Business Archives

Week in Weed – April 20, 2024

Written by Staff on April 20, 2024. Posted in Business, Cannabis News.

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

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

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

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

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

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

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

In other cannabis news

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

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

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

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

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

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

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

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

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

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

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

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

BZAM/Final Bell trial set to begin next week

Written by David Brown on April 19, 2024. Posted in Business, Cannabis News, Producers.

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

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

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

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

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

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

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

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

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

Written by Staff on April 19, 2024. Posted in Alberta, British Columbia, Business, Cannabis News, Producers.

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

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

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

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

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

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

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

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

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

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

More outdoor consumption spaces are opening in BC

Written by David Brown on April 18, 2024. Posted in British Columbia, Business, Cannabis News.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Former Aurora CIO questioned as part of ArriveCAN hearings

Written by David Brown on April 17, 2024. Posted in Business, Cannabis News.

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

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

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

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

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

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

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

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

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

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

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

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

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

OCS confirms data leak, OPP opens investigation

May 10, 2022

Ontario Court rules “frivolous” statement of claim against cannabis retailer had no hope of succeeding

January 22, 2024

Two Conservatives apologize over cannabis conspiracy theory

April 11, 2020

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

Written by David Brown on April 16, 2024. Posted in Business, Cannabis News, Government, Producers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Trudeau says it’s time for government to “catch up” and support cannabis industry

March 17, 2023

House of Commons Standing Committee on Finance calling for changes to cannabis tax

February 27, 2024

Waiting for Trudeau

January 15, 2024

Week in Weed – April 13, 2024

Written by Staff on April 13, 2024. Posted in Business, Cannabis News, Government, International.

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

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

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

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

In other cannabis news…

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

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

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

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

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

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

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

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

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

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

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

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

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

Quebecers still vaping cannabis, despite provincial ban

Written by David Brown on April 11, 2024. Posted in Business, Cannabis News, Government, Quebec.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Two new Trees locations join BC Budtenders Union

Written by David Brown on April 11, 2024. Posted in British Columbia, Business, Cannabis News, Retail.

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

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

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

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

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

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

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

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

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

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

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

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

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

Written by David Brown on April 10, 2024. Posted in Business, Cannabis News, Government, Ontario.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Written by David Brown on April 9, 2024. Posted in British Columbia, Business, Cannabis News, Government, Retail.

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

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

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

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

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

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

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

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

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

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

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

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

Surrey Board of Trade says its time for cannabis stores in the city

March 1, 2023

BC Chamber of Commerce calls on province to address municipal “cannabis deserts”

January 18, 2022

Pitt Meadows, BC now accepting retail cannabis applications on a case-by-case basis

July 18, 2023

Diteba Laboratories Inc. files notice of intent

Written by Staff on April 9, 2024. Posted in Business, Cannabis News, Ontario, Other.

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

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

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

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

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

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

Week in Weed – April 6, 2024

Written by Staff on April 6, 2024. Posted in Business, Cannabis News, Government.

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

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

We also shared our monthly cannabis industry jobs update.

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

In other cannabis news this week…

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

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

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

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

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

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

High Tide announced its fifth Canna Cabana Store in Mississauga.

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

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

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

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

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

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

Written by David Brown on April 5, 2024. Posted in British Columbia, Business, Cannabis News, Retail.

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

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

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

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

Retail licences also must receive approval from the provincial government.

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

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

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

Surrey releases proposal for up to 12 cannabis stores in BC’s second largest city

January 24, 2024

Surrey city council votes to refer report on cannabis back to city staff

July 24, 2023

Surrey City Council to consider framework to approve cannabis stores

July 23, 2023

Trudeau: Concerns over cannabis legalization violating international treaties were unfounded

Written by David Brown on April 5, 2024. Posted in Business, Cannabis News, Government.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Justin Trudeau on UN treaties during an interview released yesterday:
A French journalist asked if he saw a downside risk to cannabis legalization.

"The only downside we were extremely worried about was that it would place us in non-compliance with certain international treaties… pic.twitter.com/UrYhdt6Z3Q
— WeedStreet420 (@WeedStreet420) April 4, 2024

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

Written by Sarah Clark on April 4, 2024. Posted in Business, Cannabis News, Ontario, Retail.

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

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

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

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

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

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

Hey, you can’t park there! 😳

An unfortunate accident at the weed shop in Harrow, Ontario. Luckily no injuries. RC Budshop is temporarily closed. @CBCWindsor @CTVWindsor @AM800CKLW pic.twitter.com/eypPA0deSS
— Tony Smyth (@LateNightCam) April 4, 2024

Featured image via X

Drunk driver crashes into cannabis store in Ontario

January 5, 2024

London, Ontario-area cannabis stores face string of break-ins

October 26, 2022

Toronto police arrest three men connected to a string of cannabis store break-ins

March 5, 2022

Lifeist begins CannMart restructuring after shareholders reject sale

Written by David Brown on April 3, 2024. Posted in Business, Cannabis News.

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

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

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

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

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

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

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

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

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

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

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

Heritage Cannabis seeks creditor protection

Written by David Brown on April 2, 2024. Posted in British Columbia, Business, Cannabis News, Producers.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Written by David Brown on April 2, 2024. Posted in Business, Cannabis News.

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

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

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

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

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

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

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

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

C3’s George Smitherman steps down, organization seeks new President & CEO

January 31, 2024

Anne McLellan, Task Force Chair on Cannabis Legalization and Regulation, on two years of legal cannabis in Canada

September 30, 2020

Cannabis Council of Canada calls for regulatory changes on fifth anniversary of legalization

October 17, 2023

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

Written by Sarah Clark on April 2, 2024. Posted in British Columbia, Business, Cannabis News, Other, Retail.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BC continues to debate increasing 8-store cap for cannabis retailers

January 11, 2024

SNDL reports $112 million loss from cannabis operations and $4.9 million in retail cannabis earnings

March 21, 2024

Nova Cannabis reports first year of net earnings, driven by data licensing program

March 28, 2024

Cannabis Jobs Update – April 2024

Written by Staff on April 2, 2024. Posted in Business, Cannabis News.

Looking to work in Canada’s cannabis industry? There is a wide variety of jobs available, ranging from entry-level positions to highly skilled roles.

In our April round-up, we’ve provided a snapshot of some current cannabis job openings. From Cultivation to Labs, from Budtending to Brand Reps, there’s an array of jobs available at any given time.

The Ontario Cannabis Store is seeking a Consumer Market and Insights Manager to lead priority projects.

Quebec cannabis producer Greentone is looking for a Commis assurance qualité/QAP and Culture Kizos is hiring a Packaging Partner/Partenaire d’emballage in Trois-Rivières.

BC’s Pure Sunfarms is looking for a VP of International Business Development to help grow the company’s footprint, reporting to the Senior Vice President of Strategy & Medical Exports at Village Farms International.

Canada House Clinics is looking to hire a Licensed Practical Nurse to act as a Cannabinoid Therapy Educator in Greenwood, Nova Scotia.

Muse Cannabis in South Vancouver is seeking a General Manager for a full-time position.

Aurora Cannabis continues to post for numerous positions at its various operations across Canada, including the recently-posted Master Data Management Specialist, a remote position, as well as a Technician, Cultivation Co-Op at their site in Comox, BC.

SNDL is looking for a Category Manager in Edmonton.

Clavet, Saskatchewan’s Under the Sun Groweries Inc. is looking for a new Master Grower to oversee their cannabis production facility.

Ontario’s Motif Labs, the company behind cannabis brands like BOXHOT, DEBUNK, Boondocks, and Rizzlers, is seeking a Hydrocarbon Supervisor.

Plantlife Cannabis is looking for a Sales Associate for its Erin Ridge location, and Canna Cabana is looking for a Retail Shift Leader for its Kennedale location, both in Alberta.

Tilray is seeking a Cultivation Technician for their Redecan facility in St Catharines, Ontario. The role entails the application of pesticides, and the ideal candidate will possess a pesticide licence.

Eurofins Experchem Laboratories, Inc. is looking to hire an Analyst I to provide technical support and analysis within the company’s Cannabis Chemistry Testing Laboratory.

BZAM is looking for a Production Supervisor for its Pitt Meadows, BC facility.

And, last but certainly not least, Vancouver’s famous Cannabis Culture Headquarters is looking for a retail store salesperson.

Week in Weed – March 30, 2024

Written by Staff on March 30, 2024. Posted in Business, Cannabis News, Government, International.

This week, StratCann’s Tim Wilson took an in-depth look at the similarities and differences between how cannabis and alcohol are regulated and taxed in Canada.

Ontario plans to add $31 million to its budget to deal with an increasing number of illegal cannabis stores. At the same time, Toronto also wants more money from the province for the same reason.

New Brunswick introduced legislative changes to address illicit cannabis sales in that province.

Sales up and losses down for Auxly in 2023, and BC-based cannabis producer Rubicon Organics Inc. reported an increase in net revenue and a decrease in net profit in its recent year-end results for 2023.

Cannabis retailer Nova Cannabis Inc. reported its first year of net revenue in 2023 as part of its recently released annual report. The company saw some of its most significant increases in revenue from the growth of its “data licensing program.”

Peers Cannabis’ had to recall their Giggly Bits Sativa from Ontario and Saskatchewan due to a minor labelling error.

A Manitoba woman who pleaded guilty to distributing illicit cannabis edibles on Halloween with her husband in 2022 received a $5,000 fine from provincial court.

We also looked at the ongoing failure of media and public health officials to distinguish between legal and illegal cannabis products, especially edibles, when reporting on issues of hospitalization or access to young people.

In other cannabis news this week…

Trina Fraser, Partner at Brazeau Seller Law, spoke with CBC radio about the Expert Panel’s new report.

Lawyers for Aurora Cannabis and a group of shareholders have agreed to settle a class-action lawsuit where the company allegedly booked a “sham” transaction to boost its sales figures. Both sides reached a settlement via mediation on March 4.

High Tide closed on their previously announced acquisition of accessories brand Queen of Bud. High Tide also announced its fourth store in Mississauga, the company’s 167th Canna Cabana branded cannabis retail location in Canada, the 58th in the province of Ontario, and the fourth in Mississauga.

The Canadian Press spoke with two young people who were diagnosed with cannabis-induced psychosis who are supporting the expert panel’s recommendation that Health Canada establish a standard dose for cannabis, saying it would help nudge people toward safer consumption.

Organigram Holdings Inc. announced a US $2 million minority investment in Steady State LLC (dba Open Book Extracts or OBX in the form of a convertible note. Based in North Carolina, OBX specializes in cannabinoid ingredient production and serves as a one-stop formulation and finished goods manufacturer.

The Canadian Hemp Trade Alliance (CHTA) says the Expert Panel that conducted the Cannabis Act review “missed the opportunity to recommend meaningful amendments to the Cannabis Act and Industrial Hemp Regulations.”

A new study published in Nature suggests that weight loss drug Ozempic might help people struggling with Cannabis Use Disorder (CUD).

A fraud charge against the former chairman and chief executive officer of cannabis stock market company Instadose Pharma Corp. has been stayed in Ontario court over excessive delays.

RCMP in Midway, BC, say they disrupted a lab in Beaverdell used for manufacturing cannabis shatter.

Niagara Regional Police are looking for a lone male suspect who entered the Cannabis Cupboard at 4506 Ontario Street, Beamsville, with a revolver style black handgun and demanded money from an employee. The man fled on foot with the money.

Media in Nottingham, England, reported that a local grandfather was found with cannabis and evidence that allegedly showed an agreement to buy 1kg of cannabis from Canada for $4,000 Canadian dollars (no excise included).

Rubicon Organics shows increased growth in 2023 annual report

Written by Sarah Clark on March 28, 2024. Posted in British Columbia, Business, Cannabis News, Financials, Producers.

BC-based cannabis producer Rubicon Organics Inc. reported an increase in net revenue and a decrease in net profit in its recent year-end results for 2023.

The cannabis cultivator reported $40.1 million net revenue in 2023, a 13% increase from 2022, and gross profit after fair value adjustments of $13.1 million, about a 5% decrease from 2022.

The fourth quarter of 2023 saw $5 million in operating cash flow, the sixth consecutive quarter of operating cash flow positive.

The company also reported a $1 million loss in operations, down from a nearly $2.6 million loss in 2022 and $13.2 million loss in operations in 2021.

After adding IFRS fair value accounting related to cannabis plants and inventory, depreciation and amortization, and share-based compensation expense, the company’s adjusted EBITDA for 2023 was $4.3 million

“I am pleased to announce that Rubicon has attained its seventh consecutive quarter of positive Adjusted EBITDA and sixth consecutive quarter of positive operating cashflow,” said Janis Risbin, CFO, in a press release. “Despite the challenges faced in the latter half of 2023 due to competitive pricing pressures in the Canadian cannabis sector and broader negative macroeconomic factors affecting Canadian consumers, we are optimistic about the prospects in 2024. With Rubicon’s prominent position as a leading force in the premium cannabis market, I am enthusiastic about the opportunities that lie ahead.”

The company, which sells certified organic products in several provincial markets, launched several new products in 2023, including its first entry into the edibles category, through a co-manufacturing relationship with 1964 Supply Co. live rosin edibles in Ontario, BC, and Alberta. These edibles were Canada’s first single-strain live rosin edibles and are vegan and gluten-free.

One of Rubicon’s brands, Wildflower, also launched its first edibles in October 2023, which contain the minor cannabinoids CBN, CBG and CBD, as well as full spectrum THC live rosin. It also released topical products like Wildflower Extra Strength Relief Stick and Wildflower 1:1 CBD:THC Relief Stick.

The company also plans to enter the vape market by taking advantage of additional biomass from its contract-grow strategy launched in 2023, which saw its genetics being grown outside its own facility.

Rubicon reported a 2.1% national market share of flower and pre-rolls, a 21.8% national market share of topical products, and a 15.2% national market share of premium concentrates, based on data from Hifyre.

More information from Rubicon’s March report here.

Nova Cannabis reports first year of net earnings, driven by data licensing program

Written by Sarah Clark on March 28, 2024. Posted in Alberta, Business, Cannabis News, Financials, Retail.

Cannabis retailer Nova Cannabis Inc. reported its first year of net revenue in 2023, as part of its recently-released annual report.

The company saw some of its largest increases in revenue from the growth of its “data licensing program.”

The Alberta-based retail chain owns and/or operates 96 locations across Alberta, Ontario, and Saskatchewan, primarily under its “Value Buds” and “Firesale Cannabis” banners.

Nova’s net earnings in 2023 were $3 million, compared to a $11.2 million net loss in the previous year. The company reported an adjusted EBITDA of $21.8 million in 2023, compared to $9.2 million in 2022.

The company also reported record revenue of $259.3 million, an increase of $32.9 million or 15%, from $226.4 million in 2022 and record gross profit of $61.6 million, or 24% of sales, a 40% increase from $43.9 million, or 19% of sales, in 2022.

Revenue from Nova’s “proprietary data licensing arrangements” was $12.4 million for 2023, which was an increase of 125% from $5.5 million in 2022.

Cash from operating activities increased significantly in 2023 to $11.7 million, an $11.6 million increase from $100,000 in 2022.

“Nova has achieved significant milestones this year, marked by sequential gross profit growth and positive net earnings for three consecutive quarters,” said Marcie Kiziak, CEO of Nova. “Our success in the current market is a direct result of our sharp focus on inventory management and the strategic enhancement of our proprietary data agreements, which has contributed to our positive cash flow position this past year.

“Amidst a competitive and fluctuating market, our expansion will continue to be measured, focusing on tactical opportunities in the key markets of British Columbia and Ontario in 2024. Our achievements through 2023 further highlight the success of the Value Buds banner, which has proven adaptable and well-positioned to endure success in Canada’s dynamic cannabis retail sector.”

The company’s annual report also says it is focused on opening new locations in the prairie provinces, as well as BC and Ontario. Ontario recently increased the number of stores one company can operate from 75 to 150, while BC is considering raising its cap of 8 stores per company.

BC currently lists three open Value Buds locations, while Ontario lists 34 as authorized to open. “Firesale Cannabis” was launched in 2023 and currently has one location in Alberta. There are 61 Value Buds locations in Alberta.

Toronto wants more money from the province to deal with a growing number of illegal cannabis stores

Written by David Brown on March 27, 2024. Posted in Business, Cannabis News, Government, Ontario.

The head of Toronto’s licensing and standards department says the city needs more money to enforce the law against a growing number of illegal cannabis stores operating there.

In an interview with City News, Carleton Grant, Executive Director, Municipal Licensing and Standards at City of Toronto, says that while many illicit cannabis shops shut down voluntarily in the first few years of legalization, new illegal stores have been popping up again.

Grant says there are currently 53 illegal, unlicensed cannabis stores now operating in Toronto and 215 legal ones (The AGCO currently lists 204 stores as being authorized to open in Toronto).

The comments come following a request by Toronto City Council, asking the Province of Ontario to undertake a comprehensive review of the provincial Cannabis Control Act, 2017. The motion says a review is “Imperative to ensure the effective regulations and enforcement of cannabis-related matters” in Ontario.

Municipalities need more tools and resources to address these illegal cannabis businesses, continues the motion, including “exploring options to strengthen enforcement measures, increase penalties for non-compliance, and improve collaboration between municipalities and provincial authorities

Because of the criminal nature of activities in these stores, which can include weapons and large quantities of cash, Grant says he is uncomfortable sending in his bylaw officers to address the lack of municipal licenses held by these businesses.

“What we’d like to see is the temporary funds that the province provided to the city in the first two years of the program are reinstated.”
Carleton Grant, Executive Director, Municipal Licensing and Standards at City of Toronto

“The concern is this is illegal activity, this is criminal activity. When our officers are going into these stores, there’s a presence of guns, large amounts of cash. There are things happening that officers really shouldn’t be involved in.

“We do go with the police. Police are best suited to deal with this type of illegal and criminal activity, and I think that’s where this is likely to go.”

However, Grant also says that law enforcement has a limited budget and other priorities and needs additional funding from the province to enforce the law.

“What we’d like to see is the temporary funds that the province provided to the city in the first two years of the program are reinstated,” continued Grant.

“If the city were to receive its appropriate allocation of funding from this particular program, it would assist in enforcement, it would assist in cracking down on illegal storefronts.”

Grant says he’s calling on a review of the provincial Cannabis Act, with an eye on the province providing additional funds to cities like Toronto to address the growing number of illegal cannabis stores.

In 2018, Ontario set aside $40 million over two years to help cities manage the implementation and oversight of cannabis legalization. The first $30 million was distributed in 2019, with $10 million set aside for unforeseen costs. Ontario also invested $3.26 million to support municipalities through enhanced enforcement against illegal cannabis operations.

This plan, called the Ontario Cannabis Legislation Implementation Fund (O.C.L.I.F.), was to be used for increased enforcement (e.g. police, public health and by-law enforcement, court administration, litigation), increased response to public inquiries (e.g. 311 calls, correspondence), increased paramedic services, increased fire services, and by-law/policy development (e.g. police, public health, workplace safety policy).

Ontario has distributed four payments from this fund, with cities receiving at least $5,000 each payment. Toronto received just over $3 million for its first payment, $3.7 million for its second, and $1.5 million for its third, and just last month received the fourth and final payment of $747,954 for a total of just under $9 million.

The cost of policing and enforcement has been a major part of municipal budgets all across Canada, with a significant portion of cannabis tax revenue and other related funding going to police, enforcement, fire and emergency services as it relates to cannabis legalization. This is in addition to costs associated with developing and maintaining municipal zoning rules and bylaws.

Toronto police asked for an additional $1.5 million from the city in 2021 to address the cost of cannabis-related enforcement in the department.

Toronto Police Services’ (TPS) 2022 operating budget noted that the department had a balance of $3 million in reserve, with an expected $500 million in funds withdrawn that year. It was projected to have just over $1 million in reserve for these funds in 2023 and just over $500,000 in the beginning of 2024.

Those numbers were updated in the 2023 budget to an expected $136,000 after withdrawing nearly $2 million.

When negotiating for a 75% share of all federal cannabis excise taxes collected, provinces argued that the costs of addressing the new cannabis laws in Canada would largely be borne by themselves, cities, and law enforcement.

According to the Federation of Canadian Municipalities (FCM), municipal administration and local policing costs linked to the legalization of cannabis will total $3-4.75 million per 500,000 residents.

As some examples of that spending and activity, public news reports show that Toronto police spent more than $350,000 placing bricks in front of several illegal dispensaries’ locations that refused to close, even following raids and product seizures in the summer of 2019, or about one-third of what they say was their cost for the first year of legalization.

Neither TPS nor the city of Toronto were immediately available for comment.

Previous requests for information on this subject from Toronto Police Services resulted in StratCann being told that media would need to file a freedom of information request to get information on how the department has spent the allocated cannabis funds.

Alberta worker wins appeal to have medical cannabis covered by Worker’s Compensation Board

Written by Sarah Clark on March 27, 2024. Posted in Alberta, Business, Cannabis News.

An Albertan recently won an appeal to have their medical cannabis covered by Workers’ Compensation.

On March 19 of this year, the Appeals Commission for Alberta Workers’ Compensation reversed the 2023 Workers’ Compensation Board (WCB) Dispute Resolution and Decision Review Body (DRDRB) decision.

That decision from 2023 ruled that the worker was not entitled to coverage for medical cannabis based on a workplace accident in January 2011 in which the worker injured their ankle after falling on a patch of ice.

Throughout the claim, the WCB had accepted the worker’s claim for a left ankle fracture and Chronic Regional Pain Syndrome (CRPS), but in March 2015, a case manager denied the authorization of cannabis for medical purposes as it was considered a non-standard medical aid in use for treatment of chronic pain.

Then, upon further review, the WCB determined in March 2017 that the worker’s use of medical cannabis was, in fact, related to the injuries accepted under this claim.

“The worker told the panel that the medical cannabis does not take the pain away, but it allows him to function, to relax, and he is able to carry on a conversation with people.”

More than five years later, in September 2022, the WCB informed the worker that any extension of the provision for medical cannabis after September 1, 2022, would be reviewed based on new policy criteria for authorization of medical cannabis.

For ongoing coverage, WCB requires a clinical reassessment to be conducted by the authorizing physician and confirmation of functional improvement every three months. WCB’s policy states that it will continue coverage if there is sufficient evidence that the cannabis is effective, measurable treatment goals are reached and maintained, and there are no adverse effects that outweigh the benefits of the cannabis.

Then, on February 16, 2023, following further reviews by WCB medical consultants, a WCB case manager ruled that the worker did have a designated condition named under the new policy criteria, but that the worker had exceeded the standard for maximum allowable THC content and maximum daily use of three grams a day, with a maximum allowable THC content of 90 milligrams per gram or 9% THC.

Because of this determination, WCB ruled that the worker did not meet all the criteria that would allow the agency to authorize medical cannabis. That ruling was immediately appealed by the worker and upheld just a few days later before it was sent to the Dispute Resolution and Decision Review Body.

In their decision, the review body noted that the worker’s long-time physician had supported his use of cannabis to deal with his chronic pain from this accident, noting that the worker uses different amounts depending on his level of pain. The physician argued that his patient represented an exception to the WCB’s rules of no more than 3 grams a day at no more than 9% THC.

The physician also indicated the worker had not used cannabis prior to his injury and had only tried it after conventional treatment for his pain did not work. He described himself as feeling like a “zombie” before trying medical cannabis, according to the review board’s ruling.

“The worker told the panel that the medical cannabis does not take the pain away, but it allows him to function, to relax, and he is able to carry on a conversation with people,” states the final ruling. “It has allowed him to have a normal relationship with his wife, family, and friends. He is aware enough of what dose and route he requires to prepare himself for outings and interactions and events such as the hearing.”

The man says he has been using four grams per day for approximately five years without limits on THC or CBD, following the guidance of his doctor. He generally smokes but occasionally vapes dried flower, because edible products are often too expensive. He also uses edibles in the form of gummies, as well as topical gels and patches. Although he uses THC products, the majority of the products he consumes are primarily CBD-rich.

Following the WCB ruling that said he was consuming more cannabis than necessary, the man also worked with his physician to lower his daily intake of cannabis, which resulted in an inability to eat or sleep due to the pain.

Following these results, it was his physician who then advised him to go back to his usual dosages and modes of consumption.

In its final ruling, the review panel found that the majority of the evidence supports the worker’s use of medical cannabis under the WCB’s criteria in WCB Policy 04-06, Part II, Application 6, Question 8.

Ontario to add $31 million to budget to deal with increasing number of illegal cannabis stores

Written by David Brown on March 26, 2024. Posted in Business, Cannabis News, Government, Ontario, Retail.

