes cannabis vaping products outside Montreal, largely to teenaged customers. Police say the products were sold on social media. Police also seized 17,000 vapes, wax, and dried cannabis, along with cash and other goods.

TMZ reported that Afroman was stopped at the US Border with a small amount of cannabis oil after returning from Canada. He was issued a $500 fine.

Ontario, BC, helps drive cannabis sales in April as overall market growth slows 

Written by David Brown on . Posted in Alberta, British Columbia, Business, Cannabis News, Ontario, Provinces, Retail, Saskatchewan.

Retail cannabis sales increased again in April for the second month in a row, following a post-holiday lull in January and February. 

Ontario and British Columbia, as well as Alberta and Saskatchewan, helped drive retail cannabis sales up by just over one percent in April compared to March.

Retail cannabis sales in Canada increased by just over $5 million in April compared to the previous month, despite month-over-month declines in sales in the six other provinces. Sales in Yukon were flat, and sales figures from the Northwest Territories and Nunavut were unavailable. 

Sales in Canada hit their highest level last December, at $425.9 million, before declining in the post-holiday downturn in January and February. Sales increased again in March to $406.4 million and $411.7 million in April. 

Sales across Canada continue to increase year-over-year, although increases in 2023 have been less significant than in previous years. This data correlates with a decrease in new retail stores nationwide and, potentially, consumer saturation among those currently using the legal market. 

Retail cannabis sales in Canada since legalization

Atlantic Canada saw the most significant decline in April compared to March, with retail cannabis sales in Newfoundland and Nova Scotia declining by nearly four percent, PEI declining by more than two percent, and New Brunswick declining by less than two percent. 

Every province and Yukon (NWT and Nunavut figures are not available) showed a year-over-year increase in sales compared to April 2022, except for Quebec, which saw a slight decline. 

Retail cannabis sales across Canada April 2022-April 2023

While cannabis retail sales continue to increase on a year-over-year basis, looking at the trend of sales figures from January 2019, the rate at which sales are increasing is declining, if not levelling off at around $420 million a month. 

Sales tripled year-over-year from January 2019-January 2020 and nearly doubled the following year. From January 2021-January 2022, sales increased by about 25 percent. In the most recent year, from January 2022-January 2023, sales only increased by about 14 percent. 

The number of retailers across Canada has also been levelling off in a similar trend. Quebec only added about ten stores in 2022, and sales in the province were nearly identical in the past two years, according to its most recent annual report. 

Ontario saw a significant spike in retailers from 2020-2022 but has been slowing in the last year. The province has been hovering around 1,700 producers for much of the past year. Alberta has also seen significant retail growth in the first few years of legalization and has settled out around 750. While these provinces still see new retail licences issued, these are often accompanied by other retail closures. 

BC is the only province to have seen significant retail expansion over the past year, with around 100 public and private stores added from June 2022-June 2023. Saskatchewan added about 40 stores but has not listed its annual sales report for the past fiscal year. 

Despite this slowing in sales, the legal cannabis market does continue to capture more of the overall market share from the illicit market. A survey from late 2022 showed that 67 percent of those who consumed cannabis in the previous year “never” obtained their products from illegal sources. This was an increase from 63 percent in 2021 and 55 percent in 2020.

Canadian cannabis companies increasingly exploring export market

Written by Contributor on . Posted in Business, Cannabis News, Producers.

Canadian licensed producers might be enduring an oversupply and price compression challenge domestically, but troubles within the country’s borders aren’t swaying LPs from looking overseas to invigorate their bottom line.

Whether the shipments head to Israel, Germany, or Australia, Canadian cannabis continues to go global, especially in burgeoning medical cannabis markets. 

Aurora is one of the leading Canadian LPs setting their sights globally, with a presence in 14 international markets such as Germany, the UK, Denmark, the Czech Republic, and Uruguay. Boasting medical market share in Canada at around 25%, Aurora is focused on growth opportunities in the medical cannabis market in Europe, says Dirk Heitepriem, VP of external affairs at Aurora Europe.

“This is not just about brand recognition, but about the future success of Canadian licensed producers,” he says. 

For a market such as Germany, it makes sense for Canadians to enter the medical space: Germany placed a cap on domestic commercial cannabis production, meaning most medical cannabis needs to be imported. 

What helped Aurora establish a foothold in Germany was acquiring a firm with a strong presence in the region. In 2017, Aurora acquired Pedanios, a wholesale importer, exporter, and distributor of medical cannabis in the European Union. “To be in a country looking for high-quality cannabis that also has a reimbursement option for medical cannabis patients, well, it was a no-brainer for us,” says Heitepriem.

Organigram also exports its cannabis to medical cannabis markets in Israel and Australia, beginning as early as 2018. CEO Beena Goldenberg says the LP sought international revenue for two main reasons: consumers want high-quality and consistent cannabis, and the excise-tax costs LPs face in Canada aren’t an issue overseas.

Beena Goldenberg, CEO of Organigram at their New Brunswick facility

Goldenberg also addresses the over-supply challenge in Canada, which continues to plague LPs. According to December 2022 data, the cannabis inventory in the country sat at 19 million units, while sales only reeled in 4.7 million units. “It’s good to get that excess supply out of the country, and it helps to get the first-mover advantage in international markets,” she says.

But does the medical cannabis field attract the same kind of sales as the rec market domestically? Goldenberg doesn’t specify any revenue data, but stresses how the medical cannabis consumer is often committed to a strain that assists them with their ailment while rec users dabble with various strains and formats. Also, branding makes an impact in regions such as Israel.

“When the packaging on products says that the cannabis is indoor grown in Canada, that kind of messaging can differentiate our products from others available there,” she says.

In regions outside Canada, LPs should sign partnerships with local firms familiar with that market’s demographic, says Ranjeev Dhillon, a partner at McCarthy Tetrault LLP, who is co-head of their cannabis practice. 

“But even with partnerships in place, getting an export-import license and all the associated costs and time that comes with that…it can be challenging for Canadian LPs looking to scale their business,” says Dhillon.

He noticed that the “empire-building” days of 2018, where LPs were flush with investor funds and media hype, have given way to LPs struggling for “domestic survival,” as he notes. Some LPs shouldn’t look to other countries for revenue when their own homegrown sales are floundering. 

The promise of overseas revenue could also give way to a more realistic truth: “Some jurisdictions, down the road, might put in regulations that say, ‘Let’s grow our own cannabis here, in the EU, and restrict how much we import’.”

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What LPs have to recognize, is that each country will have its own red tape and regulations to follow, so what an LP had to do to import cannabis into Germany, say, will differ from the paperwork and audits they face when they enter Australia’s market. 

Still, even for smaller craft LPs such as Alberta’s Decibel, entering markets such as Israel felt like a natural extension for the brand. “We’re in the unusual position where we have sold everything we cultivate in Canada,” says Adam Coates, Decibel’s Chief Revenue Officer. “And with our fifth shipment to Israel out the door this week, this relationship isn’t going to slow down for us.”

Partnering with Breath of Life in Israel, which handles the processing and distribution of Decibel’s dried flower, the LP broke into the country after noticing how “those medical markets needed consistent and quality cannabis, and we think our craft cultivation process is attractive to those consumers,” says Coates.

“But LPs in Canada can’t expect to just dump their cannabis in an overseas market and expect it to sell. It’s hyper-competitive, and we have boots on the ground in Israel, with a sales team there and engaging in conversations with consumers and pharmacies. This kind of work can be complex but we also wanted to scale our business by looking to take advantage of international markets.”

-David Silverberg

David Silverberg is a freelance journalist who contributes to BBC News, The Toronto Star, The Globe & Mail, Fast Company, MIT Technology Review, Leafly and several brands. He also coaches creative and non-fiction writers via online 1-on-1 courses which can be found on his website.

More than $100 million of cannabis sold in Nova Scotia last year 

Written by Staff on . Posted in Business, Cannabis News, Government, Nova Scotia, Provinces.

More than $100 million worth of cannabis was sold in Nova Scotia last year. 

Nova Scotia sold $111.1 million worth of cannabis in the fiscal year ending March 31, 2022, an increase of 9 percent compared to the previous year according to the most recent annual report.  

Transactions involving cannabis also increased by 12.7 percent. While the average basket size decreased by 3.1 percent to $38.40, this is likely due to a 2.8 percent reduction in the average price per gram of $6.19.

The Nova Scotia Liquor Corporation (NSLC) which oversees cannabis sales in the province also added 11 new cannabis stores, for a total of 48 across the province.

“We continue to look for ways to compete with the illicit cannabis market and offer Nova Scotians an accessible and safe supply of cannabis,” said Greg Hughes, NSLC president & CEO. “This includes finding ways to partner with local cannabis producers and help them bring their products to market.” 

The NSLC has also been promoting Nova Scotia-grown cannabis products. These products accounted for over 30 percent of all cannabis sales in the province, an increase year-over-year of nearly 42 percent for a total of $33.5 million in sales. 

Revenue from cannabis sales in Nova Scotia goes towards the funding of “key public services”.

Cannabis sales in Quebec plateauing, as SQDC continues to focus on enhancing consumer experience

Written by David Brown on . Posted in Business, Cannabis News, Government, Provinces, Quebec.

The President and CEO of the SQDC says the agency needs to continue improving customer experiences in order to expand its reach into the illicit market.

After growing its retail network to nearly 100 stores, Jacques Farcy, who has been at the head of the SQDC since late 2021, sees the agency’s challenge is to ensure Quebecers are aware of the variety of products the provincial retailer carries.

The CEO has made this his mission since first taking the reins, sharing similar goals with StratCann in 2022. Since then, sales have not expanded—a trend playing out across much of Canada—as the market appears to be slowing after an initial rapid expansion. 

Consumers in Quebec bought $601.9 million worth of cannabis in 2022 during the fiscal year ended March 25, 2023, compared to $600.5 million in the previous year. The estimated share of the total market the province captured declined slightly, from 58.5% in 2022’s annual report to around 56% this year. 