Ontario is planning to add $31 million to its budget to address illegal cannabis stores and websites operating in the province.

As part of Ontario’s Budget 2024, it says it plans to provide the funds over three years to the Provincial Joint Forces Cannabis Enforcement Team (PJFCET).

The PJFCET is led by the Ontario Provincial Police’s centralized enforcement unit, which targets illegal cannabis storefronts. This investment, says the province, would enable the PJFCET to “respond to the challenge of illegal online operators and crack down further on the production, sale and distribution of illegal cannabis in the online and offline space.”

Toronto City Council recently passed a motion asking the province to undertake a comprehensive review of the Provincial Cannabis Control Act, 2017. The motion says a review is “imperative to ensure the effective regulations and enforcement of cannabis-related matters” in Ontario.

Municipalities need more tools and resources to address these illegal cannabis businesses, the motion continues, including “exploring options to strengthen enforcement measures, increase penalties for non-compliance, and improve collaboration between municipalities and provincial authorities.

“I think $31 million could be spent in a better way than prohibition enforcement.”
Jennawae Cavion, Calyx + Trichomes

In a recent interview with City News, Carleton Grant, Executive Director, Municipal Licensing and Standards at the City of Toronto, says that while many illicit cannabis shops shuttered voluntarily in the first few years of legalization, new illegal stores have been popping up.

Grant says there are currently 53 illegal, unlicensed cannabis stores now operating in Toronto and 215 legal ones (The AGCO currently lists 204 stores as being authorized to open in Toronto).

Enforcement in Ontario has been ongoing. Just this past February, the PJFCET executed nine search warrants at different locations associated with illicit cannabis stores.

Raj Grover, the founder and CEO of High Tide Inc., which operates 58 legal cannabis stores in Ontario, says he is happy to see the province looking to address these types of businesses, especially online stores.

“I welcome the Ford Government’s decision to take aggressive action against illegal online cannabis dispensaries, who blatantly target kids and sell unsafe products,” says Grover. “Today’s move makes it clear that Ontario is committed to safety and supporting its legal cannabis industry. We look forward to continuing to work with Attorney General Downey and Minister Bethlenfalvy on further legislative and regulatory reform to help bolster Ontario’s regulated cannabis sector as it continues to convert consumers away from a resilient illicit market.”

Jennawae Cavion, however, founder of Calyx + Trichomes in Kingston and the Executive Director of Norml Canada, says she thinks the money could be better spent on assisting the legal industry instead of on shutting down illegal stores, especially given how easily these stores and websites can open up again.

“I think that they need to invest in ways to make the cannabis industry more sustainable and more inclusive so that there’s no reason for unregulated suppliers to want to exist,” Cavion tells StratCann. “I think $31 million could be spent in a better way than prohibition enforcement.”

Given the challenges legal store owners face in trying to follow all the rules to stay compliant, she says she understands why many operating in the illicit space are not interested in closing down or transitioning.

“There’s a lot of hurdles that we still need to jump over, as legal retailers. That $31 million would go a long way to helping instead of going after people who can just open up again the next day.”

The push for more resources to address illicit sales, especially online stores, echoes a similar call for action from the federal government’s expert panel that looked at the federal cannabis legislation.

The report said, in part, that the federal government should consider creating authorities to force internet service providers to block illicit cannabis websites and to compel financial service operators to provide financial information that helps identify illicit online operators. It also called on law enforcement to “focus its efforts on the activities of organized crime and criminal networks, the diversion of cannabis from sites registered for personal and designated production, the proliferation of retail stores on First Nations reserves operating without provincial, territorial, or community authorization, and illicit online sellers,” and noted that regulatory authorities have a role to play in combating the illicit market, not just law enforcement.

The provincial budget also shows that Ontario brought in $310 million from its share of provincial excise on cannabis sales, with $344 million expected in 2023-24 and $379 million in 2024-2025. The Ontario Cannabis Store brought in another $234 million in 2022-2023, with $242 expected and $225 million.

OPP raid 3 “sovereign” cannabis stores in Niagara region

March 15, 2024

OPP raid 7 illegal dispensaries, seize 63 kg of flower, 500 vape pens, 7 arrested

February 9, 2024

Ontario Provincial Joint Force Cannabis Enforcement Team raids online retailer

June 5, 2020

New Brunswick introducing legislative changes to reduce illicit cannabis sales

Written by David Brown on March 26, 2024. Posted in Business, Cannabis News, Government, New Brunswick, Retail.

New Brunswick is changing its provincial rules to more aggressively target illegal cannabis stores.

The provincial government has introduced amendments to its Cannabis Control Act with the goal of increasing compliance with provincial rules, reducing the sale of illegal cannabis, and preventing young people from consuming the drug.

Once passed, the proposed amendments to the act and its regulation would give inspectors more authority and increase fines for those operating illegal dispensaries and their landlords. They have been introduced as Bill 29, An Act Respecting Cannabis Control Act.

“Greater compliance is required to ensure the product is regulated and to keep it out of the hands of youth.”
Health Minister Bruce Fitch

The bill makes some proposed changes to the Act, such as adding new definitions and including language addressing landlords that knowingly allow the illegal sales of cannabis to operate on their property and giving enforcement officers the ability to enter and inspect any place, premises, or vehicle to which the Act applies, or any other place or premises connected to such business.

It also allows inspectors to purchase and inspect any products they come across as part of their investigations and gives greater authority to seize property and conduct inspections.

Inspectors would be given the power to seize items they believe are evidence of an offence under the act and allow those items to be forfeited to the Crown for disposal following a conviction.

“It is an offence to operate an illegal cannabis dispensary, and amendments are needed to strengthen the province’s ability to enforce penalties and investigate,” said Health Minister Bruce Fitch. “Greater compliance is required to ensure the product is regulated and to keep it out of the hands of youth.”

Fitch said the proposed amendments align with legislation in other Canadian jurisdictions.

This fiscal year, peace officers in New Brunswick say they have investigated and shut down 23 illegal cannabis dispensaries across the province.

Law enforcement in New Brunswick has raided several unlicensed cannabis stores in recent months, with two arrested in two raids in March, and two more arrested and product seized from an unlicensed dispensary in Saint John in January.

A court recently issued a $20,000 fine following a raid in 2022, while charges against two men connected to the company have been withdrawn.

There are 25 Cannabis NB stores in the province, plus a handful of licensed, privately-run cannabis stores.

Ontario also recently announced funding to address enforcement against illicit cannabis stores better.

Unlicensed cannabis store in Saint John raided, one arrested

September 28, 2023

Raid on unlicensed cannabis store in New Brunswick leads to product seizure, one arrest

November 17, 2023

5 charged in New Brunswick following 2021 dispensary raids

December 5, 2022

Sales up, losses down for Auxly in 2023

Written by Sarah Clark on March 26, 2024. Posted in Business, Cannabis News, Financials, Ontario, Producers.

Auxly Cannabis Group Inc. had record net revenues of $101.1 million in 2023 and a net loss of $44.5 million for the year ended December 31, 2023.

The cannabis producer’s newest annual report also shows a net income of $3.9 million compared to a net loss of $66 million in the previous year.

Cost of sales for the company also declined in 2023 compared to the year prior, and fourth-quarter net revenues were $26.9 million, a $2.2 million increase from the same quarter in the previous year.

The company incurred over $50 million in federal excise in 2023, up from $44 million in 2022.

Hugo Alves, CEO, says that 2023 was a pivotal year for Auxly.

“Thanks to a tremendous team effort, we achieved our profitability targets despite overall industry and macro-economic headwinds. For the first time in our corporate history, we achieved full year adjusted EBITDA profitability; broke one hundred million dollars in net revenue; and generated positive cash flow from operations. We focused and optimized our business, resulting in meaningful cost savings and industry-leading margins, all done while delivering quality products and meeting the ongoing demands of our consumers.”

Net revenues for the year ended December 31, 2023, were $101.1 million compared to $94.5 million during the same period in 2022, an increase of 7%.

Revenues for 2023 were primarily from sales of dried flower and pre-rolls (61%, up from 42% in 2022), with the rest coming from sales of oils and Cannabis 2.0 products like vapes. Net revenues also included wholesale bulk flower sales of approximately $15.7 million in 2023.

On December 31, 2023, the Company had total cash and cash equivalents of $15,608,000 negative working capital of $40,984,000 and cash flow provided by operating activities of $8,214,000 for the year ended December 31, 2023.

The company’s financial report also says that it will have “insufficient cash to fund its operations for the next 12 months if the Company’s sales do not improve or if they decline; if the Company’s margins do not improve, or if they decline and/or if the Company’s selling, general and administrative expenses increase.”

Government’s expert panel calls for pharmacy access to medical cannabis

Written by David Brown on March 25, 2024. Posted in Business, Cannabis News, Government.

As a way to improve access to cannabis for medical purposes, the federal government’s expert review panel is suggesting allowing sales through pharmacies.

The recommendation, part of a recent report based on a review of the federal cannabis legislation, was one of about a half dozen relating to Canada’s medical cannabis regime, which also included calls for more research and education campaigns.

Currently, those who are authorized to access cannabis for medical purposes in Canada can only purchase it online through specific medical providers. While there have been a few pharmacies, including Shoppers Drug Mart, that received federal licences allowing them to store cannabis on-site by acting as one of these licensed producers, the examples were few and far between. Shoppers exited the medical cannabis market in 2023.

“We have a massive doctor shortage. When patients have questions, who do they turn to? Us, pharmacists. This is no different with cannabis.”
Rahim Dhalla, Hybrid Pharm

The expert panel’s report recommends keeping the existing model of online sales but proposes expanding that model to also obtain cannabis in-person at pharmacies.

From that report, in part:

“Pharmacies are equipped to manage many types of products. We believe pharmacy systems and infrastructure can be adapted to handle cannabis, given they already manage controlled substances, such as narcotics. Enabling this form of access would address patient concerns about the delays with mail delivery and product shortages they encounter today. It would also provide patients with an opportunity to consult with pharmacists and be counselled on effects on mental health (such as psychosis) and issues of medication management (for example, getting advice about contraindications and interactions with other substances).” Rahim Dhalla, a pharmacist, medical cannabis consultant, and CEO at Hybrid Pharm, a pharmacy and cannabis and wellness centre near downtown Ottawa, thinks the proposals are a good step in the right direction.

Hybrid Pharm currently has a medical cannabis licence with possession licence that allows them to sell cannabis directly to registered patients. Allowing pharmacies to bypass such federal licensing and dispense cannabis as they would any other controlled product would significantly improve access, he says. (Note: This article has been corrected to indicate that Hyrbid Pharm has a medical sales license with possession, not a processing licence).

“As I have been doing this for five-plus years now, I have learned many things. We have a massive doctor shortage. When patients have questions, who do they turn to? Us, pharmacists. This is no different with cannabis.

“I get phone calls daily about dosing, adjustments, side effects, etc. We have patients that prefer coming to see a person vs online ordering. Some patients do not even know how to order online. Improving access to patients through pharmacy distribution will have a net positive on the industry as well as acceptance by the healthcare communities.”

The issue of pharmacy access for medical cannabis has been a contentious one for many years. The Neighbourhood Pharmacy Association of Canada has in the past said that pharmacies are the best place to offer cannabis due to their experience with controlled substances, as has the Canadian Pharmacy Association.

However, other pharmacy organizations in the past have previously opposed such a distribution model, including the Ontario College of Pharmacists. After initially opposing pharmacy distribution of medical cannabis when it was first included in rules back in 2013, the Canadian Pharmacy Association (CPhA) announced in 2016 that they believe pharmacies are the safest way to dispense medical cannabis in Canada.

Deepak Anand, a board member of Medical Cannabis Canada, a medical cannabis advocacy group, and Principal, ASDA Consultancy Services, agrees that the call for pharmacies to carry medical cannabis is a positive one.

“The panel’s recommendation to establish an in-person pharmacy access channel is a significant improvement to the medical access regime. It would benefit patients by addressing concerns about delays with mail delivery and product shortages, and allow them to consult with pharmacists regarding drug interactions or side effects.

“Additionally, it is encouraging to see the panel suggest that Health Canada prioritize efforts to integrate cannabis into standard drug approval pathways and conventional medical care, rather than a separate medical access program. This would provide critical and increased avenues for patients to access medical cannabis, reduce stigma, and improve overall patient care.”

Anand says the expert panels’ recommendation that Finance Canada should review whether the excise tax should be applied to cannabis for medical purposes products is also something that Medical Cannabis Canada has long been advocating for.

Any such changes to federal regulations to allow more direct pharmacy distribution models would not happen overnight, and would still require consultation with various federal and provincial pharmacy associations and provincial agencies.

Media continues to misreport issues relating to illicit cannabis edibles

Written by David Brown on March 24, 2024. Posted in Business, Cannabis News, Other, Products.

Following an incident in Halifax where several students under the age of twelve were taken to hospital after eating cannabis edibles, a new media report confirms the edibles were not legal.

While the initial media reports did not note if the products were legal or illegal, the article referred to them as “labelled.”

A follow-up article from the Canadian Press shows a picture of what is clearly an edible from the illicit market, but the article itself predictably fails to clearly note the distinction between legal and illegal edibles and how they are packaged and sold, or the THC content of those products.

This is an ongoing issue, with researchers, academics, and the media still seemingly unaware of how widespread these illicit, unregulated edibles are, packaged to mimic traditional candy and snack foods like Nerds, Doritos, Oreos, Skittles and many more.

In this most recent incident in Halifax, at least five kids consumed the product after one child brought them to school. Four of those kids went to the hospital for their symptoms.

One mother, a healthcare worker, said in an interview that her son threw up multiple times and had to be rushed to the emergency department. Another mother, who spoke to the Canadian Press on the condition of anonymity, said her child was taken to intensive care for treatment before stabilizing.

Despite the image shown in the article showing a package of “Nerd Bites” advertising at least 1,000mg THC, with each “bite” containing 200mg THC, the article itself does very little to clearly communicate that these are not products from Canada’s legal cannabis industry.

A modicum of research would clearly show the author of the article that legal cannabis edible products cannot be packaged in such a way, do not resemble regular candies like Nerds, and can only come with 10mg THC per package, not 1,000.

Only halfway down the article does the author cite a comment from the NSLC that notes this discrepancy. But even then, the article doesn’t make the distinction clear or even attempt to do so.

“A spokeswoman for the Nova Scotia Liquor Corp., the only licensed distributor of cannabis products in the province, says it only buys from licensed producers who are regulated by Health Canada and the federal Cannabis Act. The law generally prohibits the promotion of cannabis, and packaging is to adhere to strict requirements including labelling, child-resistant containers, and plain packaging that must not appeal to youth,” reports the Canadian press, attributing the comment to a media representative for NSLC.

This type of lazy conflation of the significant difference between legal and illegal edible products is not new. Researchers and media in the past few years have breathlessly reported on hospitalizations of young people after they consumed cannabis edibles, often without an acknowledgement of how prevalent these types of highly appealing and very high THC products are in Canada, or the fact they only became common in Canada around the same time legal edible products began hitting shelves.

Such distinctions are obvious for those who actually understand the law in Canada. Legal cannabis edibles cannot mimic trademarked snack product brands, cannot contain more than 10mg THC per package, and are sold only through authorized sources.

As long as the media, academics, and other researchers continue to misunderstand such an obvious distinction, people will continue to be encouraged to blame the legal market for what is evidently an issue with the illegal, unregulated market.

This also continues to impact the legal market, as concerns with issues like young people presenting at hospitals after consuming edibles are used to maintain the current 10mg THC limit for legal edibles, while ignoring that these hospitalizations are more than likely due to much higher potency products that are far more appealing and accessible to young people.

Week in Weed – March 23, 2024

Written by Staff on March 23, 2024. Posted in Business, Cannabis News, International.

The big news this week was, of course, that the long-awaited final report from the federal government’s expert panel reviewing the Cannabis Act finally came out a little after 4:20 pm ET on Thursday. StratCann delivered an overview of the report and some insight into some of the recommended changes for micro and other small-scale producers.

Also, the newest results from the annual National Cannabis Survey came out last week, breaking down cannabis use by age and gender, as well as access points and modes of consumption.

Late Friday afternoon, Organigram announced that it had received a final ruling from Health Canada, once again determining that Jolts are an edible, not an “ingestible extract.”

New figures from Stats Canada showed retail cannabis sales declined again in January after a holiday spike.

SNDL reported a $112 million loss from cannabis operations and $4.9 million in retail cannabis earnings.

Toronto police arrest a man connected to cannabis store robberies, and the Ontario Chamber of Commerce calls on the province to modernize the cannabis sector.

In other cannabis news,

CBC ran a story examining ways the cannabis industry is urging provinces to loosen rules that ban producers and retailers from collaborating on promotions. The author spoke with Shakir Tayabali of the Independent Retail Cannabis Collective (IRCC), Brad Poulos, a lecturer in the Ted Rogers School of Management at Toronto Metropolitan University, Omar Khan of High Tide Inc., and Keenan Pascal of Token Naturals.

Caledon, Ontario, held an open house in February to garner community feedback on whether the community should allow cannabis stores, and a staff report with recommendations for council is expected on April 5. Local media spoke with Wendel Clarke, on behalf of Smokey Daze Inc., a cannabis store in Tottenham, who approached the town council last fall asking for Caledon to “opt-in.”

Aurora Cannabis Inc. received a Good Manufacturing Practice (GMP) certification from Australia’s Therapeutic Goods Administration (TGA) for its production facilities, River and Ridge, both located in Ontario.

Curaleaf Holdings Inc. signed a deal to acquire Northern Green Canada, a Canadian licensed cannabis producer focused primarily on the international market through its EU-GMP certification. NGC also partners with Canadian GACP cultivators to produce and distribute finished cannabis products to both domestic and global markets.

Cannabis NB held an industry and consumer expo in Fredericton on Saturday, March 14. The crown agency has held previous expos in partnership with others, but this was their first time running it entirely in-house.

Cannabis producer Decibel Cannabis is selling its interest in cannabis retailer Prairie Records to the Fire and Flower retail chain for $3 million. Prairie Records has three locations in Alberta and three in Saskatchewan. Decibel is the owner of several cannabis brands like Qwest, BlendCraft, General Admission, and VOX.

High Tide Inc. announced that its Canna Cabana retail cannabis store located in Mississauga, Ontario, will begin selling recreational cannabis products and consumption accessories for adult use on Sunday, March 24. This opening will mark High Tide’s 166th Canna Cabana branded retail cannabis location in Canada, the 57th in the province of Ontario and the third in Mississauga.

Five Halifax elementary students under the age of 12 were taken to hospital after eating cannabis edibles that one of the students brought to the school. Police say the packages were “labelled,” but media reports do not note whether the products were from legal or illegal supply chains.

International Cannabis News

Cannabis possession and home cultivation will be decriminalized in Germany starting April 1 after a new law passed the final hurdle on Friday. Adults over the age of 18 will be allowed to possess 25 grams of cannabis and grow up to three plants at home. From July 1, non-commercial “cannabis clubs” can supply up to 500 members with a maximum monthly quantity of 50 grams per member.

The decriminalization legislation is the “first pillar” in a two-step plan to legalize cannabis in the country. The “second pillar” will set up five-year pilot programs for state-controlled cannabis to be sold in licensed shops.

Law enforcement

The OPP raided three “sovereign” cannabis stores in the Niagara region

Winnipeg Police seized cartons of illegal cigarettes and cannabis products along with over $11,000 in Canadian currency from two convenience stores, arresting three.

Retail cannabis sales declined again in January after holiday spike

Written by Staff on March 22, 2024. Posted in Business, Cannabis News, Other, Retail.

Retail cannabis sales in January 2024 dropped to their lowest in nearly a year, according to new figures from Statistics Canada.

Cannabis sales reached a record high of $589 million in August 2023, followed by three months of decline to $505 million in November before jumping to $562 million in December. Then, in January 2024, retail cannabis sales dropped to $498 million, using seasonally adjusted numbers.

Retail sales historically decline in the months following the Christmas shopping season, with cannabis being no different.

Retail cannabis sales have increased on a year-over-year basis since legalization. Before the peak in sales in August 2023, the high water mark for the previous year was $511 million in December 2022, $414 million in December 2021, and $318 million in December 2020.

While sales still show increases on an annual basis, the three-month decline in retail cannabis sales in 2023 was the steepest overall decline since legalization. The decline comes at a time when both the cannabis industry and the broader Canadian economy face challenges, with consumer spending in many sectors declining, including food and beverages and beer and wine.

The number of retail stores across Canada also declined. As of March 2024, there were 3,690 (up from 3,682 in January) cannabis stores in Canada, excluding provincial online stores.

British Columbia: 512 public and private stores, either open or “coming soon”; an increase from 511 in January.
Alberta: 752, up from 749 in January.
Saskatchewan: 185
Manitoba: 204, 120 of which are in Winnipeg (up from 198 in January)
Ontario: 1,778 listed as authorized to open
Quebec: 98 (down from 104 in January)
New Brunswick: 25 public stores, plus eight private stores and six farmgate stores for a total of 39
Nova Scotia: 49
PEI: 4
Newfoundland and Labrador: 55 (from 52 in January)
Northwest Territories: 6 brick-and-mortar locations, plus 1 private online store
Nunavut: 1
Yukon: 6

Federal, provincial governments must address barriers for small cannabis companies

Written by David Brown on March 21, 2024. Posted in Business, Cannabis News, Government, Producers.

Small-scale, craft cannabis producers may choose to move back into the illicit market if the barriers to the market are not addressed, says a new report from the federal government’s expert review panel.

The panel’s review of the federal Cannabis Act included numerous recommendations to address challenges the industry is facing, including calls for changes to regulatory fees for equity-deserving groups and micro-licence holders.

From a small producer’s perspective, they do seem to understand some of the specific concerns we’re facing.
Jonathan Wilson, CEO of Crystal Cure

The report argues that the future of smaller cannabis companies is in serious question without government intervention and other regulatory changes to lessen the financial pressure these companies face.

Some of those suggestions include reducing or even eliminating the cost of applying for micro and other “equity-deserving” applicants like First Nations and other historically disadvantaged groups.

The expert panel also suggests that provinces and territories that control distribution and sales within their jurisdictions should allow small-scale producers to sell directly to consumers, such as through farmgate or mail-order sales.

Ontario, New Brunswick, and BC currently have farmgate programs. No jurisdictions allow producers to sell directly to consumers, except through such a farmgate licence in BC.

The report also calls on allowing cannabis cultivators to sell dried cannabis directly into provincial markets without a processing licence, while also noting the challenges provinces face in purchasing products from a large number of often small companies.

The panel also calls on provinces and territories to review their “mark-ups, fees, purchasing practices, and the amount of shelf space they allocate to different products and different licence holders, including those from equity-deserving groups, to improve the prospects for the many smaller-sized companies that are currently struggling.”

“Any help we receive will help us survive. Give us some kind of advantage over the larger companies.”
Gord Nichol, North 40 Cannabis

Gord Nichol, the owner of North 40 Cannabis, a micro cultivator and processor in Saskatchewan, says any help is welcome. Since micro-producers are limited to a smaller footprint and cannot enjoy the benefits of the economies of scale of larger producers, Nichol says he would like to see the proposals for lower tax rates and regulatory fees specifically for micros.

“As a micro, I would support that,” says Nichol. “Any help we receive will help us survive. Give us some kind of advantage over the larger companies.”

Nichol also supports the idea of selling products directly to consumers, something he can currently only do with authorized medical patients through his medical sales licence. There are some provincial markets he’s been trying to get his cannabis into, like British Columbia, where he says he knows there’s consumer demand, but the province isn’t interested.

“If I can get past those kinds of gates and sell directly to consumers, I think that’s probably good for the industry. I’d love to operate an online store where anybody who wants to try my product can.”

When it comes to cultivators selling directly to provinces, though, he thinks several other hurdles will make the option less than viable for most. Meeting quality assurance standards without an on-site QAP can be challenging, and provinces will not necessarily want to deal with numerous individual cultivators—something the expert panel’s report also acknowledges.

Janeen Davis, VP of sales at Joint Venture Craft Cannabis, which operates as a processor and distributor for numerous micro and craft brands, shares a similar perspective.

“I think that some cultivators certainly have the ability to package and process CPG goods to provincial distributors. But others may still struggle with compliance issues. So I think there’s varying ability among cultivators that could find success in that approach.”

The real challenge, says Davis, is not the ability of a micro cultivator to get a processing licence, something she argues is relatively straightforward, but in getting approved by a province to sell into their markets. Davis also emphasizes that while she is aware that many small cannabis companies are struggling, many are doing well even under the current federal and provincial regulations, including Joint Ventures.