Despite that small decrease, according to Quebec’s most recent annual survey on cannabis, fewer consumers bought from illegal suppliers compared to the year prior, meaning while few people use the illicit market, those who do are purchasing more. The SQDC’s target for 2022-2023 was to capture 75% of the total market. 

Approximately 67% of cannabis consumers obtained cannabis at least once from the SQDC in 2022, similar to the rate in 2021. Among consumers aged 21 and over, around 44% purchased their cannabis exclusively from the SQDC, while approximately 22% said they obtained their cannabis only from sources other than the SQDC.

image via SQDC

One of the challenges Farcy says the SQDC is trying to address is that many consumers are unaware of many of the products the store carries. Although Quebec has more restrictions on products than other provinces, such as no high potency extracts or vape pens, they have introduced kief, hash, and a handful of edibles for the first time.  

He says the market plateauing is an expected development, and now the agency is focusing on better serving customers within the existing footprint rather than expanding it.

“It’s time now to reconsider the way we do things, and enhancing the network or the number of stores is not a winning strategy for the future,” Farcy tells StratCann. “Now that we have 98 stores, we need to make sure that we satisfy our customers more within our stores. We need to put more energy there.” 

In addition to new products, the province has also expanded its delivery service. About 20% of the province can now have cannabis delivered within 90 minutes of ordering from the SQDC’s online store, and same-evening service is available for about half of the province—something he says was just “a dream” a year ago. 

The inability to sell all the products that consumers want is another challenge, he admits, as is the prevalence of illicit online sites that consumers may not know are illegal. Although Farcy expects to see the agency make more inroads with consumers still buying from the illicit market by informing them of newer products and the variety of prices—from a low of around $3 a gram to higher quality products at nearly $20 a gram—capturing all of the market will not be possible. 

“That’s the reason we cannot claim that we will capture 100% of the market in the next three years, because there are these products that would be illegal.”

“The other thing that is important is what is legal in the minds of customers,” he adds, referring to illicit online stores.

“Customers don’t necessarily understand that buying on a website outside of Quebec, by nature, is illegal. We can’t really blame them for not understanding, because we have not made enough information available around those grey zones. And illegal markets are very clever with their approach.”

“It’s really important that we do as much as we can to not keep this confusion alive.”

Still, he sees many opportunities the SQDC is already taking to refine that shopping experience and better educate customers about what is available. One example he gives is some new store designs that provide employees with a better chance to engage with customers on the floor rather than just behind the counter. 

He acknowledges the next few years will be a harder fight than the first several years of legalization, but sees many opportunities for continued success. 

SQDC annual report 2023

The Société québécoise du cannabis (SQDC) sold $601.9 million worth of cannabis in 2022 according to the agency’s most recent annual report. 

This amounted to $94.9 million in revenue from sales for the fiscal year ended March 25, 2023. The SQDC also brought in an additional estimated $137.8 million in consumption tax and excise tax, for a total of $232.7 million to the Quebec government, which directs the funds to prevention and cannabis research. 

Website sales were also down slightly, from $36.2 million in 2022 to $34.1 million at the end of March 2023. 

The SQDC sources products from 48 active suppliers, 54 percent of which are based in Quebec. Forty-one percent of the total volume of cannabis sold in Quebec carries the Quebec Grown identifier, meaning it is mostly grown in Quebec. 

Ten new branches of the SQDC opened in the 2022-2023 fiscal year.

Dynaleo Inc, Dynaleo Group Services Inc. filed a Notice of Intention to Make a Proposal

Written by Contributor on . Posted in Alberta, Business, Cannabis News, Provinces.

SOLICITATION FOR OFFERS

On May 23, 2023, Dynaleo Inc. and Dynaleo Group Services Inc. (collectively, the “Companies”) filed a Notice of Intention to Make a Proposal (the “NOI”) pursuant to Section 50.4(1) of the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c. B-3 (the “BIA”) and Harris & Partners Inc. was appointed as Proposal Trustee of the Company (the “Proposal Trustee”). 

The Companies operate a premier, state-of-the-art, cannabis edibles facility located in Nisku, Alberta. The facility boasts several pieces of manufacturing equipment, including a complete candy processing line, packaging and labelling and a significant degree of tenant improvements. 

On May 30, 2023, the Court of Kings Bench of Alberta granted an order (the “SISP Order”) permitting the Companies and the Proposal Trustee to commence a Sale and Investment Solicitation Process (“SISP”). The SISP is being conducted in accordance with the procedures included in the SISP Order, which can be found on the Proposal Trustee’s website: www.hpiadvisory.com/dynaleo. 

Interested parties who wish to pursue a potential investment or acquisition are required to execute a Non-Disclosure Agreement to receive access to the data room.

Per the SISP, non-binding letters of intent must be submitted by no later than 5:00 pm (Calgary Time) on June 23, 2022 (Phase 1 Bid Deadline).

Jill Strueby
Senior Vice-President
403-800-1574
[email protected]		Adam Fisher
Senior Vice-President
403-318-2307
[email protected]

Sponsored Content by: Harris & Partners

Cannabis sales continue to grow, even as canopy space and number of employees begin to decline

Written by David Brown on . Posted in Alberta, British Columbia, Business, Cannabis News, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Provinces, Quebec, Saskatchewan, Yukon.

Canada’s cannabis industry sees a continued increase in sales, even as the amount of production space and the number of employees at production facilities appears to be levelling off.

The newest market data figures for the October 2022 to December 2022 reporting period show a continued increase in cannabis inventory and sales across Canada. The total amount of approved production space and employees at these federally-approved facilities declined for the first time in 2022, following several years of steady growth.

Sales of dried cannabis (packaged units) have been holding relatively steady in 2022, while sales of edibles and extracts rose through the year. This occurred while the total amount of approved indoor and outdoor grow space declined slightly over the year.

Cannabis topicals also saw increased sales in 2022, with more than 81,000 packaged units sold, the majority in the non-medical stream.

Sales of cannabis plants were sporadic throughout 2022, with the most significant spike in sales occurring in June, with nearly 3,000 cannabis plant packaged sales. The vast majority of those sales were through the medical stream. Only 71 cannabis plants were sold through the non-medical stream in 2022.

Cannabis seed sales saw a spike from January to June 2022, almost exclusively sold through non-medical sales channels. Only 80 packaged units of seeds were sold through medical channels in 2022. The amount of seeds that producers and provinces have in inventory has declined significantly since 2021.

The total approved growing space in Canada also declined in 2022, from 1,756,642 square meters in December 2021 to 1,595,724 in December 2022.

The total amount of approved processing space has also declined, from 418,081 square meters in December 2021 to 378,863 in December 2022. The total building area for licensed producers, however, increased, from 4,128,904 square meters in December 2021 to 4,427,069 in December 2022. 

The total approved outdoor growing space also declined, from 713 hectares in December 2021 to 595 in December 2022. 

The number of employees on federally-licensed production sites also decreased, from a low and high estimate of 13,210 and 17,453 employees in December 2022, to 12,576 and 16,812 in December 2022.

Competition Bureau calls for more THC for edibles, more standardization among provinces

Written by Staff on . Posted in Business, Cannabis News, Government.

Canada’s Competition Bureau is recommending the government make several changes to cannabis regulations to make the industry more viable for legal businesses.

The 45-page report, released on May 26, calls on Health Canada to reduce barriers to licensing and regulatory compliance, increase potency limits for edibles, and ease restrictions on cannabis promotion, packaging, and labelling. 

Notably, the report concludes that the current edibles potency limit of 10mg THC per serving and per package gives an unfair advantage to the illicit market and is driving consumers to the illicit market to fill demands for higher potency products. 

The report also highlights challenges faced by the industry due to high taxation and a lack of standardization, which is making it difficult for cannabis producers to get products to market and compete across provincial and territorial boundaries—such as different excise stamps for each province and territory. 

The Competition Bureau engaged industry stakeholders to better understand industry needs and challenges over much of 2022 and early 2023 to inform their findings. The Bureau argues that by adopting these recommendations, the federal government—as well as other cannabis agencies in Canada—can improve the competitiveness of Canada’s legal cannabis industry while balancing public health and safety concerns.

The recommendations are non-binding but can guide regulators in ensuring a more level playing field for the industry, including, but not limited to, informing the scope of the current legislative review of the Cannabis Act.

“Government policy is central to driving competition, and it is important to identify competition issues at an early stage in policy development. By reviewing how industry policies have fared since recreational cannabis legalization—and modernizing those policies where needed —Health Canada can ensure the objectives of the Cannabis Act are being met, while also supporting the longer-term competitiveness and viability of the industry,” notes the report.

The complete report can be read here.

image via ISED

BC repealing visibility requirements for cannabis stores

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Provinces, Retail.

Cannabis stores in BC no longer need to worry about being fined for having cannabis products visible through their windows.

The BC Government announced today that provincial cannabis regulations will no longer require that cannabis, cannabis accessories, or their packaging and labelling within the store have to be hidden from the view of anyone passing by outside the store. 

The BC Liquor and Cannabis Regulation Branch (LCRB), which oversees cannabis regulations in the province, will instead have a term and condition prohibiting window displays of cannabis and cannabis accessories to people outside the store, keeping provincial regulations in line with federal limitations around product visibility.

We spent a lot of money on this, we tried to make it a little more welcoming than just a black window or like something bad is going on there.

Vince Collard, 642 Cannabis

The move is a step beyond changes first made by the province in 2020 when the government removed their rule that required retailers to be enclosed by “non-transparent walls”. This had, in effect, forced most retailers to use window coverings they said were unsafe and, at times, in conflict with local zoning rules. 

Many retailers said the change didn’t go far enough, though, since provincial and federal regulations still say that cannabis cannot be visible in areas where minors could see it, which could be as simple as someone walking by a store on a public sidewalk. 

Vince Collard of 642 Cannabis in Sooke, BC says he’s happy to hear of the changes, but is frustrated he had to spend thousands of dollars on a window covering he now no longer needs. Still, he says it’s a good change that will make the store more welcoming. 

“We spent a lot of money on this, we tried to make it a little more welcoming than just a black window or like something bad is going on there.”

Mike Babins, the owner of Evergreen Cannabis in Vancouver, shares a similar sentiment. He says he’s happy the rule has finally been changed, but is frustrated it took so long, and that the announcement came with no warning before a long weekend. He hopes to have his window coverings on his store down by early next week. 

“Finally,” says Babbins. “This is great. We’ve been fighting for this since the day we got our licence.”

The newest change by BC is similar to changes made in Alberta in 2022 that also removed the section of the provincial regulations that prohibited products from being visible to minors outside of stores. Retailers in that province expressed similar safety concerns and the province’s messaging for making the changes spoke to these concerns, as well. 

Farnworth discussed the legislative changes at an industry event in Kelowna in April, saying he would be taking the issue to cabinet for discussion. He mentioned looking at the issue from a public safety lens since many retailers have expressed concern that the lack of visibility into the stores makes them easy targets for robberies. 

BC’s rules for retailers previously stated that cannabis, cannabis accessories, and the packaging and labelling of cannabis and cannabis accessories could not be visible from outside that store.

Andrea Dobbs, one of the owners of the Village Bloomery, with two locations in Vancouver, says she was very happy with the news. 

“I’m grateful to all of the retailers who made noise! I know the RCBC (Retail Cannabis Council of British Columbia) put some energy behind this so I’m grateful to them as well.Im looking forward to waving hello to passers by and to feeling seen. Feeling seen to me means feeling safe.

CertiCraft

Manitoba suspends Social Responsibility Fee, expects passage of new legislation soon

Written by David Brown on . Posted in Business, Cannabis News, Government, Manitoba, Provinces.

The Manitoba government will no longer require cannabis retailers to submit Social Responsibility Fee (SRF) payments for 2022 or 2023.  

In a bulletin sent to cannabis retailers on May 18, Manitoba Liquor and Lotteries (MBLL), the agency that oversees cannabis in the province, says they are suspending the six percent fee immediately while they wait to pass legislation that will formally repeal the fee going back to January 2022.

Effective immediately, the MBLL will pause the payment withdrawal process for all unpaid SRF assessments that have been approved but not yet processed and will pause efforts to validate 2022 amounts owing for any outstanding bills.

Additional taxes (like the SRF) make it extremely difficult to create a sustainable and profitable business, which ultimately drives purchasing back to the illicit market.

Kerri Michell, Farmer Jane Cannabis Co.

The legislation, Bill 10, was introduced in November 2022 and initially proposed to repeal the fee payments back to January 2023. The government now says they will extend this back an extra year, eventually offering refunds to stores that had paid into the program beyond that date. 

Refunds will not be issued until the legislation is passed. A report stage amendment has been on the orders of the day for Manitoba’s House of Commons but has not yet been entered into record. The opposition is not expected to oppose the amendment or the bill. 

The six percent fee had been levied on retailers’ sales, to the tune of tens or even hundreds of thousands a year in the case of some larger chains. The government said they were repealing the fee partly because the expected social costs of legalization didn’t come to fruition. In a recent committee meeting, numerous retailers expressed the challenges they faced even trying to pay the fee, and asked the government to push the repeal back by a year. 

A spokesperson for Manitoba’s Department of Finance says that while the final amount expected to be refunded to retailers isn’t yet known, it estimates that the SRF would have generated $10.5 million in 2022. The 2022 regulatory costs are estimated at $1.1M. They also note that this is the beginning of more expected changes to help cannabis businesses in Manitoba. 

“Repealing the Social Responsibility Fee is the first step in providing business owners in the cannabis sector with more financial room to build their business; once this legislation is in force, the province of Manitoba will look at entering the federal excise tax agreement.”

In a recent back and forth with the NDP’s opposition critic on the cannabis file, Adrien Sala, Manitoba’s Minister of Finance, Cliff Cullen, said the province estimated it had taken in around $18 million from the fee—$10 million in the over the past year and about $8 million in the year prior.  

The Minister of Finance also admitted that the provincial government could not account for how they had spent the money intended to address social costs related to legalization. 

Kerri Michell, the president of Farmer Jane Cannabis Co, which has a half dozen stores in the province, says the change to provincial regulations will greatly help retailers. 

“Challenging regulations, including one of the most unfavourable tax structures in Western Canada, have hindered potential expansion into Manitoba,” says Michell. “With the removal of the SRF, the province becomes open for business from a retailer’s standpoint. Moreover, Bill 10 holds immense significance in achieving federal legalization goals by creating a healthy industry. 

“Additional taxes (like the SRF) make it extremely difficult to create a sustainable and profitable business, which ultimately drives purchasing back to the illicit market. If repealed back to January 2022, many independent stores will now be able to operate sustainable and profitable businesses and avoid potential layoffs and closures. I’m grateful the industry is coming together to support positive changes!”

Todd Friesen, a manager at Supercraft Cannabis in Ste Anne, says he was pleasantly surprised by the new announcement, and by the government’s commitment to respond to industry calls to extend the refund back to January 2022. 

“I applaud them for this. I think they’re being very proactive by releasing that statement, and this is going to assuage fears that if this doesn’t get passed by June first, they’re still going to be able to keep the lights on. I’m impressed that they rescinded too quickly to this amendment and to issuing this stop payment until this is settled.” 

Friesen says he also has to give credit to Adrien Sala for helping to bring in retailers to the May 10 committee meeting that seems to have pushed the government to make these changes. 

“He worked with several retailers to really push for that meeting,” he adds. This has been a long, arduous process to get to this point, with a lot of work from a lot of people. It’s nice to see the community come together and actually be able to achieve something.”

Cannabis sales continue to increase in BC as prices fall

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Provinces.

Cannabis sales in BC continued to increase in the first three months of 2023, while the price of cannabis continues to drop in the province. 

The BC Liquor Distribution Branch (LDB), which oversees cannabis distribution in the province and the BC Cannabis store’s online and brick-and-mortar locations, recently published their Q4 results for 2022/23.

The LDB saw a nearly 30 percent increase in wholesale cannabis grams compared to the same period in 2021/22 and a more than 16 percent increase in wholesale sales with over $119 million sold. 

The average price per gram of all cannabis products sold in the province was $4.29, compared to $4.78 in the year prior. The average price per gram of dried flower decreased to a low of $3.50 a gram compared to $3.83 in the same period in the previous year. 

For dried flower, 3.5-gram and 28-gram SKUs continue to dominate, but declined compared to sales in the first three months of 2022, while 14 and 15-gram SKUs increased.

Image via LDB

Overall, dried flower sales declined by just over 5 percent compared to the same period in the previous year. At the same time, beverages, edibles, ingestible extracts (oils and capsules), vape pens and other concentrates, pre-rolls, seeds, and topicals all increased.

The increase in year-over-year sales of beverages comes entirely on the back of carbonated beverages, while sales for other beverages like dried mixes, teas, and coffees declined. 

For edibles, the most significant increase was in baked goods which increased by more than 50%, followed by chews/gummies at over 25 percent increase year-over-year. Sales of cannabis chocolates, hard candies, and other edibles all declined. 

Sales of cannabis pills and capsules increased year-over-year by about 8 percent, while oils and tinctures declined by about 16 percent compared to the first three months of last year. 

In the concentrates category, vape pen sales increased by 34 percent, while disposable vape pen sales increased by over 80 percent. Hash sales increased by 23.5 percent, infused pre-rolls increased by nearly 300%, resin and rosin sales increased by 23 percent, shatter by almost 9 percent, vape kits by 100%, and cannabis wax by nearly 1,000 percent. The only year-over-year decline in cannabis extracts was for dry sift. 

BC’s direct delivery program, launched in the summer of 2022, also continues to grow. In the first three months of 2023, close to 470 kg of cannabis or its equivalent was sold through the program, accounting for nearly $2.5 million in sales. The average price of a gram of cannabis sold in the direct delivery program was $5.24, while the average price for a gram of dried flower was $4.19.

Although the amount of cannabis sold through the program in the most recent quarter was more than that sold in Q3 under the direct delivery category, the dollar value of sales was down slightly due to the declining cost of products within the program.

The Week in Weed – May 6, 2023

Written by Kieran Delamont on . Posted in British Columbia, Business, Cannabis News, Government, Manitoba, New Brunswick, Ontario, Provinces, Quebec, Saskatchewan.

This week on Stratcann we covered some questions from the Manitoba NDP’s finance critic, who wonders where all the legalization-related revenues went (as the government seems unable to tell him), shared our exclusive inside tour of the OCS DC, reported on Health Canada’s extension of some COVID-19 measures, as well as challenges producers are having selling into Alberta, news that the Victoria Cannabis Buyers’ Club will be suing the government, as is an Indigenous retail store owner, and BC’s search for a good weed photographer. Elsewhere in the Canadian cannabis industry world of weed…  

Cannabis bought in Madawaska First Nation will soon be subject to its own sovereign tax scheme, the band government announced this week. The move comes after the Blaine Higgs government pulled out of tax-sharing agreements with Wolastoqey First Nations groups in the province in 2021; in response, the band is levying its own taxes on tobacco and cannabis, which they say will be about half of what you’d pay off-reserve. Madawaska First Nation is currently home to at least a few retail stores, although one shared with StratCann on Facebook that they do not charge a sales tax. 

The first handful of applications for retail stores in Mississauga is starting to roll in, and as Global News reports, the first horse out of the gate is Pop’s Cannabis, who have applications in for two stores and are preparing a third. “I think we’re better now than where we were (in 2018),” said Pop’s president Ryan Dymond. We know how to sort of resonate with the communities; we understand the stigmas.”