Jonathan Wilson, CEO of Crystal Cure, a micro cannabis producer in New Brunswick, says he was pleased to see the report address challenges that small producers face.

“I’m just excited to see so many mentions of small producers. It’s great to see that. From a small producer’s perspective, they do seem to understand some of the specific concerns we’re facing.”

“I think that some cultivators certainly have the ability to package and process CPG goods to provincial distributors. But others may still struggle with compliance issues.”
Janeen Davis, Joint Ventures Craft Cannabis

Wilson was most excited by the recommendations of provinces to allow more options with farmgate and allowing producers to sell directly to consumers. Crystal Cure is one of a handful of licensed farmgate producers in New Brunswick, meaning they can operate a retail store at their production facility, selling directly to consumers.

He says he’s been pushing the province to expand on the farmgate model, as well as allowing them to ship cannabis from their farmgate store directly to consumers.

“(The province) has been telling us they are waiting on guidance from the federal government, so now we have that. Now we can say ‘Hey, they’re recommending this. We’ve been echoing this and this is very consistent with what we’ve been lobbying for.”

Featured image via North 40 Cannabis

Canada tables final Report of the Legislative Review of the Cannabis Act

Written by David Brown on March 21, 2024. Posted in Business, Cannabis News, Government.

The Government of Canada released its final report on its review of the Cannabis Act, identifying 54 recommendations and 11 observations on how to strengthen and improve the administration of the Act.

The legislative review was designed to look at the impacts the legalization of cannabis had on different aspects of Canadian society, with a focus on use rates among young people, impacts on First Nations Communities, and the impact of people growing cannabis at home.

The review concludes that there has been “significant progress” made on several of the key objectives of the Cannabis Act, such as the establishment of a regulated framework for cannabis production, the ongoing adoption of legal supply chains by consumers, and a reduction in Canadians facing legal consequences for cannabis possession.

Although there has not been a notable increase in young people in Canada reporting cannabis use, the expert panel still expressed concern about Canada’s historically high youth use rate of cannabis. It also calls for creating and following specific targets to lower youth use rates.

The panel also expressed concern at the increasing popularity of high-potency THC products, and a need for greater consultation with First Nations and Indigenous communities to address concerns with public health and safety issues, as well as economic opportunities.

Recognizing the economic challenges facing the legal cannabis industry, the panel also calls on Health Canada to reduce the financial and administrative burden it places on those operating in the legal industry. Recognizing calls for excise tax reform, the panel calls on changes to excise taxes with higher-potency products being subject to more tax than lower-potency products.

Although the panel acknowledges industry calls for a greater THC potency limit for edibles, the panel says that, on balance, the increased risk to public health outweighs those concerns. Because of this, it recommends maintaining the current 10mg THC limit for edibles.

The panel also calls on changes to federal regulations to allow an in-person access model for medical cannabis through pharmacies, and suggests that home cultivation of cannabis has not raised any issues.

Cannabis Industry Forum finally formally announced

February 21, 2024

Canada releases What We Heard Report on the Cannabis Act review

October 10, 2023

The Cannabis Act review will not save your business

October 11, 2023

SNDL reports $112 million loss from cannabis operations and $4.9 million in retail cannabis earnings

Written by Sarah Clark on March 21, 2024. Posted in Alberta, Business, Cannabis News, Financials, Retail.

Alberta-based SNDL reported an operating income loss of $112 million for its cannabis operations and net earnings of $4.9 million for its retail cannabis operations in 2023.

After calculating restructuring costs and asset impairments, the total adjusted operating loss for its cannabis operations was $52.4 million.

The newest annual report also shows $24.6 million in net earnings from SNDL’s alcohol businesses, for an operating income loss of $162.8 million for 2023. Part of this loss is attributed to restructuring charges of $19.6 million and goodwill impairment of $29 million.

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

SNDL’s cannabis operations include the operations of Valens from January 18, 2023, to December 31, 2023.

The company’s cannabis operations segment achieved a record net revenue of $87.1 million in 2023, a 96% increase from $44.4 million in 2022. Net revenue for the fourth quarter of 2023 was $26 million, up 111% from $12.3 million in the same quarter of the previous year.

Gross margin was negative $20.6 million in 2023, compared to negative $13.3 million in 2022. Gross profit for the fourth quarter of 2023 was negative $1.1 million, compared to negative $9.0 million in the fourth quarter of 2022. This 88% improvement in gross profit during the fourth quarter is largely attributable to the strategic decision to close the facility in Olds.

With its 63% ownership interest in Nova Cannabis Inc., SNDL is Canada’s largest private-sector cannabis retailer, operating 187 locations under its four retail banners: “Value Buds”, “Spiritleaf”, “Superette”, and “Firesale Cannabis”.

As of March 21, 2024, SNDL had 85 Spiritleaf locations (21 corporate stores and 64 franchise stores), four Superette locations, two Firesale Cannabis stores, and 96 Value Buds stores.

Nova’s proprietary data licensing program generated revenue of $12.3 million in 2023, compared to $4.2 million in 2022, a 193% increase year-over-year.

SNDL reported record gross profit from its retail cannabis segment, with $73.7 million in 2023, or 25% of sales, compared to $47.3 million in 2022, or 23% of sales, a 56% increase year-over-year. Gross profit for its retail cannabis segment was $20.0 million, or 27% of sales, in the fourth quarter of 2023, compared to $15.7 million, or 23% of sales, in the fourth quarter of 2022, a 27% increase year-over-year.

Younger Canadians more likely to use cannabis than older Canadians

Written by Sarah Clark on March 18, 2024. Posted in Business, Cannabis News, Research.

Over one-third of adults aged 18 to 44 years and one in seven adults aged 45 years and older had used cannabis in 2023, according to Canada’s newest National Cannabis Survey.

The annual survey results were shared on March 18 and showed that 38.4% of people 18 to 24 years old and 15% of those over 45 reported consuming cannabis at least once in 2023.

When it comes to frequent use of cannabis, 8.7% of adults aged 18 to 24, 10.3% aged 25 to 44, and 4.8% over 45 years of age reported consuming cannabis daily or almost daily in 2023.

Chart 1: Prevalence of daily cannabis use among all Canadians by age group and gender, 2023 — *Prevalence of daily cannabis use among all Canadians by age group and gender, 2023*

Unsurprisingly, flower remains the most commonly consumed product, with 62.1% of all age groups. Edibles followed closely behind at 57.1%.

Those under 45 were much more likely to consume dried flower, vape pens, and concentrates, while those over 45 were much more likely to consume oral cannabis oil and topicals.

Nearly 72% of consumers responded to getting their cannabis products exclusively from the legal regulated market, while just under 2% reported getting their products exclusively from the illicit market. Another 7.2% reported sourcing their cannabis from both types of access points.

The most commonly reported reason for choosing a legal source for cannabis was product safety (38%), followed by convenience at 16.9%, a desire to follow the law at just 12.9%, a belief in product quality at just 5.8%, and product selection or variety at 5.2%.

Another recent survey showed that household spending on legal cannabis in Canada has continued to increase while spending on illicit cannabis has decreased. Household expenditures on cannabis from the unlicensed sector were at a low of $465,000 in Q4 2023, down from about $1.2 million in Q4 2018.

Household spending on legal cannabis increases while illegal decreases

February 29, 2024

Legal market continues to eat into illicit market in Canada while reported cannabis use remains the same

January 12, 2024

Ontario Chamber of Commerce calls on province to modernize cannabis sector

Written by David Brown on March 18, 2024. Posted in Business, Cannabis News, Government, Ontario.

The Ontario Chamber of Commerce has called on the province to modernize the Ontario cannabis market as part of its 2024 provincial budget submission.

The Chamber’s annual budget submission makes numerous recommendations as part of Ontario’s budget consultation process on how to strengthen Ontario’s business community, including three key points that relate specifically to the legal cannabis sector.

The Chamber calls for changing provincial regulations to allow licensed producers and retailers to “have a direct relationship” to pursue lost tax revenue from underground markets by creating tougher penalties for noncompliance, coupled with intensified audits, and calling on the Ontario Cannabis Retail Store to provide quarterly updates on its progress around the 16 recommendations in the Auditor General’s value-for-money audit report released in December 2021.

Those 16 recommendations include a call for a more structured, consistent, and transparent approach to its product listing calls and product listing selections, improving transparency about the product delisting process, improving customer service, and numerous calls for greater oversight of its distribution partner Domain Logistics.

A cyberattack in 2022 on the parent company of Ontario Cannabis Store’s (OCS’) third-party operated distribution centre, Domain Logistics, briefly crippled the cannabis distribution system in Ontario.

The Auditor General’s 2023 report revisited those 16 recommendations, noting that 79% had been fulfilled and 13% were in the process of being fulfilled. Only 3% showed little progress, while 5% were no longer relevant.

The two recommendations that showed little to no progress were a call to explore tools such as Ontario’s Digital Identity Program to strengthen controls over online ordering of cannabis by individuals under the age of 19. The report also says the OCRC has not required Domain Logistics to incorporate more extended data retention requirements into all subcontractor agreements.

However, the OCRC informed the Auditor General that its Privacy and Freedom of Information team is planning to perform a privacy impact assessment to determine appropriate data retention requirements and plans to implement these recommendations by March 2024.

Featured image of True North Cannabis in Grand Bend, Ontario

BC Chamber of Commerce calls on major changes to BC cannabis laws, policy

January 17, 2022

Ontario Chamber of Commerce concerned with province’s plan to ban in-house cannabis brands and products

March 4, 2022

BC Chamber of Commerce calls on province to address municipal “cannabis deserts”

January 18, 2022

Week in Weed – March 16, 2024

Written by Staff on March 16, 2024. Posted in Business, Cannabis News, Government, International.

This week at StratCann, we looked at the changing landscape of Canadian cannabis events and how some producers are distinguishing themselves with low-THC products. We also asked when the cannabis industry will receive the kind of relief being provided to other comparable industries.

We looked into Nova Scotia’s annual sales report, including more than $111 million in sales, and the story of a Kelowna, BC, cannabis store receiving a one-week suspension for selling to a minor.

BC’s Good Buds Company posted a notice of intent and a path to debt restructuring. Village Farms shared their newest quarterly report, as did High Tide, who also announced they were purchasing Queen of Bud for $1 million in shares and cash.

Manitoba’s LGCA had planned to revisit the province’s ban on public consumption but paused pending direction from the new NDP government.

Police in Niagara are investigating an armed robbery at a provincially-licensed cannabis store, while OPP raided three “sovereign” cannabis stores in the Niagara region.

In other cannabis news…

A man in BC who received a lifetime ban from entering the US in 2022 after a border agent found a bottle of CBD oil in his truck’s console while he was attempting to cross the border into the US is now fighting to have the ban lifted when tests confirmed the oil had no THC.

MJBiz got their hands on a memo sent within the Department of Finance Canada’s Tax Policy Branch, updating the Minister of Finance, Chrystia Freeland, on the financial state of federally licensed cannabis producers.

The document notes several well-documented issues, such as challenges with provincial distributors, high taxes, and a growing number of CCAA listings. The report also noted that as of last summer, 83 businesses owed less than $1 million, 40 owed between $1 and $5 million, 9 owed between $5 and $10 million, and 16 owed more than $10 million.

The Mississauga News spoke with cannabis retailers in the city. Mississauga has gained 34 legal cannabis stores since council lifted the prohibition on April 19, 2023. Another 20 are in the process of getting a licence. Pop’s Cannabis and The Woods Cannabis are both featured.

Taylor Giovannini, president and CEO of Oceanic Releaf, was one of four Newfoundland women named among the most powerful in Atlantic Canadian business.

In BC, a Cariboo Regional District (CRD) director and some of his constituents are raising concerns about a residential property growing cannabis under a personal or designated medical licence that the director says is against its zoning restrictions. The article contains the usual conflation of commercial and medical licences and passing of the buck from local police, as well as a misunderstanding/misrepresentation of court rulings behind why personal and designated medical licences are issued.

Adastra Holdings Ltd. announced a “surge” in PO’s throughout January and February 2024, predominantly from Alberta, Ontario, and British Columbia, that resulted in a record total for the period.

Jones Soda says its recent launch of cannabis beverages in Canada with partner Tilray is doing well, and it has had to accelerate the production of its next load of inventory, with plans to expand beyond the initial launch in Ontario. Jones was originally founded in Vancouver but is now based in the US.

Cannaray Limited, a European medical cannabis company headquartered in London, announced it had signed a definitive agreement to merge with Aqualitas Inc., a Nova Scotia-based aquaponics grower. Aqualitas is joining forces with Cannaray’s medical cannabis divisions, Therismos GmbH (Germany) and Therismos Limited (UK).

Hempsana Holdings Ltd. announced that on March 11, 2024, its wholly-owned operating subsidiary, Hempsana Inc. filed a Notice of Intention to make a Proposal (NOI). The company has distribution deals with brands like Cream of the Crop, Social Lite Cannabis, Caviar Gold, and Ufeelu. In their most recent quarterly report for November 2023 the company listed $983,122 in net revenue and a $1.2 million loss. At the time, it listed $121,960 in cash on hand, $204,163 in inventory, and total assets of about $4.4 million.

Greenway Greenhouse Cannabis Corporation announced it shipped its first consumer packaged goods to the OCS, including its new MillRite brand, for the hard workin’ type folk.

Glow LifeTech Corp. launched four new cannabis products in Ontario, expanding its MOD and .decimal brands listed by the Ontario Cannabis Store.

CannaPharmaRx, Inc. announced that it has received its first purchase order covering the output of its first four harvests. This product was shipped on March 11 to another producer for distribution within Canada. CannaPharmaRx, Inc. was licensed in December 2022 and operates out of a facility in Cremona, Alberta, that was previously Aurora’s first licensed production space. The company has also announced plans to sell into Israel through Y.S.A. Holdings Ltd.

Cannabis NB says they are opening three new stores to add to the 25 stores they currently operate in the province, in addition to seven private retailers and six farmgate stores. The stores, expected to open in April, will be in Saint John, Fredericton, and Moncton. The provincial cannabis operator is also looking for a District Manager.

Cannabis NB’s Cannabis Expo is Saturday, March 16, in Fredericton.

The CannExpo is happening March 22-24, 2024, at the Enercare Centre in Toronto.

Quebec hopes its Crown corporations like the SQDC can help the province find an extra $1 billion in net revenue over five years.

David Lobo, President and CEO of Ontario Cannabis Store, will be taking part in Queen’s University 2024 Donald Matthews Faculty Fellowship Symposium on Friday, March 22.

A new academic review says there was no consistent positive association between greater cannabis retail and increased frequent cannabis use in adolescents, healthcare service use potentially related to cannabis, or increased adverse neonatal birth outcomes. However, the study shows there may be a positive association between greater cannabis store access and increases in “cannabis-related harm.”

Police in Longueuil, Quebec, seized 1,337 cannabis plants, 20 kilograms of bagged cannabis, and eight kilograms of hashish from a building in a busy commercial district. They also seized hashish presses and other equipment.

Two people were arrested in two dispensary raids in New Brunswick.

And finally, Hong Kong customs officers arrested two men arriving from Vancouver, Canada, aged 48 and 67, on suspicion of smuggling 87 kg of cannabis. It was reportedly the largest passenger cannabis trafficking case at the airport in a decade.

High Tide Inc. reports increased revenue, declining losses, in newest quarterly report

Written by Sarah Clark on March 15, 2024. Posted in Business, Cannabis News, Financials, Retail.

High Tide Inc. is now the second-largest cannabis retailer in North America by store count, according to the company’s newest quarterly report.

The cannabis company, which owns and operates the largest number of stores in Canada via its Canna Cabana retail chain, among other related assets, reported an 8% year-over-year increase in revenue in the first fiscal quarter of 2024, ended January 31, 2024, at $128.1 Million. The company has an adjusted EBITDA of $10.4 Million and $3.6 Million of free cash flow.

High Tide’s gross profit increased to $36 million in the first fiscal quarter of 2024 compared to $32.2 million during the same period in 2023. Gross profit margin was 28%, representing an increase from 26% in the fourth fiscal quarter of 2023 and 27% during the entirety of 2023.

The company reported a net loss of just $5,000, down from more than $3.8 million in the same quarter in the previous year.

Cash on hand as of January 31, 2024, totalled $28.7 million compared to $23.7 million as of January 31, 2023, and $30.1 as of October 31, 2023. This includes the impact of a $2.8 million one-time cash payment to pay down a convertible debenture in the first fiscal quarter of 2024.

Revenue from High Tide’s Cabanalytics Business Data and Insights platform, including ad revenue, was a record $7.3 million for the first fiscal quarter of 2024, up from $6.6 million year-over-year, and $6.8 million sequentially, representing increases of 11% and 8% respectively.

The Company also continued the rollout of its ELITE loyalty program, with membership reaching approximately 32,000, an increase of 237% year-over-year and 14% since January 29, 2024.

“I am very proud to announce that High Tide has reached break-even net income this quarter, which is a critical milestone in our ongoing corporate trajectory and is a rarity in the global cannabis space,” said Raj Grover, Founder and Chief Executive Officer of High Tide.

“While there has been industry-wide softening of Canadian cannabis sales in the post-holiday months, and having made essentially no acquisitions in over a year, I am proud to report that our Company continues to grow organically and has never had a sequential decline in revenue since going public in 2018.”

High Tide opened seven new stores from November 1, 2023-January 31, 2024. One was in BC, two in Alberta, one in Saskatchewan, one in Manitoba and two in Ontario, for a total of 165 current locations across Canada.

High Tide to acquire Queen of Bud

March 15, 2024

High Tide announces new consumer-facing digital magazine

September 14, 2023

Ontario to allow retailers to own up to 150 cannabis stores, proposing to ban cannabis cultivation in home-based child care facilities

November 30, 2023

Manitoba’s LGCA plans to review Province’s cannabis consumption ban

Written by Sarah Clark on March 15, 2024. Posted in Business, Cannabis News, Government, Manitoba.

Manitoba’s Liquor, Gaming and Cannabis Authority (LGCA) was planning a review of the province’s ban on consuming cannabis in public this year but has paused the process as it awaits direction from the new NDP government.

A 14-page briefing, first reported by the CBC, said that the provincial cannabis regulator had planned to begin a review of the possibility of cannabis consumption sites in Manitoba, including looking at the current rules that do not allow cannabis to be consumed in public in Manitoba in any form.

“LGCA has committed to a full, in-depth review of cannabis consumption sites, including industry demand, legal permissibility, and potential regulatory implications,” the briefing stated, according to the CBC.

“LGCA plans to revisit its analysis in early 2024, beginning with a review of the legislative and regulatory framework and then moving to stakeholder consultations.”

That plan was reportedly paused as the agency waits for direction from the newly formed government. The Manitoba NDP formed government in October 2023. The province’s cannabis rules were put in place by the previous Progressive Conservative government.

The LGCA also reportedly noted in its briefing that public consultations in 2021 and 2022 “did not indicate either strong support or opposition” for cannabis consumption sites in Manitoba.

Manitoba is one of several provinces that have banned the public use of cannabis. Cannabis consumption is legal in public in BC, Ontario, and some parts of Alberta. Other provinces and territories have also banned it outright.

BC recently announced changes to its rules, allowing cannabis consumption in certain patio spaces.

This restriction means that the only place to consume cannabis is on private property or in someone’s private residence. As some landlords do not allow cannabis consumption, this ban can mean some residents have little to no ability to actually consume cannabis.

The ban on cannabis consumption is just one of the province’s rules put in place by the previous conservative government that has been challenged by activists and advocates in the province.

Manitoba is one of just two provinces that banned residents from growing cannabis at home, along with Quebec. The Manitoba NDP and their leader, now-Premier Wab Kinew, said that they did not support the ban previous to forming the government in last fall’s election.

A court rejected an attempt to appeal the ban in 2023, but a group challenging that ban filed an appeal on March 1 against that decision. Several requests for comment on the party’s stance on home-grow bans were unanswered, but sources close to the file tell StratCann that an announcement may come from the province on the matter of home-grown cannabis in the coming weeks.

Affidavits filed in Manitoba home grow court challenge

January 29, 2021

Manitoba announces several new cannabis distributors

February 13, 2024

Manitoba group files appeal against cannabis home grow ban

March 1, 2024

Village Farms’ Canadian cannabis operations report net income of $4 million for 2023

Written by Sarah Clark on March 13, 2024. Posted in Business, Cannabis News, International, Producers.

According to parent company Village Farms International’s newest quarterly report, net sales for Pure Sunfarms and Rose LifeScience increased in the last three months of 2023.

While Pure Sunfarms (PSF) is the wholly-owned Canadian subsidiary of Village Farms, the company also owns 70% of Québec-based Rose LifeScience.

Net sales increased 14% from $38.2 million in the same quarter in 2022 to $43.6 million in Q4 2023, while retail branded sales increased 5%, international (export) sales decreased 66%, and non-branded (wholesale) sales increased 339%.

The cost of sales also declined from $27.8 million in the same quarter in 2022 to $25.2 million in Q4 2023.

Despite this increase in net sales, the company still reported a $1 million loss after expenses for its cannabis operations in Canada. This is a decrease from a net loss of $3.8 million in Q4 2022. The company reported $22.2 million in excise taxes in Q4 2023 and $78.3 million for the year ending December 31, 2023, on sales of $232 million, an effective rate of nearly 34%.

For the year ended December 31, 2023, Village Farms’ Canadian cannabis operations saw $154 million in sales and a net income of $4 million. The company reported $109 million in net sales and a net profit of $200,000 in the previous year.

Village Farms’ US cannabis venture, Balanced Health Botanicals, saw net sales of $5.1 million compared with $5.3 million in Q4 2022 and a net loss of $13.7 million compared to $20.9 million in Q4 2022.

For Q4 2023, retail branded sales were $56.1 million of total sales, while international sales were $1.1 million. Non-branded sales accounted for another $7.9 million.

Michael DeGiglio, President and Chief Executive Officer of Village Farms, says the Canadian market is slowly rebounding from excess supply and record low prices, and he expresses optimism at the possibility of future excise tax reform.

“Our Canadian Cannabis business remains the undisputed leader in that market, with record sales and another quarter of positive adjusted EBITDA and cash flow in the fourth quarter,” said DeGiglio.

“We reclaimed the number two national market share rank across all categories and are steadily closing the gap on the top position. Record retail branded sales were complemented by another especially strong quarter for non-branded wholesale sales. In our non-branded wholesale channel, we took advantage of improved supply conditions and pricing created by the shift of many of our peers to asset light models, significantly reducing our non-brand-spec inventory. While these close out sales are temporarily affecting gross margin and adjusted EBITDA, they are generating additional cash flow, and will support more efficient, higher cash conversion inventory turnover this year and beyond.”

Village Farms is also the only North American cannabis company with a production facility in the Netherlands as part of the country’s early pilot-project approach to regulating cannabis supply for its cannabis “coffee shops”. Production is expected to begin later this year, with its first sales in 2025.

It is also exporting cannabis from its Canadian production to markets in Europe and Australia. Nine of the company’s cultivars in Canada are now being sold across four international medical markets. The Company has a strategy in place to accelerate international export sales in current markets while expecting to launch products in additional European markets this year.

In addition to their US cannabis venture, Village Farms is also preparing for the potential for full legalization in the US through its connection to one of the largest greenhouse operations in the country (more than 5.5 million square feet in West Texas), as well as the operational and product expertise gained through Pure Sunfarms’ cannabis success in Canada.

“On the international front,” adds DeGiglio, “earlier this year we started the build out of our first production facility in the Netherlands, where we are proud to be the only North American participant in the first legal recreational cannabis market in a major European country. Production is targeted to begin later this year. We expanded our export program for the European medical market to the United Kingdom, with additional markets expected to be added this year. Notably, recent positive progress around German medical use regulation provides us with additional opportunities going forward as the market grows.”

BC’s Good Buds Company posts notice of intent, path to debt restructuring

Written by Staff on March 13, 2024. Posted in Business, Cannabis News, Producers.

BC outdoor cannabis growers Good Buds Company Inc. filed a notice of intention to make a proposal pursuant to the Bankruptcy and Insolvency Act.

In a memo from March 6, a representative for the Salt Spring Island-based company emphasized that it has not filed for bankruptcy, nor is it in receivership.

It’s not uncommon for companies to file such notices as a way to restructure their debt rather than going into bankruptcy proceedings.

According to the formal notice, the company remains under the control of its management team. “The NOI creates a stay of proceedings and allows the Company a period of up to thirty days to prepare and file a proposal to its creditors unless the period is extended by the court upon application by the Company,” it continues.