Just down the highway, Brampton city councillors want a bit more control over retail in the city, reports the Brampton Guardian. Coun. Michael Palleschi said that the council’s decision to allow stores back in 2018 was made under the (slightly bizarre) assumption that cannabis legalization “wasn’t going to be a huge thing.” It’s the usual issues, of course: too many stores, too close to schools, et cetera, et cetera. 

Entourage Health, formerly WeedMD, reported a $123-million loss for 2022, and expressed concern that they may eventually run out of cash to burn, reports MJBiz Daily. Likely of significant concern are their revenue numbers: the company only sold $54.5 million in that year, substantially lower than its costs. 

An employee of a large illegal grow-op was handed a suspended sentence of two years probation and 240 hours of community service by a St. Catharines, ON judge, the St. Catharines Standard reports. The 54-year-old woman was charged after police seized around $16 million worth of cannabis and cash; her lawyer contends that she was a mere “gardener” in the operation, not one of the masterminds. 

A West Vancouver man was also given two years probation after police caught him acting as a delivery driver for Stöni, a black-market cannabis delivery operation operating in Vancouver and Winnipeg. He was represented by cannabis lawyer Jack Lloyd, who described him as a small player in a larger operation. “My guy is in a broken-down Toyota delivering stuff when he gets told to deliver it,” he said. The man has since started working as a delivery driver for a legal retailer. 

The BC government is seeking to have a Denman Island home they say was connected to illicit cannabis products to be forfeited as proceeds of crime.

Some attendees of the Vancouver 420 rally this year say they feel misled by event organizers, with many wanting their money back. 

In Quebec, La Presse reported on police frustration with illicit operators utilizing medical cannabis authorizations to sell into the black market. Six suspects are the subject of targeted warrants: police alleged that they used at least 22 certificates of authorization to produce cannabis for medical and personal purposes issued by Health Canada and used them to cultivate cannabis on a large scale for the purpose of exporting it to the United States. 

CBC Manitoba published a story this week including comments from several independent retailers in the Prairie province who say they are struggling under the weight of high fees and long delivery times. The article included comments from Mistik Cannabis Co. co-owner Melanie Bekevich, Jupiter Cannabis owner Tom Doran, and John Arbuthnot, CEO of Delta9, all of whom have areas they’d like to see provincial action on. 

The Mantioba NDP say they want to look at allowing public cannabis consumption in the province. The PC government says they would impose such a measure. “It might be normalized, but it’s still not legal in public places. So that will still be enforced. That’s not part of this,” said Saskatchewan Liquor and Gaming Minister Lori Carr. 

Retailers in Ontario continue to petition the province to ease up on their window display restrictions, with comments from Hempire House co-owner Sharlene Locha, Shane Clarke, owner of Smokey Daze, and a spokesperson for the AGCO.

Saskatchewan’s Weed Pool announced they have set up shop now in BC. The company will seek to be a third-party warehouse and distributor for cannabis growers and retailers in BC. 

A new study out of McGill University has provided more evidence of medical cannabis’ efficacy in treating cancer pain. Research led by Dr. Antonio Vigano found that patients using cannabis as part of their treatment tended to take fewer opioids and were better able to manage their pain. 

And finally: it’s not quite deep-fried butter at the State Fair, but it might be close. A Los Angeles restaurant, known for its experimentation with cannabis in the past, is now serving deep-fried cannabis leaves. Delish interviewed chef Michael Magliano about that dish, and others in the rapidly developing culinary cannabis world down stateside—an industry many would like to see up north, too. Happy snacking!

BC needs someone to take pictures of weed

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Government, Ontario, Provinces, Quebec.

The BC government’s Liquor Distribution Branch (LDB) is seeking bids from experienced and qualified photographers to take photos of cannabis products. 

In a recent tender, the LDB said they are looking for applicants who can create images on-site at licensed producer’s facilities, retail stores, or in-studio, with products sent to them by the LDB.

The agency will be accepting bids until May 24, 2023. The final date for the receipt of questions from proponents is May 8, 2023. Questions received after May 8, 2023, may not be answered.

The images will be used by the LDB’s cannabis marketing department for BC Cannabis Stores, BC Wholesale and the LDB’s websites and newsletters, in-store marketing, including signage, digital displays, brochures and postcards, social media platforms, and other marketing collateral as needed for cannabis operations, such as brochures, location shots, portrait shots, and magazine publications.

Photographers would need to be familiar with all applicable federal and provincial cannabis marketing rules and restrictions and will need to supply their own equipment. An LDB representative may also attend site visits at production facilities or BC Cannabis stores. 

The LDB also notes that it may ship products to the contractor that can be bulky and costly to ship. The contractor will need a safe and secure location to receive these shipments and the ability to return them to the LDB in a rapid and safe manner. 

The Contractor must provide the LDB with finished images within three days of receipt of any product, including completing any necessary proofing and editing, unless otherwise directed by the LDB. The LDB will own the property rights, including intellectual property rights, of all materials produced by the contractor for the LDB.

Application information can be found here.

Several other RFPs for other public cannabis agencies are available at the moment. 

The Ontario Cannabis Store (OCS) is seeking a supplier(s) to help the provincial agency deliver approved promotional items to the general public, stakeholders, and employees. The closing date is May 18 for bids. 

The Insurance Corporation of British Columbia (ICBC) recently shared its intention to directly award an extension of contract to Precision Medical Monitoring Limited to provide medical review and advice regarding cannabis claims for one additional year. 

The Société québécoise du Cannabis (SQDC) is seeking bids for the supply of an “integrated human resources and payroll management solution in cloud computing mode, professional services for the integration of the proposed Solution as well as outsourcing of payroll.”

The LDB also recently closed an RFP for providing Digital Radio for LDB Liquor and Cannabis Stores.

Cannabis NB is expected to begin releasing information on private retail store locations in New Brunswick, announced through a public application process in 2022.

Inside the world’s largest legal cannabis distribution centre

Written by Staff on . Posted in Business, Cannabis News, Government, Ontario, Profiles, Services.

The cannabis you buy online or at a private retail store in Ontario has reached the end of a long journey that saw it pass through numerous hands, trucks, pallets, and conveyor belts before making its way into your hands. 

This entire process is overseen by an enormous team working around the clock to keep the world’s largest cannabis warehouse moving efficiently and effectively.

With 220,000 square feet of space, the discreetly-located warehouse processes the equivalent of approximately 1,100 kg of dried cannabis every day from more than 250 of Canada’s federally licensed cannabis producers. A team of about 400 employees operates the facility 24 hours a day, connecting almost 1,700 privately owned retail stores across Ontario with more than 3,000 products. 

Every week on average, 1.7 million units—the equivalent of almost 7 million grams of cannabis— arrive at the Distribution Centre operated by third-party Domain Logistics, not including products sold through OCS’ Flow-Through program. 

Weekly, the OCS also ships roughly the same amount of product; 1,100 kilograms of cannabis is transported to Ontario’s retailers every single day. 

OCS President and CEO David Lobo says the provincial agency is confident in its ability to adapt and evolve to continue enabling the growth of Ontario’s cannabis marketplace. Although it still has challenges it is working through, Lobo points to improvements in the product call process, a revised pricing structure, changes to insurance requirements, and transforming the retailer ordering process to ensure fewer short shipments. 

“Our strategy is laser-focused on building best-in-class wholesale capabilities and providing a seamless, “user-friendly” experience for both LPs and retailers. We see ourselves as the conduit between high-quality, tested and traceable cannabis products from Canadian LPs and the dynamic and varied retail experiences being offered across the province,” he explains.

“We know that more than 96 percent of all legal cannabis purchased in Ontario is purchased through private retail stores. As Ontario’s sole legal cannabis wholesaler, we are committed to being the best business partner we can be for retailers and producers by listening to feedback, reducing friction in our processes and making investments in the industry.”

The entire process—from receiving a shipment from a producer, storing it in the sprawling warehouse, and sending it out to retailers and directly to consumers—is highly complex and choreographed. The distribution centre currently handles more than 3,000 SKUs at any given time, with about 800 new SKUs per quarter, an increase from about 200 per quarter in the early days of its operation. 

The path all packages take when entering the highly-secured facility is similar to other distribution centres, with pallets being carefully reviewed and checked in. Packages then make their way through a complex, partially-automated system that follows them along conveyor belts and in elevators to see them stored before being packaged for shipment to retailers and, in some cases, consumers who purchased through the OCS’s online retail platform. 

CertiCraft

Domain Logistics manages the distribution centre for the OCS. In the early days at the first warehouse in Oakville, they processed all orders manually. They have since moved to automate much of the process, increasing efficiency and ensuring products make it to retail clients and direct-to-consumer through their online platform.

Products are stored and processed on racks that are several levels high. They are manually and digitally checked for each order before they’re placed on another pallet and truck to make their way across the province.  

Each package gets checked, double-checked, and triple-checked before distribution to retailers and consumers through various delivery services. All for you to roll up, light up, and smoke! (or however you responsibly choose to consume).

Flow-Through

In addition to its standard wholesale and consumer shipments, the OCS distribution centre also manages a growing portfolio of Flow-Through products—around 350 as of publication—which allows retailers to select specific products not already stored in the warehouse. 

Flow-Through gives retailers a chance to stock unique and seasonal innovations that can help them distinguish themselves from their competitors. 

“For licensed producers, Flow-Though is an opportunity to introduce greater innovation, including small-batch, niche, short life cycle and seasonal products,” says Lobo. By enabling LPs to determine how much inventory to make available for retailers, Flow-Through is helping producers drive inventory allocation and availability, while gaining a better understanding of market demand for a product.”

Lobo also says once the Flow-Through program is operating at 100% capacity, the agency will begin looking at other changes to further streamline distribution and offer pathways for more unique products. 

So the next time you find yourself enjoying cannabis in Ontario, pause between hits to contemplate the work it takes to help it find its way to you!

BC announces more changes for cannabis retailers

Written by David Brown on . Posted in British Columbia, Business, Cannabis News, Government, Provinces.

The BC government will be looking to make some changes to its cannabis regulations, especially around the rules for cannabis retailers.