The company also reportedly continues to operate, and all amounts owed as of the date of the NOI will be dealt with as part of the proposal, which is to be filed at a future date.

The company lists more than $18 million in amounts due claimed by creditors, with the most significant amount being $10.6 million to Good Buds Company International. The company also lists Farm Credit Canada claiming to be owed nearly $3.2 million, nearly $3.2 million to the Receiver General of Canada for excise, $26,000 to Health Canada, and about $11,000 to the BC Ministry of Finance.

These amounts are not necessarily in arrears but can simply represent ongoing expenses.

Featured image of Good Buds field on Salt Spring Island

Navigating the world of bankruptcy, restructuring in the cannabis industry

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January 16, 2024

Trees Corporation seeking investment or buyers

January 30, 2024

Kelowna cannabis store takes one week suspension for failure to ID minor

Written by David Brown on March 12, 2024. Posted in British Columbia, Business, Cannabis News, Retail.

A cannabis store in Kelowna, BC, will have to close for a week in April after an employee was alleged to have sold cannabis to a minor.

The minor worked for BC’s Liquor and Cannabis Regulation Branch (LCRB) as part of the province’s Minors as Agents Program (MAP).

The penalty for such an offence is a minimum $7,000 fine or closing the business for seven days. The store, Prime Cannabis, opted for the seven days, scheduled to begin on April 3, 2024.

The incident occurred during an LCRB inspection on November 30, 2023. Following standard procedure for such a visit, an adult inspector conducted an in-store risk assessment before giving the 16-year-old minor agent the clearance to enter the store.

The minor entered the store and purchased a single pack of cannabis-infused gummies, paying cash. The employee working at the time did not check her ID. Upon leaving the store, the minor handed the product to one of the two adult LCRB agents. The other agent re-entered the store to inform the employee that they had just sold cannabis to a minor, an offence under BC’s regulations.

In their defence, the owner of Prime Cannabis, which has two other locations in addition to the Kelowna store, one in West Kelowna and one in Cranbrook, says they have internal policies instructing employees to check IDs. However, the March 6 ruling concluded that the store’s owner had not taken enough steps to ensure employees properly followed such rules.

One oversight noted in the ruling was a lack of a written checklist that can demonstrate proof of the content of in-store training and the time spent on various topics.

“I note the absence of written documentation: no training checklist, no written quizzes, no printed text messages about ongoing reminders,” states the final ruling. “A written checklist is particularly important when staff in the three stores are being trained by different people. Signing off on a checklist by both the trainer and the trainee can demonstrate what topics were followed and the time spent on each.”

The licensee can apply for a reconsideration of the compliance order within 30 days of receiving a copy of the ruling.

Prime Cannabis is not the first cannabis store to be caught up in the MAPs program. In February of this year, another cannabis store in Kelowna was issued a $7,000 fine for failing to check the ID of a minor in the BC government’s program. The targeted inspection was in July 2023.

BC is sometimes more lenient in its rulings. In a case heard in 2023, it was found that a cannabis retailer was not responsible when an employee failed to check the ID of a customer. This was because the store demonstrated that it had an extensive training program in place.

While the employee was fired for their oversight, the retailer, in that instance, did not have to face a $7,000 monetary penalty or shut down for seven days.

“Prime Cannabis takes full ownership over our mistake in not ID’ing and serving a minor,” said Rob Anderson, the owner of Prime Cannabis in an email to StratCann. “We take ID’ing very seriously and have increased our minimum age to ID to 40 years old. We self-audit ourselves regularly through secret shoppers. Ultimately, there is no excuse and we own our mistake.

“We regret the inconvenience we will cause our customers not being able to provide them with product during the week of closure. We hope our customers will continue to support us, and we will be offering a 10% discount the entire week of reopening after serving our licence suspension.”

Cannabis industry wonders when their relief is coming, too

Written by David Brown on March 10, 2024. Posted in Business, Cannabis News, Government, Producers.

Canada’s cannabis industry says they need the same sorts of support provided to the country’s craft brewers.

In an announcement on March 9, the Canadian government said it plans to provide thousands of dollars in alcohol excise duty relief to Canadian businesses, particularly local craft breweries.

Canada’s cannabis industry has been asking for similar relief for years, with some noting their industry is larger and more heavily taxed and regulated than even beer makers.

In order to help alcohol businesses, the federal government is proposing to cap the inflation adjustment at 2% for beer, spirit, and wine excise duties for an additional two years, and to cut the excise duty rate on the first 15,000 hectolitres of beer brewed in Canada by half for two years. The government says this will provide the typical craft brewery up to $86,952 in additional tax relief in 2024-25.

In a press release, with comments from Deputy Prime Minister and Minister of Finance Chrystia Freeland and Minister of Small Business Rechie Valdez, the government acknowledges the number of jobs created by the brewing industry in Canada and the contribution this makes to the broader economy.

“This announcement is great news for breweries, distilleries, and wineries from all across Canada who contribute so much to our national economy,” said Valdez. “Not only are they producing incredible products, they are also small businesses who are creating jobs and opportunities in their local communities. Today’s relief on alcohol excise taxes will allow craft breweries to spend less on duties, and more on what matters most: growing and innovating their small businesses.”

Jonathan Wilson, CEO of Crystal Cure, a small-scale cannabis producer in New Brunswick, said he found the news difficult to swallow given how much his industry is currently struggling.

“For the Ministers to announce this excise tax relief for alcohol today, with the core message being to support small business in peril, it’s one of two things: cold-hearted or oblivious, and I can’t tell which one. Small cannabis producers that have been suffering under the current industry ecosystem, they are the ones without the cash flow to absorb the exorbitant taxes and fees, and they can’t sell at a loss in perpetuity. These producers were supposed to be the cornerstones of the industry, and it seems everyone is fine with them being allowed to crumble.”

Deepak Anand, an industry analyst and consultant, shared similar sentiments with StratCann.

“The federal government needs to urgently make some similar provisions available for the cannabis industry, which has been struggling much harder than the alcohol industry. Much like alcohol, there are dozens of craft cannabis cultivators who can benefit greatly from similar relief.”

For a comparison:

According to Statistics Canada, in 2022, breweries employed nearly 23,000 Canadians.
A Deloitte Report from 2021 said the cannabis industry employed more than 43,000 direct and another 180,000+ indirect jobs in its first three years.
In 2018, the Conference Board of Canada reported that the beer industry supported 149,000 Canadian jobs, paid $5.3 billion in wages, and contributed $13.6 billion to Canada’s GDP in 2016.
A Deloitte Report from 2021 said the Canadian cannabis industry contributed $45.5 billion to Canada’s GDP in its first three years, or an average of about $15 billion a year.

“Canada’s small craft brewers are among the finest in the world, and are an important contributor to our growing economy by creating jobs in communities across the country. Today’s announcement is good news for Canadians and for the craft breweries they visit, which will now benefit from thousands of dollars in new tax relief every year,” said Freeland in the press release.

Budget 2022 called for a more streamlined approach to the cannabis industry, which included the creation of a “Cannabis Strategy Table” led by the Department of Innovation, Science and Economic Development (ISED), intending to provide an opportunity for the federal government to hear from industry leaders and identify ways to work together to grow the legal cannabis sector in Canada.

Last year’s budget noted that as the legal cannabis industry in Canada grows, there are opportunities for the federal government to “streamline, strengthen, and adapt the cannabis excise duty framework specifically, and other excise duty regimes under the Excise Act, 2001 accordingly.”

Budget 2022 calls for streamlined approach to cannabis industry, excise, and more

April 7, 2022

$11 billion in cannabis sales has created 151,000 new jobs and added $43.5 billion to Canada’s GDP

February 1, 2022

House of Commons Standing Committee on Finance calling for changes to cannabis tax

February 27, 2024

Week in Weed – March 9, 2024

Written by Staff on March 9, 2024. Posted in Business, Cannabis News, Government, International.

The big news this past week was Statistics Canada releasing cannabis sales figures for 2022-2023. We also took a deep dive into Alberta’s sales figures for the same time frame.

Cannabis consumption areas are beginning to emerge in a few places in BC following a recent rule change.

BC’s Budtenders Union announced a new store unionized, while we updated a previous unionized store that voted to decertify.

Ontario passed new legislation that bans growing cannabis in childcare settings and creates more opportunities for the province to engage with First Nations communities around provincially regulated cannabis stores.

We also shared our monthly cannabis jobs update.

In our Cannabis Insight section, we shared a piece on navigating the challenges of brand partnerships and another on five ways retailers can grow their sales.

We also celebrated trailblazing women in cannabis in recognition of International Women’s Week.

In other cannabis news…

Following the release of Stats Canada’s cannabis data for 2022-2023, many mainstream sites picked up on aspects of the figures, including a decline in alcohol sales while cannabis sales grew.

Manitoba news outlets were quick to share that Manitoba had the highest rise in recreational cannabis sales across Canada in the 2022/2023 fiscal year at 23%.

Yukon released its sales numbers for 2022-2023. During the fiscal year ending March 31, 2023, cannabis sales in Yukon totalled $11 million, a 9.4% increase from the year prior. Dried cannabis was the highest product category, accounting for 64.6%. Inhaled cannabis extracts were the second highest at 24.9%.

CanMar announced a strategic partnership with the Canadian Cannabis Exchange (CCX) and Loud Lion Supply. CCX will serve as CanMar’s exclusive B2B Cannabis Brokerage/Exchange Strategic Partner on The Hub, CanMar’s community platform.

Tilray Brands Inc. announced two new releases from Broken Coast. Cherry Cheesecake and EmergenZ are now available in Canada across select regions and retailers, including Alberta, Manitoba, and Ontario, with further expansion planned nationwide.

Ontario-based Sensi Brands Inc. announced the launch of SensiMed.ca, a new medical cannabis marketplace. Sensi Brands operates Station House, a producer in southeastern Ontario with a farmgate licence, and the Potluck and Sensimilla brands and Good Greens Medical.

A labour arbitrator says global fertilizer giant Nutrien was justified in keeping an employee out of work at the Saskatchewan potash mine until the company was satisfied the cannabis he used for sleep would not leave him impaired on the job site the next day.

High Tide Inc. opened its second Canna Cabana in Mississauga, Ontario. This opening will mark High Tide’s 164th Canna Cabana branded retail cannabis location in Canada, and the 55th in Ontario.

Tilray’s hemp asset, Manitoba Harvest, announced its new instant Superseed Oatmeal in three flavours with hemp hearts.

Aurora Cannabis Inc. announced the availability of medical cannabis pastilles for doctors to prescribe to patients in Australia. The 30-pack pastilles are available now in three formats, including Aurora THC Pastilles in Watermelon flavour (5mg THC), Aurora CBD Pastilles in Peach flavour (10mg CBD), and Aurora Balanced Pastilles in Yuzu Lemon flavour (5mg THC, 10mg CBD), exclusive to MedReleaf Australia.

HYTN Innovations Inc. announced the completion of a Good Manufacturing Practices audit by Australia’s Therapeutic Goods Administration at their Kelowna, BC facility. The audit was in coordination with Australia’s Promethean Biopharma.

Health Canada updated its page on physical security measures for cannabis licences.

A new study from researchers in Newfoundland suggests that healthcare providers have significant knowledge gaps in authorizing medical cannabis, which limits their practice competence and confidence in this area. Referring patients to cannabis clinics while enforcing harm-reduction strategies was an interim option for patients to access cannabis for medical purposes.

International cannabis

In his State of the Union address, US President Joe Biden said: “No one should be jailed for using or possessing marijuana,” leading to tons of headlines and speculation. The statement was just a reiteration of his existing policy. In 2022, Biden pardoned thousands of people with cannabis possession convictions and called for cannabis to be rescheduled. The decision is now with the US DEA.

Law enforcement

Police in Winnipeg say they identified 64 individuals as testing positive for cannabis while driving. Provincial Offence Act notices were issued for improper storage, as well.

Police in PEI say four people failed roadside tests for cannabis.

Police in Victoria, BC, arrested a man selling cannabis outside a high school.

Authorities in Ireland seized 36 kg of cannabis on a flight from Toronto intercepted at Dublin Airport.

Ontario bans home grows in (some) child care settings, allows for agreements with First Nations cannabis stores

Written by David Brown on March 8, 2024. Posted in Business, Cannabis News, Government, Ontario.

Ontario passed legislation this week that, among other things, bans growing cannabis in homes where childcare services are provided and further allows the province to enter into agreements with First Nations communities to support cannabis regulations on reserves.

Bill 157, Enhancing Access to Justice Act, 2024, which passed on March 5 and received Royal Assent on March 6, includes the two amendments to Ontario’s Cannabis Control Act.

The amendment related to childcare specifically prohibits the cultivation, propagation, or harvesting of cannabis in dwellings in which child care, as defined in Ontario’s Child Care and Early Years Act, 2014, is provided.

The rule creates an exception for in-home childcare services, which is defined as child care provided at the child’s home, or place where residential care is provided for the child, and there is an agreement between a home childcare agency and the care provider that provides for the agency’s oversight of the provision of care.

British Columbia has had a similar restriction on home cultivation and consumption in childcare settings since 2018.

The Bill was introduced by the Ontario Conservatives, and while it did receive support from the opposition NDP, at least one member questioned the need for these changes.

Kristyn Wong-Tam, the NDP critic for the Attorney General, critic for small business, and member of the Standing Committee on Justice Policy, questioned the need for the rule change, calling it a “non-issue,” and admonishing the government for recent policy changes that allow companies to operate up to 150 cannabis stores in the province, an increase from a previous cap of 75. That rule change came into effect in January

“I wonder why the government would make such a hoopla about a non-issue like cannabis in childcare facilities and then move to quietly advance the centralization and the consolidation of big cannabis corporations by giving them much more expansion power,” said Wong-Tam while the bill was being debated in the House.

“I have heard from small cannabis businesses who fear this will hurt them, and I have heard from larger cannabis businesses who believe that the limits on the numbers of cannabis stores that a company can have are too low,” Wong-Tam added in an email to StratCann. “I wish that understanding this decision played a larger role in the debate. When I reached out to cannabis stakeholders, many informed me that I was the first MPP to ever ask them how Ontario’s legislation could be enhanced. I invite cannabis stakeholders to engage their provincial government more regularly at Queen’s Park so we can learn from you about what your businesses need.”

“I invite cannabis stakeholders to engage their provincial government more regularly at Queen’s Park so we can learn from you about what your businesses need.”
Kristyn Wong-Tam, Ontario NDP

The second piece of legislation related to cannabis was a change to the provincial cannabis act, allowing the province to enter into agreements with First Nations communities to support cannabis regulations on reserves.

Any such agreements would require any regulations created by First Nations to adhere to provincial and federal regulations while providing a chance for band councils to oversee their own retail cannabis business in their communities.

There are currently only seven licensed recreational cannabis retailers on First Nation reserves in Ontario, while many others operate outside of the provincial framework and, at times, outside the framework of the First Nations government within the reserve that they operate in.

During the bill’s second reading, Doug Downy, Ontario’s Attorney General, said the legislation was created in concert with First Nations communities and leadership.

“This comes on the heels of much conversation with First Nations partners and communities,” said Downy, “and the aspirations they have for a safe and regulated market to protect their youth and their communities, just as we seek to do the same in the rest of the province of Ontario.”

Previously, the provincial cannabis regulations authorized the Minister to enter into arrangements and agreements with a council of the band with respect to specific cannabis regulation issues on a reserve.

Under the newly added language, provincial legislation will authorize the Lieutenant Governor in Council to make regulations to implement the arrangement or agreement. These regulations can then modify or clarify the application of the Act, and establish requirements that apply on a reserve and incorporate rules established by the council of the band.

Featured image: Rama Cannabis, one of the seven provincially-regulated cannabis stores currently operating within First Nations communities in Ontario

Ontario to allow retailers to own up to 150 cannabis stores, proposing to ban cannabis cultivation in home-based child care facilities

November 30, 2023

More stores, products, lower prices, mean cannabis sales continue to climb in Ontario

December 17, 2020

BC continues to debate increasing 8-store cap for cannabis retailers

January 11, 2024

Cannabis Jobs Update – March 2024

Written by Sarah Clark on March 7, 2024. Posted in Business, Cannabis News, Producers, Retail.

Seeking employment within the cannabis industry? A wide variety of opportunities are available across Canada.

In our March round-up, we’ve curated a sample of current cannabis job openings. From roles in cultivation and regulatory compliance to retail positions, there are diverse avenues for anyone looking to get started or expand their career in the cannabis sector.

SNDL Inc. recently posted a Wholesale Manager, Strategic Partnerships position at the Toronto location. This role will manage bulk biomass procurement and sales and international business opportunities.

Aurora Cannabis currently has 26 openings posted, including Head of Channel Partnerships & Operations (remote), Director, Operations (Bradford), Plant Work Technician (Pemberton), Manager, Corporate Account and Consolidations (remote), and several others.

Greentone, located in Bécanour, QC is seeking a Directeur(trice) qualité for its quality assurance and control team.

The Certus Group, a job placement agency, is seeking a new business development-focused Sales Executive, Logistics, Cannabis Division to lead sales efforts for a “Global Top 10 Logistics and Freight Forwarding Leader.”

Auxly Cannabis Group Inc. is seeking a Territory Manager for Alberta Central to be the face of Auxley within the retail community, and also a Cloud System Administrator to join the technology team.

Production:

BZAM Ltd. has posted several openings, including a full-time Processing Associate in Ancaster, ON.

Motif Labs is also on the hunt for a Production Associate (Cannabis) to support the Extraction or Refining team at its Aylmer, ON location, as well as a Supply Planner responsible for strategic inventory and supply planning.

Decibel Cannabis Company in Creston, BC, is looking for a Plant Health Technician.

Marketing/Branding:

High Tide Inc. is looking for a Marketing Coordinator to join their dynamic. The position is based in Calgary, AB.

A Little Bud has a hybrid remote position (White Rock, BC) for a Cannabis Social Media Specialist for their retail brand.

Kindling Cannabis, located in Toronto, ON, has an opening for a Director of Digital Marketing.

Bold Growth Inc., in Saskatoon, SK, is looking for a Brand Manager to enhance their brand, trade marketing and digital marketing.

Retail:

Plantlife Cannabis is expanding and has multi-locations across Calgary South looking for Sales Associates.

Canna Cabana is seeking Part-Time Sales Associates for several locations, including Muskoka, ON and Medicine Hat, AB.

Cannabis NB has an opening for a Chef(fe) d’équipe/Team Lead in the Sant John area.

Circle K continues with several Budtender openings across cities in Ontario, and also one Part-Time Budtender for their Paradise, Newfoundland and Labrador location.

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Cannabis Jobs Update – February 2024

February 11, 2024

Cannabis Jobs Update – January 2024

January 3, 2024

$11 billion in cannabis sales has created 151,000 new jobs and added $43.5 billion to Canada’s GDP

February 1, 2022

AGLC reports its first cannabis profits

Written by David Brown on March 6, 2024. Posted in Alberta, Business, Cannabis News, Government.

Alberta’s cannabis distribution agency posted its first year of profits for fiscal year 2022-2023, bringing in over $18 million from over $600 million in sales after its operating expenses and costs.

The cost for the AGLC to bring in $618.9 million in sales from April 1, 2022, to March 31, 2023, was $558.5 million, leaving the agency with $60.4 million in net revenue. Operating expenses for AGLC’s cannabis operations took away another $49.3 million of that, leaving it with a net income of a little over $18 million.

This is nearly three times as much as the $7 million forecasted in the province’s 2022-2023 budget. The province also brought in $164 million in cannabis tax.

As a comparison, in the same time period, gaming brought in nearly $1.6 billion for AGLC, while liquor brought in $825.1 million. The AGLC’s operating expenses for its cannabis operations were higher than for alcohol ($37.8 million), despite sales for alcohol being 14 times higher than cannabis. In 2023, AGLC contributed $2.4 billion from gaming, liquor and cannabis operations to the General Revenue Fund, with cannabis accounting for less than 1%.

In the 2021-2022 fiscal year, the agency had a loss of almost $4.4 million for its cannabis operations. In 2021, the agency posted a $12 million loss.

Market insight

Unsurprisingly, dried flower sales still dominate the Alberta market, accounting for 33.4% of all sales. When combined with pre-rolls and milled flower, which AGLC lists separately, this is nearly 59% of all sales from dried flower products.

Vapes represent just over 20% of total sales in dollars, while extracts are almost 12%.

Dried flower sales declining

Despite still controlling the bulk of sales, dried flower (excluding pre-rolls and milled flower) showed its third year of declines, from $237.9 million in fiscal year 2021, $226.5 million in fiscal year 2022, and $206.9 million for the 2023 fiscal year, as of March 31, 2023.

Milled cannabis flower, however, did increase from $15.7 million in 2022 to $23.9 million in 2023. Just $2.6 million was sold in the fiscal year covering 2020-2021. Pre-roll sales increased from $120.8 million in 2022 to $131.8 million in 2023.

Sales in dollars from vapes, extracts, edibles, oil, beverages, capsules and soft gels all increased, while topicals and seeds decreased (as well as non-liquid beverages).

Most cannabis stores per capita

Alberta has the highest number of retail stores per person in Canada, and 27% of licensed cannabis producers are based in Alberta. The number of cannabis stores as of March 31, 2023, was the same as the previous year at 756. The agency currently lists 752 as of March 5, 2024.

Cannabis sales in Alberta were about $130 per capita, compared to about $95 in Ontario in the same time frame.

Cannabis licensees are the least satisfied with the AGLC out of all its licence types, with approval of 92% for liquor licensees and agencies, 96% of charitable gaming licensees, 95% of gaming retailers and operators, and 84% of cannabis licensees.

There were 2,085 cannabis products available and 143 contracts with licensed producers of cannabis, including 38 contracts with Alberta-based licensed producers. About 89% of Albertans who purchase cannabis say they are satisfied with the product variety, and 86% of Albertans say they are satisfied with the accessibility to purchase cannabis.

From 2022-2023, the AGLC conducted 4,944 inspections of cannabis licensees, with a 98% compliance rate. This compares to 4,662 inspections of gaming licensees and 20,643 inspections of liquor licensees, both of which had a 99% compliance rate.

Cannabis sales continued to increase in 2022-2023, with extracts leading the charge

Written by David Brown on March 6, 2024. Posted in Business, Cannabis News, Financials, Government.

Cannabis sales and other activities related to managing cannabis brought in $1.9 billion for the provincial and federal governments in the year ending March 31, 2023, according to new data from Stats Canada.

This represents a 24.4% increase from the previous year and includes net income from provincial cannabis authorities, excise taxes, retail sales taxes, other specific taxes, as well as licenses and permits.

People in Canada purchased $4.7 billion worth of cannabis from provincial cannabis authorities and other retail outlets, a 15.8% increase ($600 million) from the previous year.

Cannabis sales increased the most in Manitoba (+23.7%), while New Brunswick (-0.4%) reported the most significant decline.

On average, Canadians spent $150 per person of legal age on cannabis in the most recent fiscal year ending March 31, 2023, an increase from $132 per person in the previous year. On average, people in Yukon spent the most at $314 per person, while people in Quebec spent the least at $88 per person.

The amount of dried cannabis the average Canadian purchased in the most recent fiscal year increased slightly from the previous year, from $94 per person to $97, and inhalable extracts increased from $24 to $37 per person.

Inhaled extracts on the rise

While dried cannabis was still the most popular product category, its market share continued to decline as concentrates, especially vapes, gained more shelf space. Sales of dried cannabis declined from 71% market share in 2021-2022 to 64.9% in 2022-2023.

The largest contributor to the increase in overall cannabis sales across Canada was inhaled extracts, which rose by 59% in the 2022 to 2023 fiscal year. This category accounted for 67.6% of the $600 million increase in sales from the previous year, or more than $405 million.

Newfoundland and Labrador, which only began allowing sales of cannabis vape pens in 2022, saw the biggest increase in inhaled extract sales, at 307% increase. PEI saw a 144.7% increase in extract sales. Sales of inhaled extracts in Alberta were 32.5% of total sales, the highest portion in Canada, followed by New Brunswick at almost 31%.

The overall market share of cannabis extracts increased from 18.1% to 24.9% in the 2022-2023 fiscal year compared to the year prior.

Sales in dollars of all cannabis products increased from the previous year except for topicals, seeds, and other cannabis products, which, combined, saw a decline from $52.7 million in 2021-2022 to $21.1 million in 2022-2023.