The provincial government says they will be looking into lifting the cap on how many stores one company can own, currently limited to eight locations, and making changes to their tied house policies. 

The province has also committed to reviewing the direct delivery program that allows producers to send directly to retailers and the 15% service fee that applies to products sold through the program. 

In an announcement at a cannabis industry event in Kelowna, BC on April 22, 2023, Solicitor General Minister Farnworth told the assembled group of stakeholders that the province was looking at implementing these changes in the coming weeks and months in collaboration with industry. 

The eight-store retailer cap, explained Farnworth, was originally put in place to prevent large cannabis chain stores from embedding themselves in the province, but as the industry is evolving, he noted this is not as much of a concern. Other provinces, like Ontario and Alberta, have seen a handful of chains taking up a significant portion of their retail locations. 

The tied house rule is a similar rule that was put in place to prevent licensed producers from owning stores. Several other provinces have allowed this type of relationship, with a handful of cannabis producers running retail stores under the same name or through an affiliated company. 

“These controls were put in place to help prevent big companies from taking over BC’s legal market in the early years of legalization. It’s important to periodically evaluate those decisions as the market continues to mature.” 

The province will be seeking feedback from the industry “in the very near future.” 

Omar Khan, Chief Communications and Public Affairs Officer at High Tide Inc., which operates seven retail locations in BC under the Canna Cabana banner, say they are excited by the proposed changes. 

“We welcome Minister Farnworth’s commitment to modernize BC’s retail cannabis framework by looking at allowing street visibility into legal cannabis stores as well as phased expansion of the current store cap, and committing to a review of the current 15% wholesale markup and other elements of the direct delivery program. 

“All these measures will help legal cannabis retailers take sales away from an entrenched illicit market.  Experience shows that when customer-friendly legal cannabis stores are available in convenient locations with competitive prices, most cannabis consumers will leave the illicit market.”

Provincial representatives also shared that they have no current plans to establish more BC Cannabis stores beyond the 39th store in Delta’s Scottsdale Mall, scheduled to open soon. 

The windows remained covered at Evergreen Cannabis in Vancouver

The Minister, who is the province’s lead on the cannabis file, also mentioned recent changes by the BC LDB to reduce several regulatory burdens, such as eliminating the requirement for producers to maintain mandatory recall insurance, temporarily amending supplier payment terms from 30 to 14 days for a period of six months, and permanently reducing the reporting frequency for licensed producers participating in the direct delivery program from weekly to bi-weekly.

The agency has also committed to reviewing the province’s direct delivery program. The industry has been frustrated by the inclusion of a 15% fee the province collects from producers using the program, despite the fact that the product never passes through the LDB warehouse, instead moving directly from producer to retailer. 

Farnworth also told the audience that the province is planning on taking action on the issue of the federal regulation that prevents cannabis products or branding inside a cannabis store from being visible from the outside. 

The province previously removed its rule requiring retailers to use blackout screens in 2020. More recently, Alberta’s cannabis regulator went further, removing any mention of any rules that prevent cannabis from being visible from outside the store, a move BC appears to be looking into as well. 

This would require a legislative change that Farnworth says he will take to cabinet for discussion. 

“From a public safety issue, it makes total sense,” Farnworth said.

“The old rule that you could see in but couldn’t see any product was impossible for a store like ours. It was simply out of the question because of the size of our store. There’s no way we could take the coverings down. So changing this would mean we can just rip it all down, which would be great.” 

Mike Babins, Evergreen Cannabis

Mike Babins, the co-owner of Evergreen Cannabis, the first licensed non-medical cannabis retailer in Vancouver, says this rule change is needed because they have had to keep their window coverings up despite the previous provincial rule change. 

“This is good for so many reasons,” he tells StratCann. “The old rule that you could see in but couldn’t see any product was impossible for a store like ours. It was simply out of the question because of the size of our store. There’s no way we could take the coverings down. So changing this would mean we can just rip it all down, which would be great.” 

Babins also noted that removing, or at least lowering, the 15 percent direct delivery fee would likely allow him to charge much less for those kinds of products, which would increase sales for those small producers working with the program. He says about 80 percent of the cannabis flower he carries is purchased directly from retailers through the program. 

“That 15 percent adds a lot of cost, which makes it harder to compete with some of the bigger companies as well as the black market.”

In his speech, Farnworth noted that there’s much interest in cannabis hospitality and tourism and that the province is moving forward on these issues as well. In the short term, he said the province is looking at changing some of the prohibitions around cannabis consumption spaces, such as how consumers can purchase cannabis at a farmgate store and consume it on-site. 

In the long term, he says the province is also looking at authorizing special cannabis events that could encourage more tourism opportunities for the industry. 

BC launched its farmgate program in late 2022 but has only seen two companies apply to take part so far. The BC government in the past has emphasized that they see cannabis farmgate tying into the farmgate model, similar to how wineries currently operate. 

The province also announced more funding for First Nations looking to enter the cannabis space and continuing conversations around jurisdiction, reconciliation, and self-determination for Indigenous peoples and communities in BC.   

Farnworth also told the crowd he and the provincial government are pushing for changes to federal regulations, such as: increasing the 10mg THC cap on edibles, the 30-gram public possession limit, federal consumer packaging requirements, and the federal excise tax, especially for small cannabis businesses. The Minister said he is calling for an expedited review of the federal tax program. 

During a brief Q&A period after his speech, one audience member asked Farnworth if the province would be committed to no longer collecting its 75 percent share of the federal excise tax, or potentially giving BC producers a rebate for the excise tax they have paid.

The Minister said he would discuss the issue with the provincial finance minister. 

New Brunswick’s first privately-owned cannabis stores could open this summer

Written by Staff on . Posted in Business, Cannabis News, Government, New Brunswick, Provinces, Retail.

Some of New Brunswick’s smaller communities could see privately-owned cannabis stores opening as early as June, with additional stores opening throughout the summer.

The provincial government, which first announced its plans for around a dozen new stores in 2021, began the vetting process for ten new private cannabis stores following a tender process that ended in October 2022.

The goal was to bring cannabis to smaller, under-served communities. Tenders were accepted for Blackville, Bouctouche, Caraquet, Chipman, Dalhousie, Grand Bay, Hampton, Saint Andrews, Saint-Quentin, and Salisbury.

The goal of having private retail locations is to combat the illicit market by providing better access to safe, regulated cannabis products in underserved areas of the province.

Lori Sickles, CEO of Cannabis NB

A representative for Cannabis NB, the agency that oversees cannabis distribution and sales in the province, told StratCann that barring any unexpected delays, the agency hopes to see the first private stores opening in June, with additional locations opening over the summer. 

The timeline still depends on several factors, such as the retailers’ ability to get their stores ready to open, including all applicable licensing, and a final review of each site to ensure they are fully compliant with provincial regulations.

“We are looking forward to expanding our offering to include private retail in New Brunswick,” Lori Stickles, CEO of Cannabis NB, said in 2022. “The goal of having private retail locations is to combat the illicit market by providing better access to safe, regulated cannabis products in underserved areas of the province.”

Cannabis NB is currently the only legal retailer in the province, with 25 locations. Most of these locations are in or near cities like Moncton, Saint John, and Fredericton. All ten new private retail locations are in towns with fewer than 10,000 residents, most with just a few thousand or less.

The move to allow new private stores came after the provincial government initially tried to do away entirely with the public retail system. After long delays, and facing public pressure, that plan was scrapped in March 2021.

The reasoning given by the new PC government was that Cannabis NB was losing money. However, since then, the crown corporation has shown increasing profits as sales increased, and has recouped initial startup costs. The public retail and distribution system had been initially put in place by the previous Liberal government. 

In the agency’s most recent quarterly report in January, total sales were $21.6 million, an increase of 5 percent compared to the same period last year. Net income for the quarter was $4.8 million, 21.5 percent above the previous year’s third-quarter net income of $3.9 million.

New Brunswick has taken some relatively unique approaches to cannabis retail since opening its public-only model in 2018. In addition to being one of only two provinces with a mixed public and private retail mode (BC is the other), it is one of only three provinces (along with Ontario and BC) to have a formal farmgate retail licensing system in place. There are currently five cannabis producers in New Brunswick now licenced to allow on-site sales direct to consumers, including the recent addition of a cannabis nursery. Just in time to start your garden!

It has also operated several pop-up Cannabis NB locations, and the agency is currently holding its third annual Cannabis NB Cup, featuring products from 13 growers across Canada.

“We are very excited to launch this year’s Cannabis NB Cup competition,” said Lara Wood, Cannabis NB’s VP of  Operations. “It provides a great opportunity for our partners to show off their best and connect directly with their audience, and is one of the only programs nationally to offer producers real-time, quantitative feedback from consumers who are trying these products.”  

Stay tuned to StratCann for more information on Cannabis NB’s first privately owned cannabis stores and other New Brunswick cannabis news as it emerges.

Organigram asks court to overrule Health Canada on edibles extract restrictions

Written by David Brown on . Posted in Business, Cannabis News, Government, New Brunswick, Producers, Provinces.

New Brunswick cannabis producer Organigram has filed for a judicial review of Health Canada’s recent decision to require an end to sales of “edible extracts” that exceed the federal 10mg THC packaging limit. 

The filing, posted March 31, 2023 as Organigram Inc. v. Minister of Health et al., falls under Section 18.1 Application for Judicial Review. Judicial review is a process by which the courts can ensure that the decisions of administrative bodies like Health Canada are fair, reasonable, and lawful. 

Organigram is seeking a judicial review following Health Canada’s move to end the production and sale of so-called “edible extracts” earlier this year. The company is one of a handful that were producing products in this category that were packaged exceeding the federal limit of 10mg THC per package for edibles. These were generally in the form of lozenges and gummies. 

Note: A representative for Organigram insists that Organigram does not compete in the so-called “edible extracts” category and only produce “ingestible extracts”.