Sales by all cannabis authorities in Canada were $3.6 billion, with the cost of sales being $2.8 billion for a total of $796.6 million in gross profit.

After subtracting additional expenses and adding other income, the net income of cannabis authorities in Canada was $428.4 million.

Total taxes and other revenue collected on the sale of all recreational cannabis sold in Canada was $1.5 billion. Federal excise and customs duties were $227 million, while provincial and territorial excise tax brought in another $711 million.

The net income of all cannabis authorities, total taxes, and other revenue was $1.9 billion, an increase from $1.5 billion in the previous year.

In comparison, in the most recent fiscal year, the control and sale of alcohol brought in $13.6 billion for the provincial and federal governments. While significantly more than cannabis, this represented just a 0.1% increase from the previous year.

Cannabis industry union adds new stores, loses one

Written by Staff on March 6, 2024. Posted in British Columbia, Business, Cannabis News, Producers, Retail.

Employees at a Vancouver cannabis store that joined the BC Budtenders Union in 2022 quietly voted to decertify the union a few months later.

Employees at Eggs Canna on East Hastings in downtown Vancouver voted to join the union in early 2022, but changed course shortly after that, says co-owner Oana Cappellano in a recent email.

Eva Prkachin, a representative with the Budtenders Union, UFCW 1815, confirms that the employees at this location agreed to decertify union membership, meaning it no longer acts as their bargaining agent.

Employees at the Eggs Canna location declined to comment, but Prkachin characterizes the decertification as the result of the union successfully negotiating for changes to different in-store policies. Cappellano shares a different perspective, saying staff opted to leave the union because they were disappointed with the contract the union negotiated, including making promises they could not keep.

At the time, UFCW 1518 said Eggs Canna was the first cannabis store outside of Vancouver Island to join its ranks. Since then, employees at a Seed and Stone location in Chilliwack joined the Budtenders Union.

Prkachin says since then, a second Seed and Stone location, this time in Delta, joined the union, and most recently, a third Trees Cannabis location, as well as Fireweed Cannabis in northern BC and Canna Cabana in Vancouver on Davie St. joined. The Canna Cabana location opened in November 2023.

Prkachin tells StratCann that the union is currently seeking to make contract negotiations easier for employees looking to unionize.

“We’re in the process of lobbying the government right now, in concert with employers, to hopefully pull together some boilerplate language around that kind of stuff so we can get to the meat of bargaining a bit faster. It’s an area where workers have to wait too long for both sides to come to an agreement.”

As of March 5, 2024, UFCW 1518 has organized at eight cannabis retail companies in BC, some with several locations, as well as one cannabis producer. These businesses are:

Seed & Stone
Clarity Cannabis
Trees Cannabis
Canna Cabana
Yaletown Cannabis
Fireweed Cannabis
Burnside Buds
Original Farm
Potanicals (cannabis producer)

Cannabis consumption spaces beginning to open in BC

Written by Staff on March 5, 2024. Posted in British Columbia, Business, Cannabis News, Retail.

A cannabis store in Penticton hopes to become one of the first cannabis stores in the province with a designated consumption area.

Cannabis Cottage, located in downtown Penticton, says it hopes to have its grand opening for the outdoor consumption space on April 20, bringing in food trucks, local artists, and performers.

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

The store owner, Marianna Wolff, says she chose the location for her store, on a major thoroughfare in the city’s downtown, because it had a large front yard that could serve as a lounge space for customers.

Initially, BC’s rules did not allow for such a consumption space, but a rule change announced in February of this year finally made it possible. That rule change made it so that existing patio spaces where smoking and vaping of tobacco products are allowed can now also allow cannabis use.

It also made it so that cannabis stores, like Cannabis Cottage, can advertise consumption spaces. BC first engaged the public about these proposed changes in 2023 as part of a broader industry outreach initiative.

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

She says she has worked with her neighbours, which includes a church, to ensure they are okay with the use of the outdoor space as a lounge. All of them gave their approval. The parish members did ask that no consumption occur during the operating hours of its Sunday School, something Wolff said she was happy to accommodate.

She says she chose the space specifically because it was not near areas like parks or schools, and would have the approval of its neighbours.

“The spot itself I feel is very indicative of spaces that can be good candidates for outdoor cannabis consumption without disrupting anybody who doesn’t necessarily want to have to smell it.”

Cannabis Cottage first experimented with bringing in local food trucks during a customer appreciation event last fall.

“It was very successful. It was a great show of how you can have designated space for people to enjoy their cannabis in a similar way that you might go to a brewery and enjoy a beer or go to a winery patio and enjoy a glass of wine.”

The format is similar to one taken by a cannabis retailer in Cumberland, BC, on Vancouver Island.

Max Oudendag has been assisting Michael Arneja, the owner of Cumberland, BC’s Trugreen Cannabis, on a large outdoor community space that will include a formal 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 told StratCann late last year.

Like the pop-up event Cannabis Cottage held last fall, Trugreen held several pop-ups in 2023 as a test run for their project, which they say they have been working hand-in-hand with the province to develop.

Arneja says they also plan on launching a grand opening for the first stage of their outdoor consumption space in Cumberland on April 20, as well.

His vision extends beyond the mere creation of a cannabis consumption area, instead seeking 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.

Sam Jones, the owner of 2% Jazz Coffee, a cafe in Victoria, says that beginning in April his store will be hosting monthly cannabis-themed events, as well.

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

Instead, he works with local cannabis companies who help host the event, which can serve as a learning session for those interested. The coffee shop will also be hosting a cannabis seed exchange on the last Friday in March.

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

-Note: This article was edited to include information on the 2% Jazz Coffee.

BC releases What We Heard report on cannabis consumption spaces

January 10, 2023

BC seeking feedback on cannabis consumption spaces for cafes, festivals, spas, and more

April 6, 2022

BC: Report on cannabis consumption spaces by end of year

June 22, 2022

Week in Weed – March 2, 2024

Written by Staff on March 2, 2024. Posted in Business, Cannabis News, Government, International.

Lots of cannabis news from StratCann this week.

Tim Wilson took a deep dive into the complexities of excise tax reform. Spoiler, you’re gonna need to get the provinces on board.

Meanwhile, the House of Commons Standing Committee on Finance called for changes to cannabis tax in a non-binding decision.

New data from Stats Canada showed household spending on cannabis is down, driven by declines in the medical market and the illicit market, despite increases in the legal non-medical market.

An Ontario cannabis store shared a creative approach to get around social media restrictions.

A BC cannabis company is bringing infused poutine to the Quebec market, and BC’s Community Savings rolled out pre-approved credit cards for cannabis companies.

TobaGrown’s lawyers have filed an appeal against last year’s court ruling that upheld the province’s home grow ban.

In stonk news, there were a flurry of financial reports this week, with the biggest being BZAM getting CCAA protection due to ongoing financial challenges.

In addition, Greenway Greenhouse, Cronos, Avant Brands, and Nextleaf Solutions all shared their financial reports.

Wayne Patrick Consumer Products is pursuing a Sale, Refinancing and Investment Solicitation Process due to insolvency.

A new study raised questions about the accuracy of eyelid tremors as evidence of cannabis impairment, and researchers at UBC launched a clinical trial exploring CBD for bipolar depression.

Finally, an unlicensed cannabis store in New Brunswick was fined $20,000 by a judge.

In other cannabis news last week

MJBiz had a scoop this week, reporting that the CRA will be calling on provincial wholesalers to garnish payments intended for producers that owe money to the tax authority. Three provincial wholesalers confirmed that the CRA told them to garnish payments originally intended for licensed producers over unpaid taxes. The CRA is owed more than $200 million.

CBC broke a story about a Manitoba foster home where former and current employees say staff had been providing underage youth with cannabis as a harm reduction tool. The Manitoba government says it is cutting ties with the organization. The owner is criticizing the province for the move.

The Windsor Star ran a piece on CannTrust’s Peter Aceto, who says he became the “fall guy” for the company’s previous problems.

Following news of his passing, Post Media ran a story on former Prime Minister Brian Mulroney’s involvement with Acreage Holdings, a cannabis company located in BC but operating in the US.

Vancouver-based seed-to-sale platform Elevated Signals raised $7.9 million to aid the expansion of its manufacturing operations software into new sectors.

A resident of Enniskillen, Ontario, raised concerns over the local council’s decision-making process on new zoning rules for cannabis operations, highlighting what they say is a significant oversight. A letter from Cannim Canada, indicating its intention to apply for a license to grow cannabis in a local greenhouse, was not shared with the council before it made changes to zoning rules aimed at mitigating odour and light pollution.

The Union of BC Municipalities’ (UBCM) Community Safety Committee received a report on cannabis policy as part of its February executive meeting.

The Good Shroom Co Inc., a cannabis company, announced its expansion plans in Quebec, Alberta, and Prince Edward Island.

Tilray Brands, Inc. announced its new Good Supply infused ‘Juiced’ cannabis pre-roll multi-packs in several provinces.

Quebec cannabis producer Jubilee is introducing new edibles infused with minor cannabinoids CBG and CBN, along with two new flavours. Additionally, the brand announced new infused topicals coming in spring, as well as body butters and bath salts. Jubilee products are available in Ontario and Alberta.

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

Ayurcann Holdings Corp. announced its results for the three and six months ended December 31, 2023, with $10.7 million in gross revenue and $771,622 in losses.

And lastly, MTL Cannabis announced its financial and operational results for the three and six months ended December 31, 2023, with nearly $9 million in gross profit, $248,286 in losses, and an estimated selling price of $1.84 per gram for dried flower.

Manitoba group files appeal against cannabis home grow ban

Written by David Brown on March 1, 2024. Posted in Business, Cannabis News, Government, Manitoba.

The group challenging Manitoba’s ban on growing cannabis at home filed an appeal today against a recent court decision to uphold the ban.

In a ruling posted in October 2023, a Manitoba judge dismissed an application by a Winnipeg resident who was challenging the legality of Manitoba’s ban on people growing their own cannabis.

The Manitoba law, which has been in place since 2018, was challenged by resident Jesse Lavoie, who argued the provincial ban was unconstitutional and an overreach of provincial authority.

The provincial government argued that the ban on growing cannabis at home was within the province’s power in the name of protecting public health and safety.

Although the ruling was somewhat sympathetic to Lavoie’s lawyer’s arguments, Court of Queen’s Bench Justice Shauna McCarthy sided with the arguments made by the Government of Manitoba, saying that the penalties, while strict, were not overly punitive or a violation of the balance between provincial and federal jurisdiction. The province of Manitoba, she ruled, has the right to ban growing cannabis at home, even if federal law allows people to grow up to four plants.

One of Lavoie’s lawyers in the case, Kirk Tousaw, told StratCann they planned to appeal the ruling. That appeal was filed on March 1, 2024.

The law was put in place by the Progressive Conservative Party of Manitoba, which had been in power since 2016. The Manitoba NDP, which formed government after an election in 2023, had previously said they do not support the ban. Lavoie, who operates the company TobaGrown, which has spearheaded the effort to challenge the ban, says he hopes the province will hold to that commitment.

“We urge the NDP government to change the law now and to not spend anymore taxpayer dollars defending the PC’s bad law.”
Jesse Lavoie, TobaGrown

“TobaGrown has been at the forefront of advocating for a repeal of the ban on home cannabis gardens since day one,” Lavoie tells StratCann. “We have worked hard in the courts to challenge the constitutionality of the ban while also remaining open to discussions about a political solution.

“Since the NDP was elected in October 2023, we have consistently communicated that our preference would be to see the law changed by the government, not the courts. We very much hope that the NDP does the right thing for the people of Manitoba and repeals this prohibition.

“But we continue to also believe that the ban is an improper use of the criminal law power by the provincial government and that it is unconstitutional. And that means we remain committed to appealing the trial court’s decision to the Manitoba Court of Appeal. That hearing is expected to be this spring, and we are therefore filing our Appeal Facta to ensure that Manitobans have the same right to grow four plants at home that all Canadians outside Quebec currently enjoy.

“We urge the NDP government to change the law now and to not spend anymore taxpayer dollars defending the PC’s bad law.”

Several requests for comment on the party’s stance on home grow bans were unanswered, but sources close to the file tell StratCann that an announcement may come from the province in the coming weeks.

The House is scheduled to have its first sitting in 2024 on March 6.

In April of this year, the Supreme Court of Canada upheld a similar ban on home-grown cannabis in Quebec, ruling that the province has the authority to enforce such a ban, even in the face of federal rules allowing up to four plants per household.

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, as well as up to a year in prison and forfeiture of personal property.

In their conclusion, the judge wrote, in part: “The applicant has failed to meet his onus of proving that section 101.15 is in pith and substance criminal law, rather than an area under provincial jurisdiction. Rather, I have found that the pith in substance, or the dominant purpose, of the prohibition against home cultivation in Manitoba, is to support the provincial government scheme enacted to control and regulate the purchase, distribution, and sale of cannabis in a manner which is consistent with the public interest.”

The province’s cannabis laws, including the ban on growing cannabis at home, were put in place by the previous Conservative government in Manitoba. The Manitoba NDP formed government following an election on October 3.

Challenging Manitoba’s ban on home-grown cannabis

August 15, 2020

Cannabis lawyer Jack Lloyd to assist in Manitoba home grow challenge

December 13, 2021

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

July 20, 2023

Nextleaf Solutions reports record revenue

Written by Sarah Clark on March 1, 2024. Posted in British Columbia, Business, Cannabis News, Producers.

Bucking industry trends, BC-based cannabis company Nextleaf Solutions reported their third profitable quarter this week.

Nextleaf reported $4.1 million in revenue, paying nearly $1 million in excise taxes while bringing in $132,821 in income. The quarter, ended December 31st, 2023, was the company’s highest gross sales period, generating more than $4.1 million.

This is an increase from the same quarter in 2022 when the company had $1.4 million in revenue and reported $559,013 in losses.

Nextleaf sells cannabis extract products like oils, soft-gels, and vape pens in markets across Canada. It also provides toll-processing services for other producers. The company’s house brands, including its Glacial Gold and High Plains Cannabis brands, only launched into Alberta in August 2023.

The company anticipates launching nine new products nationwide in Q2 2024, including Glacial Gold infused pre-rolls.

In its recent 2023 financial report, BC-based cannabis processor Nextleaf Solutions Ltd. says it achieved four quarters of consistently positive cash flow in the past fiscal year.

“I have a personal affinity towards Alberta and its success for us as a Company, having spent over 20 years there,” said Emma Andrews, Interim CEO, in a press release. “This was my first full quarter as interim CEO, so I spent time visiting retailers in Alberta to support our Company’s launch. It was gratifying to see first-hand how the products are gaining immediate traction and how the value proposition is resonating early on with retailers, particularly with our softgel SKUs,”

As of December 31, 2023, Nextleaf Solutions had working capital of $1,033,496 (up from $780,408 as of September 30, 2023).

Cronos shows declining losses, increased cost of sales in 2023

Written by Staff on February 29, 2024. Posted in Business, Cannabis News, Financials.

Cronos Group Inc. says it has improved its cash flow in 2023 due to lower operating expenses and increased exposure to international markets.

Cronos, the Canadian company behind cannabis brands like Peace Naturals, shared its Q4 2023 financial results on February 29, reporting $23.9 million in consolidated net revenue for the last three months of 2023 and $87.2 million in sales for the year ending 2023.

This represents a slight increase from $22 million in consolidated net revenue in Q4 2022 and $86.7 million in sales for fiscal year 2022.

However, this net revenue couldn’t cover the costs of doing business for Cronos, which reported $45 million in net losses in Q4 2023, a decline from $76.1 million in losses in the same quarter for 2022. Annual losses were also down, with Cronos reporting $70.4 million in losses for 2023 compared to nearly $155.2 million in 2022.

The cost of sales increased from $71.3 million in 2022 to $74.5 million in 2023.

Cronos says the increase in its year-over-year sales was largely due to higher sales in Canada and exports to Germany and Australia. These improvements were somewhat offset by lower cannabis flower sales in Israel, which it blames on the Israel-Hamas War and increasing competition. Israel has also pushed back against Canadian cannabis producers it accused of “dumping” product into its market, saying this is undermining local growers.

In Q3 2023, Cronos also announced plans to wind down operations at its Winnipeg, Manitoba facility (“Cronos Fermentation”). In the second quarter of 2023, Cronos exited its United States hemp-derived CBD operations.

“In 2023, we significantly improved our cash flow from operations driven primarily by operating expense savings, while simultaneously expanding our portfolio of borderless products in Canada and Israel and entering two international markets, Germany and Australia,” said Mike Gorenstein, Chairman, President, and CEO of Cronos.

Cronos sells the brands Spinach, Lord Jones, Peace Naturals, and Lit (Israel).

Cronos enters into deal to sell, leaseback Peace Naturals Campus

November 27, 2023

Cronos closing cannabis fermentation facility in Winnipeg, Manitoba

August 8, 2023

Israel opens “anti-dumping” investigation into cannabis imports from Canada

January 26, 2024

Avant Brands brings in $30 million in revenue with a $5 million loss

Written by Staff on February 29, 2024. Posted in British Columbia, Business, Cannabis News, Financials, Producers.

Kelowna-based Avant Brands Inc. announced its audited financial results for the fiscal year ended November 30, 2023.

The company behind the BLK MKT brand brought in record gross revenue of $30.2 million in the year leading up to November 30, 2023, but still recorded a net loss of almost $5.2 million. Net loss from operations alone was $1.5 million in the same period, compared to $8.5 million in the previous year.

This represents a year-over-year increase in gross revenue compared to 2022 and a decline in net loss of $6.6 million for the year leading up to November 30, 2022.

In the most recent report, net revenue was $26.3 million from the sale of 7,105 kg of cannabis, while the cost of sales was nearly $17.3 million. The company paid $3.8 million in federal excise taxes.

The increase in net sales is attributed to a $1.4 million sales growth in recreational revenue and a $5 million sales growth in international export/wholesale.

Recreational cannabis sales accounted for 60% of net sales during the year ended November 30, 2023, with export and B2B sales comprising 39% of total revenue. Avant has exported to Israel, Australia, and Europe. Companies exporting to Israel have faced recent pushback from the industry and government there. Avant says it completed “significant” sales to Israel and Australia in the year ending November 2023, and it is preparing to fulfil further orders with existing export clients, as well as being in discussions with new potential clients.

While Avant undertakes some B2B sales, it says its primary focus is on selling flower it produces in-house. It sells an array of its products like BLK MKT, Tenzo, Flowr, Cognōscente, and Treehugger brands into markets across Canada, including BC, Saskatchewan, Manitoba, Ontario, Quebec, and Atlantic Canada. It sells products in Alberta through its online medical cannabis portal (www.greentecmedical.ca).

Avant operates six production facilities in BC, Alberta, and Ontario, including four in BC.

The overall weighted average selling price of cannabis sold decreased by 25% to $4.23 per gram. Non-medical cannabis sales averaged $6.31 a gram for the year ended November 30, 2023, compared to $7.18 per gram in the comparative period of the prior year.

Avant says the decrease in the average selling price is primarily due to price compression in the industry combined with product sales and a $300,000 sales provision.

Like many other cannabis companies, the cost of operations increased for Avant compared to the same period in 2022. Operating expenses increased by $1.8 million, or 26%, over the prior year’s comparative period. Avant says this is due to higher regulatory fees, performance bonuses, and estimated professional and audit fees.

The cannabis producer says it has a yield-per-plant of 63-99 grams of flower and 10-32 grams of trim. It says the fair value of its cannabis is $3.69 per gram of flower and $0.2 per gram of trim.

Since its inception, the Company has incurred losses and has an accumulated deficit of $65,913 as of November 30, 2023, which has been funded primarily by the issuance of equity, convertible debentures, secured credit facilities, and advances from related parties.

“There is a material uncertainty related to these conditions that may cast significant doubt on the Company’s ability to continue as a going concern and therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business,” it reports in its financial statement. “The Company’s ability to continue as a going concern depends upon its ability to generate profitable operations or raise adequate financing in the future.”

What’s the big stink? Rural Okanagan LP addresses odour concerns

January 20, 2023

GTEC Holdings

March 25, 2020

Cannabis companies have numerous ways to market their products

December 10, 2020

Household spending on legal cannabis increases while illegal decreases

Written by Staff on February 29, 2024. Posted in Business, Cannabis News, Retail.

Household spending on cannabis in Canada declined in the last two years following an increase in the first three years of legalization.

The newest figures from Statistics Canada show the annual percent change in real household final consumption expenditure, with that percentage declining from a 2021 high of 0.126% to 0.056% in 2022 and 0.039% in 2023.

The decline in household spending on cannabis is largely driven by a consistent decline in spending on products from the unlicensed cannabis market. Meanwhile, spending on cannabis from the licensed sector has been increasing on an annual basis, with some quarterly fluctuations.

The most recent quarter reported, Q4 2023, showed a slight decline in this category from a previous high watermark of $1.5 million, but is still up year-over-year.

Household expenditures on cannabis from the unlicensed sector were at a low of $465,000 in Q4 2023, down from about $1.2 million in Q4 2018.

Expenditures of cannabis for medical purposes have also declined, from a high watermark of $155,000 in Q1 2019 to $82,000 in Q4 2023. There is no distinction between sources in this category (elicit or illicit).

“Household final consumption expenditure” refers to the total amount a household spends on goods and services purchased for final use by the household.

In 2021, the average annual spending on goods and services per household in Canada was $67,126, with a median net worth of Canadian families of $329,900 as of 2019.

Based on current prices, spending on cannabis products for non-medical use from licensed cannabis producers (legal market) fared slightly better than cannabis products for non-medical use purchased from the unlicensed market.

Stats Canada bases their data for the illicit market on information provided by Canadians about cannabis use.

Increased cost of production adds to growing concerns for Greenway

Written by Sarah Clark on February 29, 2024. Posted in Business, Cannabis News, Ontario, Producers.

Greenway Greenhouse Cannabis Corporation’s nearly $1.4 million in revenue in the last three months of 2023 still saw the Ontario cannabis producer in the red $1.6 million, according to their most recent quarterly report.

This is an improvement from the previous quarter when the company reported a net loss of $576,461. For the first three quarters of 2023, the company reported a comprehensive loss of nearly $3.4 million compared to just over $1 million for the same period in 2022.

Gross profits for the last three months of 2023 were also down compared to the same period in 2022, from $234,849 to $1.9 million.

The losses are attributed to increased production costs like labour and utilities, as well as a lower price per gram of cannabis. The cost of goods sold in the third quarter of 2023 was nearly $1.2 million compared to $508 thousand in the previous quarter.

The company says it has insufficient cash to pay creditors for current working capital obligations and operations for the next twelve months, referencing “significant doubt about the Company’s ability to continue.”

In addition, its quarterly report cautions that the company’s “ability to continue as a going concern is dependent upon its ability to obtain sufficient additional funding and to generate sufficient revenues and positive cash flows from its operating activities to meet its obligations and fund its planned investments and operations.”

The concerns are not new and have been mentioned in previous quarterly reports.

Greenway is sitting on more than $2 million in dried cannabis, compared to about $1.5 million in Q1 2023.

It operates a cannabis nursery facility in Kingsville, Ontario, and a flowering and processing facility in Leamington, Ontario.

It reports an average cash cost per gram of $0.75 for finished goods inventory on hand as of December 31, 2023. The company’s biological assets were comprised of 11,026 plants (March 31, 2023 – 6,519), which were, on average, 59% (March 31, 2023 – 43%) complete, and it was expected that they would yield approximately 1,364 kg (March 31, 2023 – 1,193 kg) of dry flower.

Biological assets refer to the value assigned to pre-harvest cannabis plants still in the process of growing, relating to expected yield.

*Inside Greenway’s cannabis nursery. Image via Facebook.*

Ontario cannabis store finds creative way to get around social media restrictions

Written by David Brown on February 27, 2024. Posted in Business, Cannabis News, Ontario, Retail.

Ontario cannabis retailer Stok’d Cannabis has released a series of ads it says circumvent social media platforms’ restrictions on cannabis advertisements by promoting neighbouring brands.

The retailer, with five locations in Ontario, collaborated with several local businesses to mention the store in relation to their own business, often employing cheeky puns throughout the ad.

The ads included businesses like a bookstore, an electrician, a nail shop, and a sandwich shop, all located near or affiliated with the cannabis store.

The campaign ran in January as sponsored posts on several platforms, a transit shelter, and local radio.

Lisa Bigioni, co-founder and CEO of Stok’d, says they are still collecting data from the campaign to see how effective it was, but notes she has already seen increased foot traffic, and customers have told her they have seen the ads.

She says the ads all went out on accounts connected to the local businesses, not their account.

She explains that the biggest challenge they were seeking to circumvent is not federal ad restrictions but enforcement of social media policies.

“I think that the Health Canada restrictions I understand, and I think we did our part to not go against those restrictions. It’s the social media challenges that we have that I think was the bigger win. The ads were put out almost a month ago, and no one caught that there was this cheeky innuendo about a cannabis store.

“And we know that social media accounts shut down cannabis advertising as soon as they see it and none of them caught it, and I think that was the bigger win.”

Erin Kawalecki, partner and chief creative officer at Angry Butterfly, who partnered with Stok’d on the project, says that the local businesses appreciated the approach.

“While our goal was to promote Stok’d, it was also important to be authentic to the different
businesses we were partnering with,” says Kawalecki. “Finding that common language that promoted both was key, and a lot of fun, too.”

“The trickiest part was while we thought this could work, we weren’t entirely sure until the
ads went live and passed through all the different filters,” adds Bernice Lo, VP, Executive
Creative Director, Angry Butterfly, “We had plan B and C ready to go, just in case.”

The geo-targeted, 21+ campaign launched last month across multiple channels including
paid/sponsored posts and prerolls, evening radio, and select TSAs, but Angry Butterfly says the story was kept out of the ad industry press until the media finished its run to ensure the news didn’t reach the likes of Meta, Google, etc. to avoid pushback.

https://vimeo.com/913526553/a238e66c5d?share=copy

https://vimeo.com/913526921/f367776517?share=copy

https://vimeo.com/913526962/3f084f9760?share=copy

We did a thing! Advertising in the cannabis space is hard, unless you have ⁦@BrentChoi⁩ and team at Angry Butterfly on your side. And fabulous neighbours, of course! https://t.co/CAvaxJEHNd
— stokdcannabis (@stokdcannabis) February 27, 2024

Building cannabis brands with creativity and innovation

April 12, 2022

Bending the rules in cannabis access and promotion

November 3, 2022

Cannabis companies have numerous ways to market their products

December 10, 2020

House of Commons Standing Committee on Finance calling for changes to cannabis tax

Written by David Brown on February 27, 2024. Posted in Business, Cannabis News, Government.

The federal House of Commons Standing Committee on Finance is recommending a change to how cannabis excise taxes are applied.

The change calls for moving from a rate of $1 per gram or 10% of a producer’s selling price (whichever is higher) to a 10% ad valorem rate. This rate currently applies to dried or fresh cannabis, cannabis plants and cannabis plant seeds.

Tax on cannabis extracts, edibles and topicals is a flat rate of $0.01 per milligram of the total THC of the cannabis product. These products would not be subject to an ad valorem duty rate, unlike dried cannabis, fresh cannabis, cannabis plants and cannabis plant seeds.

The committee also calls for investments for First Nations engagement in the Cannabis Act review, with the Assembly of First Nations calling for $50 million over the next five years.

The recommendations from the House of Commons Standing Committee on Finance (FINA) are part of the recent Report of the Standing Committee on Finance. The report is based on meetings launched in June 2023 in anticipation of the 2024 budget due in April.

The Committee also held pre-budget hearings in the fall between September 21, 2023 and November 17, 2023. In addition to meetings in Ottawa, the committee travelled across Canada to hear from a range of Canadians.

The Committee also invited other House of Commons standing committees for the purpose of holding meetings and providing recommendations for its pre-budget consultations.

The committee heard nearly 170 presentations and received over 850 written briefs, the largest number ever received for that process.

You can read that report here.

The cannabis industry has been calling for reforms to the federal excise tax rate for years now, arguing it ends up being a tax rate of as much as 30 percent or more of their revenue.

The most recent figures show the federal government has collected more than $2.5 billion in cannabis excise tax. Nearly $2 billion of tax has gone back to the provinces, which collected 75% of the excise, while more than $566 million went to the federal government.

Also, the Canada Revenue Agency is owed more than $200 million in unpaid taxes.

“As at March 31, 2023, the total amount receivable for Cannabis duties is $221,238,299,” Sylvie Branch, a CRA spokesperson, told StratCann earlier this year. “This outstanding balance represents funds owed to the CRA and is not broken by federal, provincial, and territorial components.”

A recent report also says that the CRA is now calling on provinces to garnish payments to cannabis producers who have not paid their excise taxes.

In a statement to the committee last October, then-President and Chief Executive Officer, Cannabis Council of Canada’s (C3) George Smitherman told the committee the issue with cannabis taxes was dire.

“We need adjustments to the excise tax formula and to costly matters about how the formula operates. We need the elimination of a special tax of 2.3% in the name of a regulatory fee charged by Health Canada that neither alcohol nor tobacco pay. This is about $75 million off the bottom line of companies.”

Smitherman also called for the elimination of Health Canada’s 2.3% regulatory fees on cannabis products, as well. He recently stepped down from his role with C3.

Despite ongoing lobbying efforts, Budget 2023 did not include any changes to these taxes.

Budget 2022 called for a more streamlined approach to the cannabis industry, which included the creation of a “Cannabis Strategy Table” led by the Department of Innovation, Science and Economic Development (ISED), with the goal of providing an opportunity for the federal government to hear from industry leaders and identify ways to work together to grow the legal cannabis sector in Canada.

ISED announced a cannabis industry “forum” recently for those purposes.

Health Canada’s quarterly financial report for the quarter ended December 31, 2023 calls for $131.1 million for the renewal of the federal framework for the legalization and regulation of cannabis in Canada.

Canada assessed more than $500 million in excise taxes for fiscal year 2020-2021

February 13, 2023

Campaign for cannabis excise tax reform releases policy white paper

May 27, 2022

Cannabis industry disappointed by lack of tax reform in Budget 2023

March 28, 2023

Wayne Patrick Consumer Products pursuing a Sale, Refinancing and Investment Solicitation Process due to insolvency

Written by Staff on February 26, 2024. Posted in Business, Cannabis News, Ontario, Producers.

Two Ontario-based cannabis companies are pursuing a Sale, Refinancing and Investment Solicitation Process (SISP) through court due to low cash flow.

Hamilton, Ontario-based cannabis companies Wayne Patrick Consumer Products Ltd. and WPCP Ltd. had their Notice of Intent proceedings continued under the CCAA on February 20.

In a court filing, the companies’ representative says the applicants are insolvent. They are balance sheet insolvent, unable to meet their liabilities as they become due, and are in a liquidity crisis.

The Applicants produce and distribute cannabis products in Ontario, Saskatchewan, Yukon, Northwest Territories, Nunavut, Newfoundland and Quebec. Both of their operations are run in a leased facility located in Ontario.

In their last six months, both companies have suffered losses due to high staff turnover, increased enforcement by the CRA, declining investor interest, higher interest rates, and decreased demand for cannabis products in a highly saturated and competitive market.

The company also says it has had to sell some of its inventory at a loss.

Wayne Patrick Ltd. owns 100% of Wayne Patrick Consumer Products Ltd. Wayne Patrick Ltd. is a private corporation incorporated under the OBCA. Its head office is also in Toronto.

On January 15, 2024, the Canada Revenue Agency (CRA) gave notice to WPCP that the CRA would not be renewing its license under the Excise Act when it expired on February 7, 2024.

A few weeks later, on February 7, 2024, two of the applicants, Wayne Patrick Ltd. and WPCP, each filed an urgent notice of intention to make a proposal under the Bankruptcy and Insolvency Act to prevent, among other things, the termination of the Excise License by CRA.

The Applicants have consolidated debt in excess of $5 million, including owing approximately $650,000 to CRA and $37,000 to Health Canada for annual licensing fees. They also have unpaid trade debt and other unsecured debt of approximately $2 million. The Applicants’ have missed the past two payrolls, and approximately $42,000 of payroll is in arrears.

In 2020, Wayne Patrick Ltd. acquired Beleave Kannabis Corp. through Beleave’s own CCAA proceeding, the facility that Wayne Patrick operated out of. It is about 10,000 sq ft, with multiple production rooms, including a hash production room, multi-use rooms, and a large vault for storage of finished goods. Their Health Canada licence is set to expire on May 11, 2028.

Community Savings rolls out pre-approved credit cards for cannabis members

Written by Staff on February 26, 2024. Posted in British Columbia, Business, Cannabis News.

Community Savings, a BC-based credit union, has announced the launch of pre-approved business credit cards for its cannabis membership. This industry-first offer finally gives cannabis businesses in BC guaranteed access to credit cards, a long overdue change in the financial services available for the industry.

Typically, credit cards are a standard payment solution available to any small business, but obtaining a business credit card for cannabis businesses has – until now – been a highly discriminatory process. Many cannabis businesses are rejected by credit card providers solely because of their legal business in cannabis. Community Savings has successfully campaigned for policy change to ensure cannabis businesses have credit card access. This is a significant milestone, changing the way access to basic financial services is provided to cannabis businesses in BC.

Cannabis businesses have been forced to operate without a fully functioning banking system for too long. The industry was legalized five years ago, but big banks have ignored this sector’s needs and credit unions like Community Savings have stepped in.
Mike Schilling, President and CEO of Community Savings Credit Union

Community Savings offers three business credit cards with a range of benefits. The No Fee Cash Back Visa allows you to earn cash back for the purchases your business regularly makes. The Visa Low Rate Business Card features a low annual fee and low interest rate, and the Visa Infinite Business Card offers valuable rewards and first class privileges with a competitive annual fee and a limited time 5,000 welcome bonus points offer. Other card benefits may include zero liability fraud protection, purchase protection and extended warranty, trip cancellation and interruption insurance, as well as lost or delayed baggage protection.

Commenting on the launch, Mike Schilling, President and CEO of Community Savings Credit Union, said, “Cannabis businesses have been forced to operate without a fully functioning banking system for too long. The industry was legalized five years ago, but big banks have ignored this sector’s needs and credit unions like Community Savings have stepped in.

Credit cards are an essential financial product for businesses. Community Savings is proud to now pre-approve every one of our cannabis members to ensure access to this basic payment product. Every day, we work with our members to help grow the cannabis industry, starting with access to the right financial services.”

Five years after legalization, access to basic financial services is just one barrier facing Canada’s legal cannabis industry. Notably, cannabis growers and producers pay federal taxes of a staggering +30% of top-line revenue, in addition to overly burdensome regulatory compliance costs experienced by all cannabis businesses. Despite the challenges, the cannabis industry has grown about 10% year-on-year since legalization and supports the jobs of nearly 100,000 Canadians. With the right legislative framework, the industry has an opportunity to grow to increase its economic competitiveness and meet global demand.

As a pro-cannabis business financial institution, Community Savings is the largest provider of banking services to BC’s cannabis sector of growers, processors, retailers and ancillary businesses.

This month, the credit union, together with We Can Capital Inc. launched another industry-first innovative invoice factoring program crafted for British Columbia’s licensed cannabis producers (LPs). This initiative gives LPs access to affordable and readily available working capital to support growth. More information on Community Savings’ affordable invoice factoring for cannabis licensed producers in BC can be found here.

Community Savings Credit Union announces affordable invoice factoring for cannabis licensed producers

February 22, 2024

BC credit union receives award for cannabis campaign

November 21, 2022

Cannabis businesses continue to face barriers with Canadian banks

February 1, 2021

Canadian Cannabis Exchange facilitates sale of Ogen production facility and equipment

Written by Staff on February 26, 2024. Posted in Alberta, Business, Cannabis News, Producers.

SOLICITATION FOR OFFERS

Canadian Cannabis Exchange Ltd. (“CCX”), by and through the court appointed Receiver, Alvarez & Marsal Canada Inc. (“A&M”), announces the exclusive sale of Ogen Ltd. and Ogen Holdings Ltd.’s (collectively, “Ogen”) property, which includes a production facility and equipment. A&M has selected the CCX to act as marketing agent to assist in carrying out a court-approved sale and investment solicitation process (the “SISP”). The SISP has been designed to solicit interest in, and opportunities for, a purchase of, or investment in all or part of Ogen’s property.

Sale Package Information:

The Ogen facility is a 57,300 sq. foot, Health Canada licensed production facility on a 2.32-acre lot located at 5430 30^th Street SE, Calgary. The facility is newly renovated and equipped with state-of-the-art HVAC, mechanical, lighting, and security systems. Highlights of the facility include over 30 individually secured and environmentally controlled production areas, along with office space and a loading dock. Opportunity for repositioning is created through the available 15,000 kVa incoming power capacity and a convenient location only 15 minutes from the downtown core within Calgary’s Foothills Industrial Park.

In addition to the Ogen facility, there is a diverse range of cannabis production, processing, and packaging equipment. The complete list of equipment is supported by reference photographs categorized by function into saleable buckets.

Ogen’s Health Canada license, under which the production facility operates, can also be transferred as a component of the sale. This license authorizes the holder to conduct activities under both Standard Cultivation and Standard Processing subclasses subject to the conditions stated in the Health Canada Cannabis Act and Cannabis Regulations.

Information regarding the sale package can be found in the Opportunity Summary.

Interested parties who wish to receive additional materials can do so by accessing an exclusively shared data room. Parties are required to execute a Confidentiality Agreement for Data Room Access to gain access, which can be obtained by following the link below or by contacting CCX directly ([email protected]; 587-877-4687).

About Ogen:

Ogen is a pioneering name in the cannabis industry, dedicated to producing premium, high-quality products that redefine the standards of excellence. Ogen filed a Notice of Intention to Make a Proposal on June 26, 2023 pursuant to Section 50.4(1) of the Bankruptcy and Insolvency Act, R.S.C. 1985, c. B-3, as amended. On November 3, 2023, A&M was appointed the receiver and manager of Ogen and its current and future assets, undertakings and properties other than certain excluded assets.

About CCX:

CCX serves as a wholesale distribution channel in the legal Canadian cannabis market, connecting Licensed Producers with buyers and sellers, offering price transparency and standardized supply contract terms. The CCX platform has facilitated transactions exceeding 100,000 kg of flower and extracts with over 600 Canadian Licensed Producers as collaborators.

High taxes, regulatory fees, low margins meant the end of the road for OGEN

November 9, 2023

OGEN latest Alberta cannabis company to close

November 7, 2023

Week in Weed – February 24, 2024

Written by Staff on February 24, 2024. Posted in Business, Cannabis News.

Several interesting, unique stories came from StratCann this past week. David Brown published an in-depth look at the current state of the hemp industry in Canada, and the challenges it faces in scaling up to meet demands.

A new study from researchers at the University of Waterloo and the University of Toronto says retail cannabis stores in Canada are evenly distributed across different neighbourhood types.

ISED’s “Cannabis Industry Forum” was finally formally announced this week. While some outlets reported this was the “launch” of the forum, this is simply the first formal announcement of a list of names that have been floating around for about a year now.

A Manitoba cannabis brand is taking a former partner to court and the SQDC says it is pulling back operating hours at twelve branches.

BC’s Community Savings Credit Union announced new affordable invoice factoring for cannabis licensed producers.

A Kelowna cannabis store received a fine of $7,000 for failing to check ID, an expensive lesson. Burb Cannabis was finally able to open its new store near UBC after a nearly three-year wait and New Brunswick’s eighth private cannabis store opens in Hampton

We also shared our newest from our profile series, this time speaking with Kootenay Cultivar about their approach to small batch craft cannabis.

In other news…

Canadian cannabis company Mendo Medical is bringing the California-based Beard Bros Pharms brand to the Canadian market. Beard Bros products will be available in early March.

Simply Solventless Concentrates says it is set to launch six third-party branded products in Alberta and one in Ontario.

First launched in Ontario, HYTN Innovations Inc. announced the expansion of its 100 mg THC Nano Shot Citrus to the British Columbia and Alberta markets. Each Nano Shot bottle delivers 100 mg of nano-emulsified THC in accurate 0.05 mL increments.

Klonetics announced they have successfully exported their cannabis products to Israel and Australia.

Canopy Growth Corporation announced the introduction of five new pre-roll products across the Company’s adult-use cannabis portfolio from brands 7ACRES and Hiway.

Aurora Cannabis Inc. announced that Simona King, a former executive of Bristol Myers-Squibb, a leading multinational pharmaceutical company, has been appointed as Chief Financial Officer of the Company, effective February 21, 2024.

Researchers and health experts are expressing concern at the potential for high-potency THC products to have harmful health effects, particularly among young men, reports CBC. The Schizophrenia Society of Canada recently launched the Cannabis and Psychosis Project, an online resource to help address some of these concerns. Hospital visits for cannabis-induced psychosis increased by 220% in Ontario between 2014 and 2021.

BC teens are trying cannabis, alcohol, or tobacco at the lowest rate in 30 years, according to a new survey from the McCreary Centre Society, a Vancouver-based non-profit that does research on youth health. The Society will publish an in-depth look at youth cannabis use in early 2025.

From the report: “In 2023, 22% of youth had ever used cannabis, which was a decrease from previous survey years (e.g., 25% in 2018, 30% in 2008, and 41% in 1998). Youth who had used cannabis had most commonly first tried it at age 14 or 15. Compared to 5 years earlier, there was a slight increase in youth who used cannabis for the first time at age 12 or younger (15% vs. 14% in 2018), and a decrease in the percentage who waited until they were 15 or older to try it (44% vs. 47% in 2018).”

Cannabis industry event Token Tuesday came back to Winnipeg this past week, with its largest show yet, according to many who attended.

Manitoba NDP’s Minister of Sport, Culture, Heritage and Tourism, Glen Simar, says the government will continue to take a close look at the province’s retail model, which includes the possibility of government run stores.

Cannabis NB will bring its Cannabis Expo to the Fredericton Capital Exhibition Centre on March 16. The Cannabis Expo is a cannabis education tradeshow that’s expertly crafted for 19+ New Brunswickers who consume cannabis, as well as those who are just curious about the industry and these products.

International cannabis

One of the biggest cannabis news stories this week was when Germany passed a law allowing individuals and voluntary associations to grow and hold limited quantities of cannabis. Later this year, the law will allow for cannabis cultivation clubs, similar to Uruguay, as well as personal cultivation of up to three plants for private consumption, and the possession of up to 25 grams of cannabis.

New Brunswick’s eighth private cannabis store opens in Hampton

Written by Staff on February 23, 2024. Posted in Business, Cannabis News, Government, New Brunswick, Retail.

New Brunswick recently announced the eighth private retail cannabis store in the province, located in Hampton, about a 30-minute drive from Saint John.

The provincial government first announced its plans for around a dozen new stores in 2021. It began vetting for ten new private cannabis stores following a tender process that ended in October 2022.

The newest store is the second Cannabis Xpress location in New Brunswick. The retail chain was also the first private cannabis store to open in the province in June 2023. Cannabis Xpress currently has 14 locations in Ontario.

*Local MLA Gary Crossman with Cannabis Xpress owner Chris Jones*

“We are excited to finally open our newest store in Hampton,” says Cannabis Xpress owner Chris Jones. “The town has been very welcoming, as well as the residents who are excited that we are open so that they have a more reliable, convenient place to buy their legal cannabis products.

Jones tells StratCann that the new location’s grand opening was the biggest store opening in the franchise’s history, with the highest number of sales and customers. He also says Cannabis Xpress is the largest private retailer in New Brunswick by revenue, and he expects to open a third location in St. Andrews this spring.

“The private model is very successful and we hope they allow us to continue expanding since it is easier for CNB to work with a group that has scale and can continue to grow versus new operators. The model and working with Cannabis NB is much easier than Ontario, they are very supportive of the growth and success of our business—great people.”

In the agency’s most recent quarterly report in January, total sales were $23.9 million, an increase of 10.5 per cent compared to the same period last year. Net income for the quarter was $6.0 million, 26.5 per cent above the prior year’s third quarter net income of $4.8 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 six cannabis producers in New Brunswick now licensed to allow on-site sales direct to consumers, including the recent addition of a cannabis nursery.

Cannabis NB will bring its Cannabis Expo to the Fredericton Capital Exhibition Centre on March 16. The Cannabis Expo is a cannabis education trade show that’s expertly crafted for 19+ New Brunswickers who consume cannabis, as well as those who are just curious about the industry and these products.

In it’s 2024-2025 Strategic Plan, the provincial cannabis agency also says they are exploring possible options for “on-site consumption opportunities” that can increase legal access and “meet the needs of current and potential customers.”

Bill tabled in New Brunswick to allow private cannabis stores

November 30, 2021

Burb opens store near UBC after long wait

Written by Sarah Clark on February 23, 2024. Posted in British Columbia, Business, Cannabis News, Retail.

Following a nearly three-year wait, Burb Cannabis was finally able to open its new location near the University of British Columbia on Friday, February 23.

The new store, at 5784 University Blvd., is located just outside campus boundaries but represents the closest cannabis store to the University.

The application for the location had received pushback from some in the community who argued such a store didn’t fit the neighbourhood and would put students at risk. However, a Metro Vancouver committee voted to approve the application earlier this month, sending it to the MVRD Board for the final decision.

BC Premier David Eby, when he was still the BC Attorney General, was among those who spoke out against the location at the time.

However, the UBC student union was supportive, with Alma Mater Society president Eshana Bhangu noting that there are multiple liquor stores close to campus that face no such community concerns.

A small handful of local media organizations attended the grand opening, with the Vancouver Sun reporting that John Kaye, co-founder and CEO of Burb, welcomed a gathered crowd, saying, “Let’s cut the ribbon, let’s get high.”

This is the final store Burb can currently open in BC. The province has a cap of eight stores per owner, although it is currently considering raising that to some degree.

Kaye tells StratCann he’s supportive of raising the cap, especially since the BC government’s own BC Cannabis Stores are not capped in the same way.

“We’re very supportive of raising the current eight store cap in BC, and feel the new cap should be 16. There are 36 BC Cannabis Stores. How is that fair?”

The new store will operate Monday through Saturday from 9am to 11pm, and Sunday from 10am to 10pm.

“Our focus is on offering the best menu possible, with exclusive products you’ll only find at Burb, such the Jellee hand-rolled hash-holes, Book Club Exclusives, and limited run merchandise and accessories,” stated Peter Pittson, general manager at Burb UBC and Co-Founder of Book Club, a cannabis community and products company.

Burb Cannabis receives final approval from MVRD for store near UBC

June 27, 2022

Proposed cannabis store near UBC receives approval from committee

June 9, 2022

Surrey Board of Trade says its time for cannabis stores in the city

March 1, 2023

Community Savings Credit Union announces affordable invoice factoring for cannabis licensed producers

Written by Staff on February 22, 2024. Posted in British Columbia, Business, Cannabis News, Producers.

A BC-based credit union is launching a new invoice factoring program intended to meet the needs of British Columbia’s federally licensed cannabis producers.

Community Savings Credit Union’s new program aims to help provide BC cannabis producers with access to affordable and readily available working capital to support growth.

The “affordable invoice factoring program” will enable BC LPs to receive payments from their BC and Ontario government distributor invoices early. Waiting several weeks, or in some cases, months, for these payments can be a significant challenge for cannabis producers, especially smaller producers with thin margins and little extra cash flow.

Ensuring these producers can receive payments from the BC and Ontario distributors gives companies more leverage in the market and is a more affordable alternative to current factoring options available, says Community Savings in a press release.

Access to banking has been an ongoing challenge for the cannabis industry in Canada, with all sorts of companies that work in or serve the cannabis industry often finding themselves unable to access even a basic account, much less institutional lending. Community Savings Credit Union is one of a handful of organizations that have worked to create solutions for cannabis companies that other institutions turned away. They even recently launched an account specifically for micro-cannabis licence holders.

Mike Schilling, President and CEO of Community Savings Credit Union, says: “As a pro-cannabis credit union, we are proud to be the only industry-owned solution to give BC LPs affordable access to working capital from their provincial receivables. We have the ability to purchase every BC and OCS invoice for every BC LP today, helping BC cannabis producers with continued growth.”

Community Savings partnered with We Can Capital, which provides financial assistance for the cannabis industry, on the project.

Joshua Reynolds, partnerships director at We Can, says this new factoring program is a way to help out BC’s storied cannabis industry.

“In British Columbia, we are fortunate to have a long-standing and renowned cannabis market. However, cannabis businesses have not always had access to the full range of financial tools necessary for success. This relationship with Community Savings will redefine the role of factoring and demonstrate its value as an exceptional growth tool. We take pride in offering highly affordable invoice factoring that is industry-driven, providing BC LPs with access to their own working capital to maintain their status as leaders in Canada.”

One example Community Savings provides of how factoring can work is of a BC cannabis licensed producer selling $150,000 worth of pre-rolls to the Ontario Cannabis Store (OCS) with a maximum of 60-day payment terms.