The company hopes to see Health Canada’s order quashed or set aside, instead requiring Health Canada to make a determination that its Jolts lozenges are a cannabis extract and do not constitute edible cannabis under the Regulations.

Organigram and others who have made these products contend they are compliant products. 

In early January 2023, Health Canada sent a notice to producers highlighting their concerns with these products. Companies were eventually told they had until May 31, 2023, to cease sales and distribution. 

Organigram, which has been selling their Edison Jolts products as cannabis-infused lozenges sold in packaging exceeding 10mg THC, said in March that it has paused production. It maintained that the products were compliant with federal regulations.

“The company remains of the view that the patent-pending products are properly classified as cannabis extracts and compliant with the cannabis regulations, and is assessing its options with its legal advisors. At present, the company has paused production of the products in the current packaging format, pending resolution of the matter.”

Each Lozenge contains 10 milligrams of THC, for a total of 100 mg THC per container of Jolts. The Jolts are available in three flavours – mint, electric lemon, and arctic cherry.

Organigram’s argument to the court contends that the Jolts Lozenges do not contain any sugars, sweetening agents, or sweeteners, although they do utilize an ingredient called Oligofructose, a “non-digestible dietary fibre” Organigram maintains is only used as a carrier and bulking agent.

The filing also notes that the products were first submitted through Health Canada’s Notice of New Cannabis Product (NNCRP) process for each flavour of Jolts at different times in 2021, and that they had submitted their first NNCP for cannabis extract lozenge products as early as August 21, 2020.

Health Canada issued a public warning about these products on March 3. 

“Some edible cannabis products were found to contain more than the allowable limit of 10mg of THC per package,” notes the press release. “These non-compliant products in product formats similar to gummies and other confectionery products, such as hard candy, have been incorrectly marketed and sold as cannabis extracts.”

The federal health authority also issued a new online document providing clarity on the issue of the classification of edible cannabis. The document, in part, notes that a cannabis edible is defined as any article manufactured, sold, or represented for use as food or drink for human beings, chewing gum, or any ingredient that may be mixed with food for any purpose.

“Licence holders should verify if their cannabis products are classified correctly. Licence holders are encouraged to review the definitions of, and requirements for, cannabis and cannabis products in the Guide on composition requirements for cannabis products and Packaging and labelling guide for cannabis products.”

In an email to StratCann on Monday, March 6, a representative for the federal health authority confirmed they are sending out notices to companies making these “non-compliant” products.

“Federal licence holders that have non-compliant edible cannabis products have or will receive a Non-Compliance Determination Letter. This letter indicates the actions and the associated timelines that licence holders are expected to take to come back to compliance. Provincial and territorial distributors have been and will continue to be made aware in order to adjust their operations accordingly.”

Health Canada initially issued warnings to some producers or manufacturers of so-called “edible extracts” in January, warning them they were not compliant with federal regulations. One producer, Vortex Cannabis, confirmed they received an order from Health Canada to stop sales of their Full Spectrum THC Jelly Cubes due to these being inaccurately classified as extracts rather than edibles. 

The Vortex Jelly Cubes came in 10mg THC squares, sold with multiple units per pack.

Several other companies make similar products, including Indiva, Organigram, Loosh Brands, and Aurora Cannabis.

One national private-sector advocate for compliance and quality in the Canadian Cannabis sector, the C-45 Quality Association, says they are drafting a letter to Health Canada discussing their concerns with this recent decision.

Updated: Health Canada issues recalls for two unauthorized cannabis products sold without market authorization (DIN) in Canada

Written by David Brown on . Posted in Business, Cannabis News, Ontario, Products, Provinces.

The Ontario Cannabis Store (OCS) has posted a recall for a cannabis product they say is an unapproved prescription drug.

In a notice posted online on April 18, the OCS says that the product “Goodnight Dream Caps” from Taima Extracts Inc. is being recalled due to a “risk calculation associated with this product” as a Type II recall.

A Type II (2) recall refers to a product that can cause temporary adverse health consequences or where the probability of serious adverse health consequences is remote.

There are generally three types of product recall designations in Canada, Type (or class) I, II, and III, with Type I representing the highest risk and Type III representing the lowest risk to public health. 

Most recalls for cannabis products in Canada have been Type III recalls, generally related to inaccurate labelling. 

This notice affects all lots and packaging dates of the product that was sold in Ontario. 

On April 20, Health Canada also issued their own recall notice for the product, stating it was an unauthorized product sold without market authorization (DIN) in Canada.

Although the product has now been removed, the soft gels were previously listed on the OCS website as each containing 20 mg of CBD, zero THC, as well as 10 mg of melatonin, and chamomile oil. 

The previous product listing on the OCS noted the producer was Voyage Cannabis, while the recall notice attributes the product to Taima. Voyage Cannabis was acquired by Heritage cannabis in 2022. The recall notice is not associated with Heritage Cannabis or Voyage Cannabis.

The OCS notice does not make it clear what caused the product to be considered an unapproved prescription drug.

Health Canada regulates melatonin under the Natural Health Products Regulations. It’s commonly advertised as an effective sleep aid; however, some medical experts warn that it can cause side effects such as dizziness, nausea, headaches, and muscle aches if used in high doses.

Health Canada recently issued a product recall for a CBD product on April 4 that contained 20mg of CBD and 3mg of Melatonin, calling it an “unauthorized product.” The notice said it was a product sold without market authorization (DIN) in Canada. A DIN is a Drug Identification Number.

Taima and the OCS were not immediately available for comment.

Any new cannabis product that enters the market must first provide Health Canada with a Notice of New Cannabis Product (NNCP) at least 60 calendar days before making the new cannabis product available for sale.

This article will be updated as new information becomes available. 

This article has been updated to note Health Canada issued a recall notice for the Goodnight Dream Caps in April 20.

Mississauga to allow cannabis stores

Written by David Brown on . Posted in Business, Cannabis News, Government, Ontario, Provinces.

Mississauga City Council voted today to approve a motion to lift its prohibition on cannabis retail stores and permit them to be located in the second-largest city in Ontario.

The motion was approved in an eight-to-four vote. A motion to defer the amendment was rejected in an eighty-to-four vote.

Some councillors who sought to defer the motion, such as Councillor Chris Fonseca, cited concerns from residents, especially around issues of clustering and a lack of control of where stores would be located. Councillor Fonseca, as well as councillors John Kovac, Stephen Dasko, and Carolyn Parrish, were the four votes against the motion.

However, other councillors disagreed, noting that cities and towns in Ontario do have a chance to provide input on any cannabis retail licence applications within their boundaries. 

With over 800,000 residents Mississauga is the second-largest city in the Greater Toronto Area and the third-largest in Ontario. It was one of more than 60 municipalities in Ontario that initially opted out of allowing cannabis stores within city limits. 

Ontario allows municipalities to opt out of allowing cannabis stores, but if they do opt in at any point they can not later reverse the decision. If passed by Council on April 19, the resolution would need to be made available to the Alcohol and Gaming Commission of Ontario (AGCO) within three business days of its enactment.

A city staff report from March notes that the ban means Mississauga residents “continue to be disproportionately served by the illegal cannabis market compared to municipalities that have opted in.”

It also highlights that Mississauga is missing out on much of the revenue from the provincial government, which has shared around $44 million of the provincial share of federal excise taxes with cities that allowed cannabis stores. That money is now distributed and will not be available to Mississauga or any other city that opts in in the future.

David Lobo, the President & CEO of the Ontario Cannabis Store (OCS), says the vote represents significant progress for the entire province. 

“The OCS supports this decision, which will provide residents of Ontario’s third-largest city with legal access to tested, traceable, safer cannabis products while displacing the illegal market.”  

“This marks a major step forward as the cannabis industry continues to evolve within the legal framework.”

Omar Khan, Chief Communications and Public Affairs Officer at High Tide, which operates numerous cannabis stores across Canada, said he is excited by the change of heart by several councillors and the Mayor who had originally voted against allowing cannabis stores in the city in 2018.

“Today’s vote is a victory for everyone who wants to drive out the sale of illegal, untested and non-age-gated cannabis within Mississauga and paves the way for new jobs and investment to come into the city,” said Khan. “Mayor Crombie and Ward 7 Councilor Deepika Damerla deserve special credit for leading the charge to bring Mississauga into the provincial retail cannabis framework. Hopefully, Mississauga’s decision will serve as a beacon for other municipal holdouts in Ontario. As Mississauga’s experience shows, where legal and regulated cannabis sales are prohibited, unregulated, criminal elements will fill the void.”

Jennawae Cavion, the founder at Calyx + Trichomes in Kingston and the Executive Director at NORML Canada, notes that the move is good in general, but could be a difficult one for those operating stores just outside the boundaries of the city.

“Congratulations to Mississauga for finally realizing the harm they have done in their municipality over the last four years by opting out of cannabis sales. They not only allowed the unregulated market to flourish, they also created a false bubble in border cities where their residents would drive to. 

“There is going to be carnage in those border towns and crazy saturation beginning today as hundreds of retailers sign leases. If you thought Queen St was bad wait until you see Mississauga. The province should never have allowed municipalities to opt in or out. Great news for Mississauga residents, but it will be a huge battle for retailers as the gap is quickly filled over the next couple months.”

The City Clerk for Mississauga now has three days to provide the Registrar of the Alcohol and Gaming Commission of Ontario (AGCO) with written notice of the resolution.

Note: This article has been edited to add quotes from David Lobo, Omar Khan, and Jennawae Cavion.

Inflated THC levels undermine cannabis industry

Written by Staff on . Posted in Business, Cannabis News, Research.

A new study in the US argues that inflated THC levels on cannabis products undermine industry credibility.

Researchers tested 23 samples of cannabis from 10 Colorado stores, comparing those results against the label. They found that, on average, the products were 23 percent lower in THC than advertised. 

Although consumer choices continue to be driven by a desire for higher-THC products, the average observed THC levels were just under 15 percent from all samples tested. 