“We know that sooner than 60 days payment can and does happen, but the consistency is unpredictable and not healthy for operational cash flow,” explains the company in a press release. “One week later, the LP received an additional order for $100,000 worth of pre-rolls. In order to fulfil that product order quickly, the LP sells the already-delivered OCS invoice to Community Savings Credit Union and We Can Capital for up to 85% advance against this $150,000 receivable for much-needed working capital, with a same-day turnaround on funds.

“The LP can now facilitate the production of the new order without delay. This instant cash can also allow the ability to negotiate better terms with suppliers that offer a discount for early cash payments. Without invoice factoring from Community Savings and We Can Capital, this BC LP would previously have needed to wait for the original payment to start an additional production run.”

Dayna Lange, the CFO of Tricanna Industries and Community Savings Credit Union cannabis member, says the program will help cannabis producers like Tricanna build better supply chain relationships.

“Having instant access to our own money has been a game-changer for the way we approach the continued growth and reputation of our business,” says Lange. “With a one-day funding and settlement model, we are able to continue to increase sales and maintain strong relationships with our suppliers. This is long overdue, and we are very encouraged to see mainstream financial services supporting BC cannabis.”

Cannabis producers in BC interested in learning more about the program can find more information here.

Cannabis Industry Forum finally formally announced

Written by Staff on February 21, 2024. Posted in Business, Cannabis News, Government.

Innovation, Science and Economic Development Canada (ISED) has finally formally announced its Cannabis Industry Forum.

The long-awaited announcement, (archived here) released on Feb 21, 2024 but backdated to February 16, officially provides the names of a handful of industry executives, the majority from publicly held corporations.

The group was first formed in 2023 but the official list of names was not shared previously with the public. The members have also engaged with Morris Rosenberg, Chair of the expert panel leading the legislative review of the Cannabis Act which is expected to be tabled in the House of Commons in the coming months.

Hugo Alves, CEO, Founder and Director of Auxly Cannabis Group Inc., chairs the Forum. The membership also includes:

Philippe Dépault, President and Founder, Québec Craft Cannabis Inc.
Taylor Giovannini, President and Founder, Oceanic Releaf Inc.
Beena Goldenberg, CEO, Organigram Holdings Inc.
Raj Grover, Founder, President and CEO, High Tide Inc.
David Klein, CEO, Canopy Growth Corporation
Miguel Martin, CEO, Aurora Cannabis Inc.
Rosy Mondin, President of Soma Labs Scientific Inc. and Director of Cannaworld Ventures Inc.
Tyler Robson, President of Cannabis, SNDL Inc.

François-Philippe Champagne, the Minister of Innovation, Science and Industry says the forum represents a chance for industry to weigh in on regulatory challenges.

“For Canada to be a leader in this global economy, we require the ability to adapt to new industries and sectors that benefit Canadians. The Cannabis Industry Forum helps create innovative solutions to barriers that exist in this industry. Through active collaboration, Canada is working with industry leaders to become an innovator and leader in this changing economy.”

Featured image of Rosebud Farms in BC

The SQDC pulls back on operating hours of twelve branches

Written by David Brown on February 21, 2024. Posted in Business, Cannabis News, Government, Quebec, Retail.

The Société québécoise du cannabis (SQDC) says it will be adjusting the closing time of a dozen locations across the province.

Beginning February 25, 2024, the twelve stores listed below will close at 6:00 pm from Monday to Wednesday rather than 9:00 pm. The change is being implemented due to lower than average traffic at these locations.

The SQDC says the new, revised schedule will be similar to that in effect in several neighbouring businesses.

The targeted branches’ operating hours will now be:

Monday to Wednesday from 10 am to 6 pm;
Thursday and Friday from 10 am to 9 pm; and
Saturday and Sunday from 10 am to 5 pm.

The 12 stores:

Aylmer
The Tuque
The fall
Magog
Mont Tremblant
Rimouski
Wolf River
Rouyn-Noranda
Sainte-Agathe-des-Monts
Shawinigan (90-minute delivery available)
Valleyfield
Vaudreuil-Dorion

Earlier this month, SQDC also announced they plan to close one location in Montreal. A termination notice was sent to members of the Canadian Union of Public Employees (CUPE), which represents the majority of union members in SQDC branches, and says the end of employment will be March 23, providing time to fully close the store down.

The SQDC currently has 98 locations across Quebec. This will be the first store to close in the province. In an interview with StratCann in 2023, the then-president and CEO of the SQDC said the province was shifting away from approving new stores with a new focus on approving new products to attract consumers.

CUPE president David Clément told the Canadian Press at the time that he believed the store closure was retaliation against the union for a job action against several SQDC stores that recently ended.

The SQDC brought in $33 million for its third quarter of the 2023-2024 financial year, which ended December 30.

Featured image via Google Maps

A Manitoba cannabis brand is taking a former partner to court

Written by Staff on February 20, 2024. Posted in Business, Cannabis News, Manitoba, Producers.

Several Manitoba cannabis companies are at the heart of a notice of claim recently filed in a Manitoba court.

TobaGrown, Inc. and TobaRolling, Inc. filed a notice of claim in Manitoba on February 16 against the owners of Kief Cannabis Company, Ltd. and Lucky Ventures, Ltd. The defendants have 20 days to reply to the notice.

In the claim, Jesse Lavoie, owner of TobaGrown and TobaRolling, claims that the owners of two other Manitoba cannabis businesses unfairly removed him from a business partnership, causing his own companies to suffer significant financial hardship.

TobaGrown’s lawyers contend that the principal of and a shareholder in Kief Cannabis, Jesse Denton, entered into an agreement with Lavoie to allow Toba Rolling to distribute its TobaGrown and other branded cannabis products from Kief’s federally licensed facility.

The claim also contends that Lavoie and Denton entered into an agreement with another Manitoba cannabis entrepreneur, Tim Doerkson, to create the cannabis brand “Lucky Stash” for the Manitoba market.

Although the agreement between TobaGrown and Kief was fruitful, the claim alleges Denton terminated the agreement in 2023, effectively locking the company and its partner brands out of not only the Kief facility but the Manitoba market entirely. TobaGrown now claims that Kief is in breach of contract, owing Toba more than $100,000, as well as equipment and cannabis held at their facility.

It also contends that Denton violated his “fiduciary duties” to the business arrangement, causing TobaGrown to suffer damages it says he is liable for, and that both defendants acted with an intent to injure the economic interests and reputation of Lavoie and the Toba brand.

These allegations have not been proven in court. Neither Denton nor Kief responded to requests for comment.

BC micro files notice of claim alleging non-payment from processing partner

February 16, 2024

Processing the pain: Financial disputes in a tight cannabis market

October 23, 2023

Two BC cannabis companies in conflict over payment

August 19, 2023

Kelowna cannabis store fined $7,000 for failing to check ID

Written by Staff on February 19, 2024. Posted in British Columbia, Business, Cannabis News, Retail.

It was an expensive Valentine’s Day for one cannabis store in Kelowna when a judge ordered them to pay a $7,000 fine for an employee forgetting to check ID.

Kiaro Cannabis in Kelowna was subject to a targeted inspection in July 2023 in which an underage agent was sold a package of cannabis gummies. The employees on duty did not ask for the minor agent’s ID or their age.

In rendering their decision, the general manager of the BC Liquor and Cannabis Regulation Branch (LCRB) ruled that store management did not take proper actions to ensure staff were properly checking ID, leading to the decision to implement the penalty of a $7,000 fine.

For a first offence of this type, which was the case here, BC has a range of penalties, such as a licence suspension for seven to eleven days and/or a monetary penalty of $7,000-$11,000.

Kiaro operates four Cannabis retail stores in BC, including the Kelowna location, as well as Vancouver, Port Moody, and Victoria.

BC’s Minors as Agents Program (MAP) utilizes young people under the age of 19 to test if cannabis and liquor stores in BC are checking IDs. The program works with two adult agents and one minor. One adult agent first enters the store to assess if it’s safe for the minor to enter. If deemed safe, the minor then enters the store and selects a product to buy.

If the purchase is made successfully, the minor agent then returns to a car where the second adult agent awaits to collect the product. At the same time, the first adult agent communicates the action to the store employees on duty.

In this case, the Branch alleged that the minor agent purchased a five-pack of Strawberry Mango SOURZ by Spinach for about $7. The store clerk, later identified as the manager on duty, sold the product to the minor.

In their defence, representatives for Kiaro discussed the chain’s internal policies for staff training and practices for checking ID. In their ruling, the Branch determined that the store had provided evidence that it had an adequate training program and an effective ID policy for teaching all its employees when and how to request ID. However, it also ruled that there was little evidence about how the policies are being implemented in the Kelowna store where the infringement occurred.

The store noted that the manager on duty who sold the cannabis to the minor was suspended without pay for five days and had a written warning added to their file.

Ultimately, BC determined that the store had not demonstrated due diligence in ensuring its policies were being properly taught and executed in its stores. The Branch also recommended that the licensee consider introducing a pop-up question on its point of sale system where an employee must answer yes or no to “have you asked for ID?” before being able to complete a sale.

The retailer may now apply for a reconsideration of this compliance order in accordance with BC law, within 30 days.

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.

New cannabis study shows no significant change in rates of use-disorder post-legalization

May 15, 2023

Calgary police confirm: cannabis store robbed on Boxing Day morning

December 30, 2021

Canada releases What We Heard Report on the Cannabis Act review

October 10, 2023

Week in Weed – February 17, 2024

Written by David Brown on February 17, 2024. Posted in Business, Cannabis News.

This week at StratCann, we were first to share the story of BC allowing smoking and vaping cannabis on public patios, and the announcement of several new cannabis distributors in Manitoba.

StratCann’s David Brown investigated concerns around federal sampling rules, with Health Canada confirming such actions are compliant as long as all applicable federal and provincial requirements are adhered to.

StratCann’s Tim Wilson looked into a group of Ontario’s independent cannabis retailers who are taking on predatory pricing.

We also shared our newest monthly cannabis jobs report, news that Christina Lake Cannabis completed its acquisition of BZAM’s former Midway farm, OrganiGram’s most recent quarterly report showing $15 million in losses, and the SQDC’s newest quarterly report showing it sold $200 million worth of cannabis in Q3 2023.

BC’s CSU enforcement group conducted three raids of cannabis stores on First Nations’ Land, and Health Canada issued a product recall of BonBon Turkish Delight cannabis edibles in Ontario.

A BC micro producer filed a recent notice of claim alleging non-payment from the processing partner.

In StratCann’s profile series, we looked at seed-to-sale service provider ALCannTrace.

In other cannabis news this past week, it was somewhat slow.

The CannExpo will be in Toronto from March 22 to 24, 2024, at the Enercare Centre in Exhibition Place. This three-day event is open to industry and the adult public. Attendees can enjoy budtender sampling and a culinary stage, among other features.

Radio Canada spoke with Lynne Petit, secretary of the Retail Cannabis Council of Manitoba (RRCMB) and owner of the Midnight Show Cannabis store in Beauséjour, about her concerns with Manitoba’s two-tiered retail licensing system that allows big box stores and convenience stores to sell cannabis products.

Rubicon Organics announced their new CEO, Margaret Brodie. Brodie has been with Rubicon since it was founded in 2015 and began her tenure as the company’s CFO. She was appointed Interim CEO on January 1, 2023.

A new study published in Cannabis and Cannabinoid Research says that exposure to cannabidiol (CBD) in pregnancy reduces heart function in young male offspring. The team included Western University researchers Mina Nashed, Sebastian Vanin, Mohammed Sarikahya, and Steven Laviolette, and Queen’s University researcher David Natale.

Researchers from the University of British Columbia released a paper on how cannabis use can help manage stimulant cravings among people who use unregulated drugs like crystal meth, cocaine and crack.

BC-based Allied Corp, a Canadian cannabis supplier with its production centre in Colombia, announced that it had signed another 3-year sales agreement to supply another international distributor with THC flower.

Benzinga did a writeup on Decibel Cannabis and its success in the pre-roll market in Canada.

About 200 farmers, industrialists, and policy experts will be at the Renaissance Edmonton Airport Hotel this Feb. 21 to 23 for the Future is Here Conference on Industrial Hemp. Organized by the Alberta Hemp Alliance, the conference aims to promote the growth of Alberta’s industrial hemp sector.

There were 64 filings under the Companies’ Creditors Arrangement Act (Canada) in 2023, a 64% year-over-year increase. Of these, five were from the cannabis industry.

The National Post did a laughable bit of prohibitionist clickbait, completely misrepresenting a Deloitte report that StratCann covered last month, claiming it says the illicit market is “flourishing” in Canada.

The actual report shows that the illicit market continues to decline significantly, with the legal market becoming increasingly competitive in terms of price and variety. For some reason, the National Post really seems to want weed to stay illegal, I guess.

Law Enforcement:

Quebec police arrested three in connection with a cannabis export scheme to the US.

OPP raided seven illegal dispensaries, seizing 63 kg of flower and 500 vape pens. Seven were arrested.A Quebec man received a 12-month suspended sentence to be served at home on charges of growing, propagating and harvesting cannabis under the Cannabis Act.

International Cannabis

Ukraine passed a law legalizing medical cannabis. The bill will come into force six months after it is officially published.

SQDC sold more than $200 million worth of cannabis in Q3 2023

Written by Sarah Clark on February 14, 2024. Posted in Business, Cannabis News, Financials, Government, Provinces, Quebec, Retail.

Quebec’s Société québécoise du cannabis (SQDC) brought in $33 million for its third quarter of the 2023-2024 financial year, which ended December 30.

Quebec’s portion of federal excise taxes, plus local taxes, brought in an additional $76.5 million to provincial coffers, for a total of $109.5 million in sales and tax revenue.

The SQDC’s total sales between September 10 and December 30, 2023, reached $201.6 million, compared to $187.3 million in the same quarter of the last financial year, an increase of 7.6% year-over-year.

This is an increase from $61.4 million from cannabis sales and taxes in the second quarter of 2023, selling $151.7 million worth of cannabis.

Quebec sold 37,215 kg of cannabis in Q3 2023, compared to 33,242 kg in the same quarter for 2022 and 27,498 kg in the previous quarter for 2023.

The vast majority of sales continue to be through brick-and-mortar SQDC stores, while just 2,357 kg of cannabis were sold through SQDC’s online store, for a total amount of $12.3 million. A police captain in northern Quebec recently said that the provincial government’s limits on payment options for online cannabis orders are pushing people to the illicit market.

Of the $201.6 million in cannabis sales, flower sales accounted for $167.7 million (83%), while other cannabis producers were $34 million.

The SQDC now has 98 branches, compared to 92 at the end of the third quarter of the previous fiscal year. It recently announced it was closing one store in Montreal.

The SQDC also says it has improved its product categories, particularly in extracts, edible products and formats, adding to increased sales and better meeting consumer demand. The SQDC recently put out a call for “off-cycle products” like 7-gram flower SKUs, pre-roll multi-packs, resin, and rosin, among others.

On November 13, 2023, the SQDC and the employees represented by the Canadian Union of Public Employees (CUPE-5454) signed new collective agreements, putting an end to the labour conflict and leading to a gradual return to normal activities.

On November 27, 2023, Suzanne Bergeron joined the organization as President and CEO.

The interim financial report for the quarter from September 10 to December 30, 2023, is available now on SQDC.ca.

Ontario’s independent cannabis retailers band together to tackle predatory pricing

Written by Tim Wilson on February 14, 2024. Posted in Business, Cannabis News, Ontario, Retail.

Independent cannabis retailers in Ontario are fighting back against LPs selling products at what they say are predatory prices in discount chain stores.

A core group of 14 owners, representing 23 top-performing stores, will be monitoring large LPs who feature and promote products at razor-thin margins, and who they say are suspected of financing these low prices via data deals.

This independent retail group, which operates in separate markets in Ontario and freely shares information, will then advise the larger community of independent stores.

“We decided to either minimize or eliminate the position of LPs engaging in data deals that fund predatory pricing structures,” says Jennawae Cavion, founder of Calyx + Trichomes in Kingston. “We’re doing this while amplifying the LPs who don’t engage in data deals, who support independent retailers, and who engage in healthy business practices that stimulate longevity.”

The group is developing a three-tier list for categorizing LPs: those suspected of engaging in predatory data deals; those working with collectives; and those LPs that are data-free and don’t pay listing fees.

Of these, the companies suspected of doing data deals will face the most scrutiny, and possibly be boycotted.

“We talk about what we see in each of our markets, and we share information about which products are selling at such low prices that it doesn’t make sense,” says Owen Allerton, the owner of Highland Cannabis in Kitchener. “We can shine a light on bad behaviour by LPs, avoid those companies, and work with producers who play fair. We have a huge amount of buying power, and won’t be tricked into subsidizing our competitors.”

This informal group is different from organizations like the Independent Retail Cannabis Collective (IRCC) in that it doesn’t function as a buying organization that seeks group benefits or discounts. There is, in effect, no business model.

The group does, however, act with solidarity when it comes to member interests, and will even be adding maps to store websites highlighting other members in case customers are travelling to other cities.

It is also more than willing to school the market.

“I think the LPs currently look at making deals with retailers with predatory pricing as a net positive,” says Sam Gerges, the owner of MaryJane’s in Toronto. “Once they understand and see that it’s actually a net negative because we will offload them, they will start making decisions differently.”

A Wider View

Member retailers contacted by StratCann noted that this independent retailer group, while informal and without a written mandate, can provide support in other areas where there might be common ground.

“Other issues of concern are getting rid of the excise tax, increasing the limits on edibles, and allowing for parcel shipping of recreational cannabis in Ontario,” says Nick Baksh, founder of Montrose Cannabis, in Pickering.

The independent retailers are working together to share good business practices, and to offer expertise wherever possible.

“We’ll share anything from product recommendations to brands we like, HR best practices, creative ideas that work,” says Cavion. “We also support any projects the others are working on.”

However, while these and other issues are a meaningful part of discussions within the group, the concerted action will be to provide a collective response to predatory pricing.

“If you’re a brand and are into predatory pricing with certain box retail chains,” says Baksh, “slowly but surely, we’ll find out and make new room.”

The concern isn’t only that these practices unfairly discriminate against smaller players but that with the status quo, independent retailers are, in effect, subsidizing practices that threaten their businesses.

“LPs pay a handful of retailers money they generate from the sales in our stores to help them fund predatory pricing structures,” says Cavion. “Independents are then forced to sell at a loss, while the LPs erode their own brand value. It’s lose, lose, for both LPs and independents.”

While it is legal for licensed retailers to enter into agreements with LPs for the sale of data for business intelligence purposes, the suspicion is that data deals are really a cover for listing fees and preferential treatment. But nothing is stopping independent retailers from fighting back and supporting LPs with quality products and ethical business practices.

“Small, independent growers making quality craft cannabis are unable to compete and pay retailers these crazy listing fees that have become so common,” says Cavion. “They don’t have the millions of dollars needed to engage with a handful of large groups that have many stores. And why should they? Quality cannabis should sell itself!”

An overarching theme of the initiative is that those LPs suspected of working with discount retailers on predatory pricing will have their products boycotted.

“We won’t support people who are funding our demise,” says Gerges from MaryJane’s, which has been Toronto’s number one ranked cannabis store by sales since Q1 2021.

“We can’t have a cannabis market where shelf space and the supply chain ecosystem are controlled by larger corporations which will only stock what they get paid to stock. The Canadian consumer deserves the best product, not the product willing to pay the most. These smaller LPs don’t have money to get on the shelves of these predatory pricing retailers; we independents will be their safe haven.”

Onside with the OCS

The Ontario Cannabis Store (OCS), the provincial Crown corporation with the legal monopoly for wholesale distribution of recreational cannabis, has ameliorated the situation somewhat by increasing the number of SKUs available through its Flow-Through program.

This move has provided more opportunities to create distinct value propositions.

“Generally, we are feeling pretty good about the OCS,” says Allerton. “With an abundance of SKUs, we can carry products that others don’t and avoid going head-to-head with the discount chains.”

In a tough market, where many retailers are struggling to stay above water, having the provincial wholesaler adjust policies and reduce margins is providing some relief.

“OCS does a lot of the heavy lifting for us,” says Baksh, from Montrose. “At the same time, via Flow-Through I can access a lot of stuff that isn’t otherwise getting to market, and isn’t stocked at the warehouse in Guelph.”

Independent retailers have informed the Alcohol and Gaming Commission of Ontario (AGCO)—the Crown agency that regulates cannabis in the province—that deals based on revenue or units sold contravene the inducement regulations. To date, nothing has been done, either for lack of evidence, or will, or perhaps a sense that the jurisdictional responsibility lies with Health Canada.

At this stage, it doesn’t matter: independent retailers are stepping up and taking the fight to the big guys. The small group of top-performing retailers represents over $60 million in sales and is attached to another larger group, representing another 100 stores, accounting for $200 million in sales.

“Given that there are over 1,700 cannabis outlets in Ontario, of which approximately 300 are low-volume chain stores, is it really worth it to pay these data deals to get shelf space?” says Allerton. “Maybe it’s time to start operating with integrity, which gets you love not only from our group, but from all the independent retailers in Ontario.”

Organigram reports $15 million loss due to lower international revenue and medical sale

Written by Sarah Clark on February 13, 2024. Posted in Business, Cannabis News, Financials, New Brunswick, Producers.

Organigram reported a net loss of $15.8 million in Q1 2024 and a 16% decrease in net revenue compared to the same period last year.

The New Brunswick cannabis producer attributes the decline in net revenue to a reduction in international revenue and medical sales and a “reduction in the gain on fair value of biological assets.”

It wasn’t all bad news, though, as Organigram also achieved positive adjusted EBITDA and positive cash flow from operations of $7.7 million and improved sequential quarter-over-quarter adjusted gross margin from 17% in Q4 Fiscal 2023 to 31% in Q1 Fiscal 2024.

Organigram says they maintained the number two market position in Canada for the last five consecutive months as of the end of Q1 Fiscal 2024, and held the top position in milled flower and concentrates, the number two position in edibles, and the number three position in pre-rolls. Market position is based on data from multiple sources like Hifyre, Weedcrawler, provincial board data, and internal modelling.

The company also closed the first $41.5 million tranche of a previously announced $124.6 million investment from British American Tobacco.

It also reintroduced its Edison Jolts to the market, with $2.9 million in sales in Q1 2024, which was previously removed from shelves following orders from Health Canada. The company recently relaunched the product in several provincial markets. In a previous quarterly report, Organigram complained of lower net revenue and margins due to the declining price of cannabis flower, as well as a higher cost of sales, THC inflation, and Health Canada no longer allowing the sale of “ingestible extracts” like the Edison Jolts.

Organigram also launched 22 new SKUs in the quarter, completed its first craft harvest from the newly completed expansion of its Lac-Supérieur facility, and completed planting the first grow room using seed-based production resulting from technology acquired from the strategic investment in US-based Phylos Bioscience Inc.

In May of 2023, Organigram made its first investment into the US cannabis market by issuing a strategic convertible loan to Phylos, intending to help Organigram accelerate the launch of products containing THCV in the Canadian market.

Organigram continues to wait for EU-GMP certification of its Moncton facility.

The company also continues to maintain it has lost market share due to other companies engaging in THC inflation.

“We believe that the cannabis industry in Canada has begun to reach an inflection point that will remove supplies in the market and accelerate consolidation,” said Organigram CEO Beena Goldenberg. “Companies engaging in THC inflation who have dubiously enjoyed temporary competitive advantages to artificially inflating their labelled THC content are facing more pressure as Health Canada and the OCS have announced random THC testing protocols.

“We have also seen the CRA begin to garnish companies who are in arrears on their excise taxes and many companies are already stretching their payables to preserve cash. As capital markets have dried up and increased enforcement removes unfair advantages and penalizes those who don’t contribute to the health of our sector, the Canadian market will experience a shakeout. As this materializes, Organigram stands to cement itself as a long-term industry leader, owing to its strong balance sheet, increasing production efficiency, industry-leading R&D and reinvigorated focus on international expansion supported by Project Jupiter.”

Organigram says Project Jupiter will target investments in emerging cannabis opportunities internationally to help Organigram reach new markets.

The company’s gross revenue in Q1 2024 was $56.3 million, compared to $60.8 million in the previous quarter. It paid $19.8 million in excise taxes for a net revenue of $36.5 million.

Featured image via investors.organigram.ca

Manitoba announces several new cannabis distributors

Written by Staff on February 13, 2024. Posted in Business, Cannabis News, Government, Manitoba, Producers.

On February 9, Manitoba Liquor & Lotteries announced five companies that successfully applied to provide cannabis distribution services in the province.