Inflation of THC levels isn’t new. Research in Canada and the US has highlighted the issue for years. In Canada, the industry has been calling for more oversight of labs and testing standards. 

Nearly two-thirds of the samples tested 15 percent lower than advertised, while three samples were half as low as claimed on the label.

Colorado’s testing standards require a producer to report THC levels as a range based on the highest and lowest percentages from the test batch. However, not all products were labelled in a range.

The samples used were one to two grams in size, looking at 12 different dried cannabis varieties. Researchers also included a handful of results from other studies.

CertiCraft

Eighteen of those 23 samples showed THC levels below the labelled testing results. Only one of the products tested showed a higher THC level than the lowest from the range on the product label. 

Although THC can degrade over time, the paper contends that this was not a factor given the lack of excessive levels of CBN, a byproduct of THC degradation. 

To help address these issues, researchers in this study argue that regulators in Colorado need to do more to ensure that growers are using a representative sample rather than selecting the most potent flowers, as well as enforcing more strict product reporting rules.

Hubert Marceau, the director of development at Laboratoire PhytoChemia—an analytical testing lab in Quebec that tests cannabis products in the Canadian market—says the results once again highlight that most cannabis on the market does not have nearly as much THC as consumers might think.

“What is striking is that even with the samples that reported a range, most of the time the measured value is outside by a large margin,” says Marceau. “This should be the exception. Another interesting thing is that none of the samples cross the famed 20 percent threshold.”

“The fact the standard deviation of the observed values are about half as the reported ones, this means that all samples, regardless of the strain, would have a very similar THC content, even though it seems that there is more diversity on the market.”

Marceau says consumers should look at these results as a good example of why they should not be basing purchasing decisions solely on advertised THC levels.

BC announces cannabis policy changes aimed at helping industry

Written by Staff on . Posted in British Columbia, Business, Cannabis News, Government, Provinces.

British Columbia’s cannabis distribution branch is announcing several new policy changes for the cannabis sector.

In a memo sent out to industry stakeholders, the BC Liquor Distribution Branch (LDB) says it will be implementing several policy changes aimed at supporting the cannabis industry. It will also be conducting a review of its direct delivery program, which was first launched in 2022.

The three new policy changes include:

  • Permanently eliminating the requirement for licensed producers to maintain mandatory recall insurance, which the LDB says will help cannabis companies become more financially viable. 
  • Temporarily amending supplier payment terms, from 30 to 14 days, for a period of six months. Beginning April 30, 2023, and extending until October 31, the LDB will temporarily change the payment terms for licensed producers using the provincial system for distribution from 30 days to 14 days. 
  • Permanently reducing the reporting frequency for licensed producers participating in the direct delivery program from weekly to bi-weekly. Beginning April 30, 2023, the LDB will reduce the required reporting frequency from weekly to every two weeks. 

The LDB also says they will be undertaking a review of the direct delivery program in partnership with the provincial Cannabis Secretariat.

The review of the program, which was first launched in August 2022, will be looking to see if the program is working to assist small cannabis producers in the province. The results of the review will be posted at a later date.

As a result of these changes, the LDB has also updated its supply agreement. A notice of amendment will be provided to all licensed producers via email in the coming days. The updated supplier agreement will also be published on the central delivery and direct delivery supplier websites.

Timothy Deighton, one of the owners of Sweetgrass Cannabis, a micro producer in the Kootenays, says he sees the changes as positive, noting the changes for recall insurance could save micros thousands or even tens of thousands of dollars a year when doing business in BC.

Although Sweetgrass doesn’t currently participate in the direct delivery program, Deighton also says he’s happy to see they are reviewing it, noting the 15 percent fee the LDB still charges producers to use the program has made it too costly for his company.  

“Those are great changes, and I’m really happy to hear about this. I’m also happy to see they are reviewing the direct delivery program, and I hope they can look at the 15 percent fee. It costs companies more to do direct delivery than just by sending to the BCLDB.”

Janeen Davis, VP of sales at Joint Venture Craft Cannabis Inc (JVCC), which helps bring numerous BC micro and other craft growers to market, including through the direct delivery program, says she expected the announcement and is happy to see the province responding to industry concerns. 

“This comes as no surprise to those of us who have engaged in good faith with the BCLDB and Cannabis Secretariat’s office. They care deeply about the success of our industry and have advocated for changes on our behalf.”

Kirk Tousaw, the CEO of Great Gardener Farms, a micro producer on Vancouver Island, says the removal of the requirement for recall insurance will allow them to take more ownership over their supply chain.

“For a small craft producer like Great Gardener Farms, dropping the recall insurance requirement means we can actually pursue getting a processing license so that we can package and sell our flower directly to retailers. We also welcome any efficiencies that can be built into the direct delivery system.”

Note: This article has been updated to add comments from Deighton, Davis and Tousaw.

Week in Weed – April 8 , 2023

Written by Kieran Delamont on . Posted in Business, Cannabis News.

This week at Stratcann we covered a new report outlining some of the ways that Canada’s medical cannabis system is struggling, ranging from access issues to high costs to a lack of insurance coverage—issues that are pushing many medical patients into the recreational system instead.

We also covered new stats looking at how different generations are positioned in the legal market, a piece from Stratcann’s Tim Wilson on the tepid start to 2023 for the industry, and new rules BC is implementing to target illicit cannabis growers. 

In other industry news, a new study from researchers at the University of Toronto looked at second-hand THC inhalation, finding that indoor second-hand cannabis smoke can lead to THC levels in the body that temporarily exceed the federal legal limits for driving. The researchers also claim to have developed more accurate modeling to help predict how THC molecules behave in an indoor setting. 

Police in London, ON have had to call in reinforcements to help them probe and dismantle an illegal cannabis extraction lab found in a “posh south London home” this week. Police are describing the facility as “complex,” and were still working on dismantling the operation days after arresting one man in connection with it. 

Two Canadian cannabis companies, SNDL and Nova, are amending a deal (announced in December) that would originally see SNDL transfer 26 retail stores to Nova Cannabis. The agreement will now include 31 stores being acquired by Nova, and also restructured certain financial aspects of the transaction. 

Nova Cannabis announced its upcoming launch of Firesale Cannabis, a discount retail chain concept. Discount retail brands are nothing new, but interestingly, the company is describing the concept as a way to deal with “excess inventories” within the cannabis supply chain, sold at “outrageous discounts”—something resembling a factory liquidation store, but for Canadian cannabis products. The first store opened in Calgary this week, and the company says they have plans to expand into Ontario as well.

After industry stakeholders gathered last week to discuss the possibility of introducing cannabis retail to Surrey, BC, mayor Brenda Locke told the CBC that city staff were drawing up a proposal for council’s consideration—an announcement applauded by a few retail stakeholders. Lock shared similar comments with StratCann last month. 

On the other side of the country, a similar push to get Mississauga, ON to finally allow cannabis stores is tantalizingly close to the finish line, with a vote on lifting the ban heading to council on April 12. 

British Columbia recently announced a carbon tax rebate program for greenhouse operators—but cannabis companies are being excluded from the rebate, the province says.  

Canadabis Capital, who own the Stigma Grow brand as well as the processor Full Spectrum Labs, the retail store INDICAtive Collection, and 95 percent of Goldstream Cannabis, reported a 373 percent growth in income for Q2 ‘23. Their net income reported was $1.3 million on $9.6 million in quarterly revenue. 

An article in The Hill Times looked into the issue of federal cannabis excise taxes, speaking with Mercari’s Lisa Campbell, as well as Mercari clients like BC’s Weathered Islands Craft Cannabis and Newfoundland’s Atlantic Cultivation.

In international news, the German push to legalize recreational cannabis already seems to be pivoting a bit. Reports came out this week that the country was considering a smaller, more localized pilot project for legal weed rather than the full national legalization scheme in order to avoid potential conflicts with European lawmakers. 

And finally, your favourite NBA players might finally be allowed to spark up. A report from The Athletic suggested that cannabis will be removed from the drug testing rules in the collective bargaining agreement. 

More lucratively for those players, it also appears set to allow them to strike endorsement deals with cannabis and sports betting companies. Pro sports leagues have been dragging their feet for some time on cannabis legalization, with many players and fans critical of the leagues’ conservative attitudes toward cannabis, so it’s good to finally see some progress being made.

2023’s tough year in cannabis

Written by Tim Wilson on . Posted in Business, Government, Insight.

So far, 2023 has been a difficult year for Canada’s regulated cannabis industry. It probably won’t get better anytime soon.

In February, Canopy Growth, one of Canada’s largest LPs, closed its flagship facility in Smiths Falls, ON, laying off 800 workers. Other large LPs, such as Hexo Corp, are experiencing a serious decline in revenues. Many micros are also struggling, even as micro licences continue to be the most popular.

Additionally, the industry was dealt a blow when the federal budget failed to implement significant tax reforms, a major issue that a number of key players in the industry have vocally addressed. 

“I am disappointed by the reality that this Liberal administration stood this industry up as a key election issue, and has since abandoned its small business participants politically, economically, and practically,” says Dan Sutton, founder and CEO at Tantalus Labs in Vancouver, and a vocal advocate of tax reform. 

I expect to see the number of LPs throwing in the towel in Canada increase throughout 2023 and into 2024, before levelling off and stabilizing.

David Hyde, CEO at Hyde Advisory & Investment Inc

“It is my view that over 80% of the small businesses engaged in cultivation and processing across the legal Canadian cannabis industry are at material risk of insolvency in 2023.”

Clearly, the current excise tax regimen and costs associated with rigorous oversight by the government are taking their toll. Unfortunately, these challenges are expected to remain in place for some time.

“We are definitely seeing the number of cannabis filings increase,” says Dina Milivojevic, editor-in-chief at Insolvency Insider, which reports on the more high-profile insolvencies in Canada. “In 2019, we reported five insolvencies in the cannabis sector; in 2022 that rose to 28. Most other sectors, with the exception of real estate, seem to be faring better than cannabis.”

Other industry observers confirm Milivojevic’s observations.

“Insolvency filings in the cannabis space have been pretty active since 2019 – although 2020 and 2022 certainly saw a higher number of filings, with 2022 trending slightly higher than 2020,” says Natasha MacParland, a partner with Davies Ward Phillips and Vineberg, LLP. (Data for 2021 was not available).

“Anecdotally, it seems that there are higher numbers of filings of licensed producers, which makes sense because they are larger and have higher debt loads.”

David Hyde, Chief Executive Officer at Hyde Advisory & Investment Inc., which provides advisory services to the global cannabis industry, expects to see a resurgent medicinal cannabis marketplace in Canada, with more LPs focusing on the inherent higher margins and simplified supply chain.

Hyde’s team runs a website that lists numerous companies looking to sell their facilities, from large LPs to micros.

He also notes, however, that medical cannabis LPs face unique challenges – as evidenced by Shoppers Drug Mart’s recent decision to exit the medical cannabis market.

Labs are not testing representative samples. You could never get away with that for Aspirin, so I don’t know why it’s okay in the cannabis industry.

Gord Nichol, North 40 Cannabis

Overall, the absence of equity and debt financing will continue to pose a significant challenge to Canadian LPs in 2023. 

“Some LPs will face the difficult choice of borrowing at near-predatory interest rates or entering into a restructuring,” says Hyde.  “I do expect to see some minor relief for LPs in the form of intervention by the Federal and Provincial Governments, especially later in 2023.” 

This could include some combination of excise tax relief, lifting of certain regulatory burdens or fees, and the right-sizing of provincial cannabis distributor mark-ups. However, these measures may be too late for many companies.

“I expect to see the number of LPs throwing in the towel in Canada increase throughout 2023 and into 2024, before levelling off and stabilizing,” says Hyde. “Many micros will struggle to compete as business-to-business pricing will remain relatively flat.”

On the positive side, Hyde says that micros will continue to benefit from banding together and operating under a unified umbrella for optimal sales and distribution. 

However, for the next year, the result will likely be more market consolidation among LPs, micros, brands, and retail. Who will fare best, and who will experience the most pain, is uncertain.

As of the end of 2022, there were 113 cannabis production licences revoked by the licence holder, three revoked by Health Canada, and 13 expired, for a total of 129 inactivated licences since the beginning of legalization in late 2018. StratCann notes another 23 licences have been revoked at the request of the licence holder, and four expired from January 1 to March 31, 2023. 

“Right now, it’s looking pretty grim, to be honest,” says Gord Nichol, president and co-owner of  North 40 Cannabis in Nipawin, Saskatchewan, which Nichol says was the first micro to be licensed in Canada back in 2019. “The price of the product keeps going down, and as a small producer, our costs are high. Before, it didn’t matter, but now with inflated THC levels, we risk getting lost in the shuffle.”

The lack of transparency in THC testing creates ongoing challenges across the supply chain. According to one lab’s results, most cannabis is in the 18-24% range, yet the market demands percentages above 30%. Though Health Canada has taken to sending warning letters to producers claiming non-infused THC levels in dried flower of 35% and above, the problem will likely continue to distort the market throughout 2023.

“It is blatant, and making a mockery of the system,” says Nichol. “Labs are not testing representative samples. You could never get away with that for Aspirin, so I don’t know why it’s okay in the cannabis industry.”

As producers struggle, retail is also expected to have a rough go of it in 2023.

“I have noticed that we have seen more producers than retail stores go under,” says Milivojevic from Insolvency Insider. “That is a little surprising – I would expect to see more retail filings in the next few years.” 

Retail is saturated in some Canadian markets, with gross margins challenging. Ontario has promised some relief to producers and retailers with its promise to move to a fixed markup pricing model, but overall, margins remain tight. 

With the possible exception of medical cannabis, this is the reality across the cannabis supply chain.

“The gross margins are very challenging in most of the categories in our sector,” says George Smitherman, president and CEO of the Cannabis Council of Canada (C3), representing Canada’s licensed producers and processors. “There are a lot of licence holders out there – we know that – but low-cost producers, and those that hit all the marks, and sell every gram, deserve to be successful.” 

Smitherman remains optimistic about the industry’s overall prospects. 

“Things are challenging, but the industry will continue to grow in Canada,” he says. “Product innovation still provides an opportunity for us to bring in billions of dollars of market share from the illicit market.”

For many individual companies like North 40 Cannabis, however, the tables appear to be tilted against them, and the road ahead remains uncertain.

“If I could get out without losing my house, I would,” says Nichol from North 40 Cannabis. “This approach is destroying it for the little honest guys.”

The Week in Weed – April 1, 2023

Written by Kieran Delamont on . Posted in Business, Cannabis News.

It was budget week and, as we covered, many in the cannabis industry were a bit disappointed (though perhaps not all that surprised) at the lack of tax reform contained in the federal government’s Budget 2023. 

Also on Stratcann was news of Shoppers Drug Mart’s announcement that they will be exiting the medical cannabis market in May and transferring their platform to pharma company Avicanna. We reported on a Health Canada recall of two Pure Sun Farms products in Ontario, and also shared a profile on Herbal Dispatch and their transition from the legacy market to the legal market. 

Here’s what else was going on in the cannabis industry news this week (no foolin’!):

MJBizDaily reported on two retailers’ press releases reporting losses this week. Nova Cannabis reported an $11.2 million loss (an improvement over last year’s $20.6 million loss) while Fire & Flower reported a steep $89 million loss, calling 2022 a “turnaround year.” 

Delta 9 also shared their Year-end Financials for 2022 with retail revenues increasing 26 percent, wholesale revenues decreasing 35 percent, and business-to-business revenues decreasing 65 percent. 

Auxley also shared its financial results for the three and twelve months that ended December 31, 2022. Total net revenues increased 13 percent, while fourth-quarter total net revenues were down nearly $5 million from the same quarter in 2021. 

MediPharm Labs released its fourth quarter and full year 2022 results, as well. Net revenue was up 71 percent from the same quarter in 2021.

Another “embattled” retailer, Dutch Love, is selling four of its stores to SNDL, the Canadian Press reported. Dutch Love, a chain of stores run by the restaurant operator Donnelly Group, has thirteen locations in BC and Ontario, but sought creditor protection at the end of 2022.

After another raid, the Victoria Cannabis Buyers Club plans to sue the BC government, founder Ted Smith says. Despite their legal troubles (and mounting bills), Smith says they have no plans to stop “supplying those medicines that have been keeping people alive.” 

A Niagara mother whose four-year-old daughter fell into a coma after ingesting cannabis edibles has been sentenced to six months’ house arrest, reports the Hamilton Spectator. The crown called it a “crime of carelessness.” The girl’s 13-year-old sibling also suffered medical complications after she ate almost two dozen of the gummies.

A Quebec extraction company, PurCann Pharma, is collaborating with the Canadian Institutes of Health Research and the Multiple Sclerosis Society of Canada to study “the potential effectiveness of cannabinoids to alleviate the symptoms of people with MS.” Plenty of MS patients have used cannabis over the years, but the research project—which is slated to produce results next year—hopes to understand how minor cannabinoids in particular could be used in treatment.

Organigram announced this week that they were partnering with Greentank Technologies, makers of new 510 vape technology that will be used in “the development of a custom all-in-one device that will be proprietary to Organigram.” Greentank claims to have created “a new way of heating cannabis oil without the need for a ceramic coil,” which they say will reduce “ceramic particle emissions.” 

A Whitehorse, Yukon butcher is on trial for selling THC-infused jerky in late 2020. The jerky sent four people to the hospital. The trial will be attempting to sort through, as the CBC put it, “conflicting details on how that batch came to be and how much the owner knew about, as one lawyer put it, the ‘spicy’ batch.” The butcher’s son has stated that the whole thing was “an accident.”

Outside of the Canadian market this week, Kentucky has finally legalized medical cannabis after ten years of failed attempts to pass the bill. Repeated attempts to legalize it had been blocked by the state Senate, but on Friday morning, the bill was signed by the governor and finally made official. 

And lastly, burn one down for the former Leafly reporters who lost their jobs this week after the company announced it was ending its cannabis industry reporting, choosing instead to focus on its core consumer product listing business. 

The company laid off its Canadian editorial staff last year, and now the same fate has hit south of the border. Former reporter Ben Adlin (who left the company in 2019) said: “Leafly was relevant for a few years because they took cannabis journalism seriously at a time when even mainstream news outlets didn’t. Apparently they think there’s more money to be made as the Yelp of weed. I’ll be curious to see how that works out.”

Health Canada issues product recall for Pure Sun Farms BC Sour Kush for inaccurate labelling

Written by Staff on . Posted in Business, Cannabis News, Ontario, Products.

Health Canada has issued a recall notice for cannabis due to an errant decimal point. 

Two lots of Pure Sunfarms Corp.’s Original Fraser Valley Weed Co. B.C. Sour Kush dried cannabis, both sold through the Ontario Cannabis Store (OCS) and through authorized retailers in Ontario, were recalled due to incorrect cannabinoid values.

The THC labelled is lower than the actual THC due to a misplaced decimal point. 

The OCS originally posted its own product recall for the BC Sour Kush on March 1. Both products were packaged on March 1. Health Canada’s own recall was posted on March 30.

To date, Pure Sunfarms Corp and Health Canada say they have not received any complaints related to the recalled lots. Neither Health Canada nor Pure Sunfarms Corp. has received any adverse reaction reports for the recalled cannabis product lots.

There were 1,442 units of recalled product sold in Ontario from March 14 to March 24, 2023.

The printed value on Lot number 03984 of the B.C. Sour Kush was THC: 9 mg/g (Total THC: 216 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g). The correct labelling should have been THC 90 mg/g (Total THC: 216 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g). 

Lot number 03985 was labelled as THC: 7 mg/g (Total THC: 202 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g). The correct label should have read THC: 70 mg/g (Total THC: 202 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g)

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