Manitoba Liquor & Lotteries (MBLL), which oversees the sourcing and distribution of cannabis to retailers in the province, first announced they were seeking new applicants to handle distribution in 2023.

The successful applicants, 100 Lbs., 1CM Inc, Lineage Distribution, Kief Cannabis Company, and Valiant Distribution Canada, have entered into twelve-month renewable agreements with MBLL and now must get a Cannabis Distributors License from the Liquor, Gaming and Cannabis Authority of Manitoba (LGCA), to be permitted to begin operations.

Several of these companies have already been providing distribution services in the province as holders of federal production licences, or in partnership with a federally-licensed cannabis producer. This new licensing process allows Manitoba to further regulate and oversee these activities.

Graham Taylor, President and CEO of Lineage Distribution, is one of those companies that are already offering distribution services. He says he’s happy to see another evolution of the Manitoba cannabis market. Lineage also distributes cannabis in Saskatchewan and the Territories.

“We’re thrilled to be officially announced as a distribution partner with the MBLL and to continue expanding our services to the Manitoba market and beyond,” Taylor told StratCann.

Another company listed in this new announcement, Valiant Distribution, is owned by High Tide, which also owns the Canna Cabana chain of retailers. Canna Cabana currently has eleven locations in Manitoba.

Raj Grover, founder & CEO of High Tide, says they are excited to expand their wholesale and distribution services into Manitoba through Valiant Distribution Canada. Valiant also wholesales cannabis products and consumption accessories in Saskatchewan, and consumption accessories through their Calgary warehouse, as well as its experience distributing in the United States and Europe.

“We look forward to building on our record of delivering efficiency and a high level of service in Manitoba and encourage other provinces to follow Manitoba and Saskatchewan’s lead in leveraging private sector expertise in wholesale distribution and fulfilment services.”

Three other companies, Delta 9 Logistics Inc., Open Fields Distribution, and Maqabim Distributors Inc., are currently licensed by the LGCA for cannabis distribution on behalf of MBLL.

The province’s goal in bringing on new cannabis distribution partners is to improve storage capacity to meet greater product demand while reducing delivery times, especially for small, rural, and remote retailers.

Manitoba also still allows cannabis producers to bypass distributors and ship products directly to retail stores, which is how several cannabis distributors have been operating in the province.

In June 2023, the MBLL announced it was seeking to improve lead times and retail receiving compliance, something many Manitoba cannabis retailers have been frustrated by, especially remote, rural stores. This included introducing a new 20-day purchase order deadline and a new five-day retail receiving requirement.

As of January 2024, Manitoba listed 198 privately-run retail cannabis stores, 115 of which are in Winnipeg (up from 194 in October).

Christina Lake Cannabis completes acquisition of Midway farm

Written by Sarah Clark on February 12, 2024. Posted in Business, Cannabis News, Producers.

An outdoor cannabis producer located in BC announced today that it has completed the acquisition of a new outdoor cultivation site in Midway, BC.

Christina Lake Cannabis (CLC) first announced the deal on February 5, which included the acquisition of outdoor cultivation facilities in Southern British Columbia, related harvesting and manufacturing equipment, and approximately 19,000 kg. of biomass for a total purchase price of $3 million.

The facilities, which include all associated lands, support buildings, and related equipment, along with the biomass, were formerly owned by BZAM. BZAM had previously also purchased a hotel in Midway to house its employees at the outdoor farm near the US border.

“This acquisition will solidify our position as a key supplier to the country’s top brands,” said Mark Aiken, Chief Executive Officer of Christina Lake Cannabis. “We are expanding our growing capability to meet rising customer demand. The increased capacity is a catalyst for robust topline growth and improved profitability by harnessing economies of scale. As the demand for our products has continued to grow over the last 2 years, we have had to supplement our own cultivation with tens of thousands of kilos of biomass supply from the wholesale market. The Midway acquisition secures our supply chain providing CLC with cost certainty and solid control over input quality.”

The Midway property is 342 acres, with just over 100 acres of licensed cultivation space. With this acquisition, CLC will expand its total licensed outdoor cultivation footprint to over 120 acres. Potential further expansion of additional acreage is available and could be licensed by the Company should the demand arise.

“Over the last 18 months CLC has focused on operational efficiencies and investment in their processing infrastructure,” said Jay McMillan, Chairman of the Christina Lake Cannabis Board of Directors, in a company press release. “This has resulted in increased productivity and expanded capacity. The investment in the Midway property now aligns CLC’s cultivation and processing capability, positioning the company for future growth.”

Christina Lake Cannabis plans to plant its first “proprietary” 80-acre crop in spring 2024, expanding to 100 acres in 2025. In the company’s most recent quarterly report for Q3 2023, it showed nearly $9 million in revenue and almost $500,000 in income.

Featured image via christinalakecannabis.com

Week in Weed – February 10, 2024

Written by David Brown on February 10, 2024. Posted in Business, Cannabis News, Government, International.

It’s been another busy week in Canadian cannabis news. StratCann’s own Tim Wilson uncovered that the CRA is currently owed more than $200 million in unpaid cannabis excise taxes. Despite this, the federal government continues to issue payments to provinces to the tune of nearly $2 billion since legalization.

We also looked at how to navigate the world of bankruptcy and restructuring in the cannabis industry, and how formerly dry municipalities put cannabis stores in industrial zones.

We looked at Pure Sunfarms’ sister company receiving approval to begin building a cannabis greenhouse in the Netherlands, and a Canadian cannabis company importing genetics from New Zealand.

A police captain in Quebec says the SQDC needs to do more to compete with the illicit market in Nunavik, while the SQDC says they are closing a store in Montreal.

The town of Beaumont, Alberta, passed new rules for medical cannabis production to move it out of residential neighbourhoods, and a judge in Ontario ruled police violated Charter rights in a 2021 raid of an unlicensed, online cannabis store.

Aurora Cannabis reported a net loss of $25 million in its most recent quarterly report, while Canopy Growth reported a loss of $216.8 million.

Chatham-Kent Police raided an illegal cannabis shop, seizing cannabis, psilocybin, and LSD, while the OPP raided 7 illegal dispensaries, seizing 63 kg of flower, 500 vape pens, and made 7 arrests.

In other cannabis news…

Jeff and Vicky Curtis of TruQuartz and Boro and Beyond spoke with the news about their desire to see cannabis consumption spaces in BC. The BC government is looking at the issue but has been clear that indoor inhalation is off the table.

Catherine Lemay, assistant general counsel, IP at Hexo, spoke with ISED about how various IP rights are used in the cannabis industry and discussed some things to consider if you have an invention you think may be worth something. Full transcript here.

Mainstream media finally picked up on the story StratCann broke in Canada a few weeks ago about Israel accusing Canada of dumping medical cannabis into their market. The Toronto Star shared comments on the subject from Global Affairs Canada and several Israeli cannabis companies.

Prince George, BC Councillor Garth Frizzell is asking the province where the city’s share of tax revenue is. He noted the Union of B.C. Municipalities continues to lobby the province for municipalities’ share of the “grass tax.”

Tilray Brands is bringing beverage brand Mary Jones from Vancouver’s Jones Soda Co. to the Canadian cannabis market, starting with Ontario in Q1 2024. Green Hedge will support sales and field marketing for Mary Jones in Canada.

RCMP in PEI say they made five impaired by cannabis arrests in three days. Police are awaiting blood sample test results and anticipate these cases will be in court at a later date.

The Town of Caledon, Ontario, would like to know whether residents want to see legal cannabis stores in the municipality. The survey is open until March 1.

Some residents in eastern BC near Lumby say they are frustrated by recent changes to a zoning bylaw to allow a large cannabis facility. Bylaw 3000 expands the allowable size of buildings from 500 m2 to 1400 m2 for buildings with a base not consisting entirely of soil.

Nextleaf Solutions Ltd. announced a wholesale distribution agreement with Lineage Distribution, a licensed cannabis processor and distributor based in Niverville, Manitoba. Lineage will exclusively distribute Nextleaf’s complete product catalogue of over 35 SKUs across four initial categories. The Agreement encompasses Manitoba, Northwest Territories, Nunavut, and the Yukon Territories.

MediPharm Labs Corp. announced receipt of GMP certification for their Barrie, Ontario facility from ANVISA, the governing body of Brazil’s pharmaceutical industry. MediPharm Labs now has GMP certification from the United States FDA, European Union, and Australia’s TGA, and holds a drug establishment license from Health Canada.

A new study from researchers in Ontario says cannabis-involvement in self-harm Emergency Department (ED) visits almost doubled over 12 years and may have accelerated after medical cannabis legalization. The results, caution the researchers, cannot determine whether cannabis is increasingly causing self-harm ED visits or whether individuals at high risk of self-harm are increasingly using cannabis. While many headlines focussed on anxiety, the study itself was much more broad and only mentions “anxiety” twice. Of the 158,912 self-harm ED visits in Ontario between 2010 and 2021, 4.9 % involved cannabis.

The Cannabis Benchmark’s Canada Cannabis Spot Index for February 9, 2024, shows the average LP wholesale selling price for cannabis continuing to decline to $4.73 per gram, down from last week’s C$4.82 per gram.

Greenway Greenhouse Cannabis Corporation announced that it has surpassed 20,000 kg of product sold since its inception. Greenway will deliver its first brand, MillRite, to the Ontario Cannabis Store this fiscal quarter.

Cannabis NB plans to open new stores in Fredericton, Saint John, and Moncton. They will soon be hiring employees. The average vape price per gram equivalent in Canada fell to $8.65 in Q4 2023, a 9% decrease from the previous year. Vape products accounted for significant portions of cannabis sales, with Alberta leading at 22%, followed by British Columbia and Ontario.

314 Pure Cannabis engaged in a Sales Process

Written by Contributor on February 9, 2024. Posted in Alberta, Business, Cannabis News, Producers.

SOLICITATION FOR OFFERS

On January 11, 2024, Harris & Partners Inc. was appointed as the receiver (the “Receiver”) of all the assets, undertaking and properties of 314 Pure Cannabis Ltd. (“314 Pure” or the “Company”) pursuant to an Order of the Court of King’s Bench of Alberta (the “Court”).

The Company operated a cultivation and hydroponic growing cannabis facility located in Crossfield, Alberta (the “Facility”). The Facility is approximately 21,700 sq. ft. in size on a lot that is approximately 3.0 acres.

314 Pure also owns a total of approximately 15.61 acres of land surrounding the Facility, of which 12.61 acres have been deemed as excess land. 314 Pure owns the Facility and related production equipment.

On February 9, 2024, the Receiver commenced a Sales Process (“Sales Process”). The Sales Process is being conducted in accordance with the procedures, which can be located on the Receiver’s website: www.hpiadvisory.com/314pure.

Interested parties who wish to pursue a potential acquisition and receive additional diligence materials will be required to execute a Confidentiality Agreement, which can be obtained by contacting Avison Young directly ([email protected]; 403-232-4381).

Per the Sales Process, non-binding letters of intent must be submitted by no later than 5:00 pm (Calgary Time) on March 15, 2024.

Harris & Partners Inc.
Jill Strueby, Senior Vice-President
403.800.1574
[email protected]

Net loss of $25 million for Aurora Cannabis in most recent quarterly report

Written by Sarah Clark on February 8, 2024. Posted in Business, Cannabis News, Financials, International, Producers.

Aurora Cannabis Inc. saw a net revenue of $64.4 million and a net loss of $25.2 million in the third quarter of fiscal year 2024.

This represents an increase in revenue of $3.3 million and a decrease in net loss of $37.2 compared to the same period in the prior year.

Aurora attributes the decrease in net loss primarily to an increase in gross profit of $32.7 million and a reduction of operating expenses of $10.4 million, offset by an increase in other expenses of $5.9 million.

Adjusted gross profit before fair value adjustments was $32.4 million in Q3 2024, compared to $28.0 in the prior year quarter, an increase of 15.7%.

Revenue from sales of cannabis for medical purposes was the bulk of Aurora’s revenue at over $48 million. The company attributes this growth primarily to expansion of its export market in the most recently reported quarter.

Aurora also announced that one of its wholly owned subsidiaries has acquired the remaining approximately 90% equity interest of Indica Industries Pty Ltd (“MedReleaf Australia”). MedReleaf Australia holds the number two position in the Australian medical cannabis market.

“Fiscal 2024 is on track to be our strongest to date, driven by the continued strength of our differentiated business model and our focus on profitable global medical cannabis markets. Our international medical net revenue grew 41% year-over-year in Q3, demonstrating Aurora’s ability to meet diverse patient needs in markets across the world,” said Miguel Martin, Chief Executive Officer of Aurora, in a press release.

“The acquisition of MedReleaf Australia will make Aurora the largest global medical cannabis company in nationally legal markets and will allow us to leverage our success in providing pharmaceutical grade cannabis across 15 countries,” Martin added. “MedReleaf Australia is expected to be immediately accretive to Adjusted EBITDA, while accelerating our path to generate positive free cash flow this calendar year.”

Revenue from Aurora’s plant propagation program also increased compared to the same quarter in the previous year, from $6.6 million to $7.3 million.

Aurora has nearly $300 million in working capital and more than $112 million in biological assets, compared to more than $400 million in working capital and $93.7 million in biological assets in the same quarter of the previous year.

Aurora Cannabis’ growth buoyed by increased medical exports, cut flower business

November 9, 2023

International medical cannabis market driving Aurora’s cannabis sales

August 10, 2023

Israel opens “anti-dumping” investigation into cannabis imports from Canada

January 26, 2024

Canadian cannabis nursery to import unique New Zealand genetics

Written by David Brown on February 7, 2024. Posted in Business, Cannabis News, International, Ontario, Producers.

Canadian cannabis producer Apollo Green expects to soon carry genetics supplied by a New Zealand medical cannabis company, Rua Bioscience.

The unique cultivar, from the region of Tairawhiti, will be available through Apollo Green at a future date.

A wholly owned subsidiary of Australian Biortica Agrimed, Apollo Green specializes in unique genetics and provides access to plant breeder’s rights protection with DNA fingerprinting of all genetics. The arrangement with Apollo Green also opens Rua Bioscience’s genetics to existing sales channels in Europe, North America, and Australasia.

Apollo Green, located about 20 minutes east of Ottawa, is licensed as a cultivator and processor but bills itself as a cannabis nursery with a focus on unique genetics.

Oisín Tierney, Director of Business Development at Apollo Green, says the company, which primarily serves as a B2B nursery for commercial cultivators, is focussing on bringing in genetics from breeders around the world.

“We’re very excited to be partnering with Rua,” Tierney tells StratCann. “They are one of many breeders to work with at the moment. Ultimately, at Apollo Green we’re on a mission to offer cultivators curated phenotypes from reputable breeders from all over the world.”

“We’re always cultivating partnerships with breeders. We never stop pheno-hunting, and our ultimate goal is to be a one-stop shop for unique genetics for the commercial market.”

“What we’re looking at is genetics with landrace traits that are different to what you might find, typically, in North America.”
Oisín Tierney, Apollo Green

Tierney says part of their goal is to help refresh or reinvigorate cannabis genetics, especially in North America, which become so focused only on high THC cultivars. Although it has imported genetics before, this will be the first time the company has brought in live clones from outside the country.

“We’re Looking for genetic variability,” he explains. “The traits of (cannabis) genetics are being condensed. And variety is being reduced as the industry continues to breed, especially in commercial production. So what we’re looking at is genetics with landrace traits that are different to what you might find, typically, in North America.

For their part, Rua Bioscience is equally excited by the partnership and the ability to bring their unique landrace cultivar to other growers around the world through Apollo Green.

“We are excited about this partnership with Apollo Green and Biortica Agrimed, as it aligns perfectly with our vision to take our unique strains to the world,” said Paul Naske, CEO of Rua Bioscience. “This is more than just an agreement; it’s a bridge connecting New Zealand’s exceptional cannabis genetics to the world.”

“We welcome Rua to the Apollo Green and the Biortica Agrimed family,” said Tom Varga, CEO of Biortica Agrimed.

Licensed to cultivate since 2016, Rua Bioscience is a Māori community-owned company that launched its first prescription medicine in April 2022.

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Quebec closing cannabis store in Montreal

Written by Sarah Clark on February 6, 2024. Posted in Business, Cannabis News, Government, Quebec, Retail.

Quebec will have one less cannabis store in Montreal soon, as an SQDC location is expected to close on March 2.

The news, shared first by the Canadian Press, says the Plaza Saint-Hubert location, with 11 employees, will be closing on March 2. A termination notice was sent out to members of the Canadian Union of Public Employees (CUPE), which represents the majority of union members in SQDC branches, and says the end of employment will be March 23, providing time to fully close the store down.

The SQDC has 98 locations across Quebec. This will be the first store to close in the province. In an interview with StratCann in 2023, the then-president and CEO of the SQDC said the province was shifting away from approving new stores with a new focus on approving new products to attract consumers.

CUPE president, David Clément told the Canadian Press that he believes the store closure was retaliation against the union for a job action against several SQDC stores that recently ended.

The SQDC’s most recent quarterly report, released in November 2023, showed the province had brought in $61.4 million from cannabis sales and taxes in the second quarter of 2023, selling $151.7 million worth of cannabis.

Featured image via Google Maps

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Formerly dry municipalities put dispensaries in industrial zones to test the waters

Written by Contributor on February 6, 2024. Posted in British Columbia, Business, Cannabis News, Government, Ontario, Retail.

Municipalities in BC that reversed their ban on cannabis dispensaries have used industrial zones as a testing ground for their first store, and two owners offered differing opinions on the strategy.

Following the legalization of cannabis in 2018, the British Columbia and Ontario provincial governments allowed municipalities to opt out of permitting dispensaries.

Two dispensary CEOs who opened the first stores in Tofino and Delta, BC, say industrial zones were the only place they could start their business. Non-commercial locations were selected to address city government concerns about cannabis storefronts being visible to minors on their way to school or going home, the owners said.

When there is no store in Surrey, BC, what are people going to do?
Vikram Sachdeva, Seed & Stone

Putting a municipality’s first store in an industrial area creates challenges for owners to reach customers, according to Vikram Sachdeva, CEO and founder of the Seed & Stone dispensary chain.

“This industrial area concept has to go away,” Sachdeva said.

Sachdeva opened Delta, BC’s first cannabis brick-and-mortar store, in November 2021 after working directly with the mayor and city staff to create a policy for dispensaries.

Sachdeva explained that the industrial location was a compromise with municipal officials who were hesitant about not allowing a dispensary downtown.

Since then, five more dispensaries have opened in Delta, including three in strip malls, BC’s Liquor and Cannabis Licensing data shows.

When Seed & Stone opened the first dispensary in Hope, BC, in September 2022, Sachdeva worked with local officials to ensure the location was in a strip mall.

Pitt Meadows, BC, is currently working with Seed & Stone on opening the municipality’s first cannabis storefront after agreeing to hear applications for dispensaries in July 2023.

A similar story with a different perspective played out on Vancouver Island.

The first Tofino, BC, cannabis store suggested to city officials that it should open in an industrial zone in January 2020, Michael Holekamp, CEO of Daylight Cannabis Company, said.

Holekamp said his store in Tofino, next to breweries and automotive shops, is a trial by the city before potentially opening up in commercial areas. “It makes sense up there,” Holekamp said.

Daylight Cannabis is currently operating with a temporary permit because Tofino still doesn’t have permanent regulations on dispensaries, Holekamp explained.

Small towns have limited commercial operation spaces in industrial areas, and Holekamp said he intentionally never requested municipal officials change the zoning of his store from industrial to commercial.

“Technically right now, there is no legal zoning,” Holekamp said.

A second dispensary has since opened in Tofino, this time in a commercial area, Holekamp confirmed.

Sachdeva argues that making a greater dent in the illicit grey market requires putting cannabis dispensaries where people already shop.

Health Canada’s 2023 survey showed that 73% of cannabis users reported purchasing cannabis through the legal market.

“When there is no store in Surrey, BC, what are people going to do?” Sachdeva said.

“They’re going to go to other municipalities, or they’re going to call their guy that they’ve been calling for the last five to ten years.”

Holekamp agreed that grey market competition was a concern but said whether or not it’s more prevalent in municipalities without dispensaries was hard to tell.

North Vancouver saw a slow growth of dispensaries after lifting its ban, according to Geoff Dear, owner of Muse Cannabis, the city’s first dispensary.

But within 12 to 18 months, there was greater competition in the city, and Muse felt it in their bottom line.

Dear said limits on the number of stores in cities and minimum distances between dispensaries can help fight market saturation.

Government data shows there are now 60 dispensaries in the ten municipalities that have lifted their prohibition on cannabis storefronts.

Local media reports show that Surrey, North Vancouver, Tofino, Hope, Delta, and Pitt Meadows in BC initially opted out of allowing dispensaries before reversing course.

In Ontario, the municipalities of Mississauga, Tecumseh, LaSalle, and Milton took the same path of granting dispensary permits after initially refusing to.

The number of dispensaries in each city that reversed its ban are Mississauga (24), North Vancouver (9), Milton (9), Delta (6), LaSalle (5), Hope (3), Tofino (2), Tecumseh (2), Surrey (0) and Pitt Meadows (0) according to BC’s Liquor and Cannabis Licensing and the Alcohol and Gaming Commission of Ontario.

Surrey, BC, announced on January 25 that it planned on allowing up to 12 dispensaries in the city after first exploring a lift on its ban in July 2023.

~William Koblensky Varela is a reporter, editor, and journalist

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SQDC needs better online payment options, says police captain

Written by Sarah Clark on February 5, 2024. Posted in Business, Cannabis News, Quebec, Retail.

A police captain in northern Quebec says the provincial government’s limits on payment options for online cannabis orders are pushing people to the illicit market.

Patrice Abel, a captain with the Service de Police du Nunavik, a region that makes up the northern third of Quebec, tells Nunatsiaq News that he estimates that more than 80% of the residents in the region still purchase their cannabis from the illicit market.

This is juxtaposed with new figures from Stats Canada showing nearly three-quarters of consumers in Canada are purchasing products from the legal market.

One of the reasons so many in Nunavik are still buying cannabis from the illicit market, says Abel, is a lack of legal retail stores and the requirement to use a credit card when purchasing from the SDQC.ca, Quebec’s legal online cannabis portal.

Illicit online stores, meanwhile, offer other payment options such as electronic money transfer services like PayPal.

Société québécoise du cannabis (SQDC) is the only retail store in Quebec allowed to sell cannabis, with 98 locations across the lower third of the province.

The Kativik Regional Government is the representative regional authority for most of the Nunavik region of Quebec and has expressed concern about cannabis legalization and its potential impacts on the community in the past.

About 60 percent of the region’s 14,000 inhabitants, 90% of whom are Inuit, are under the age of 25. According to a report in 2017, Nunavik has the highest rate of use of cannabis in Québec.

Nunavik has 14 communities that are only connected by air, and several of them are “dry” communities.

A study was launched in 2021 to better understand cannabis use in Canada’s territories, as well as areas like Nunavik.

A new three-year study to determine how cannabis is used in Canada’s territories has been launched by a group of university researchers and health experts, with funding from Health Canada.

A study in 2015 found that cannabis consumers in Nunavik had lower body mass index, lower amounts of fat on their bodies, and two times lower risk of being obese.

In Quebec, the minimum legal age to possess or purchase cannabis is 21 years.

Image via wikimedia commons.

Navigating the world of bankruptcy, restructuring in the cannabis industry

Written by David Brown on February 5, 2024. Posted in Business, Cannabis News, Government, Producers.

Five years into a legal non-medical cannabis market in Canada, the industry is beginning to mature in many ways, including the unfortunate demise of many hopeful companies.

Bankruptcies, insolvencies, and restructuring are becoming more common, even as new licences continue to come in every month.

“…the company should be getting key creditors on board before the filing. You don’t want to surprise people.”
Dina Kovacevic, Insolvency Insider

A relative handful of cannabis companies filed for creditor protection in 2023, according to listings by Insolvency Insider Canada, which focuses on the Canadian insolvency market.

One of the most common filings is for the Companies’ Creditors Arrangement Act (CCAA), which allows insolvent companies to restructure their businesses and finances. With proper planning, a company can take this step to avoid declaring bankruptcy, says Dina Kovacevic, Editor at Insolvency Insider.

Typically, she explains, if a cannabis company is in trouble, it can either file for CCAA protection, or a notice of intent to make a proposal, or an “NOI” under the Banking and Insolvency Act. This is, ideally, a step taken to avoid being put into bankruptcy or receivership by a creditor or a company declaring bankruptcy themselves.

One of the most significant points Kovacevic stresses is for distressed companies to ensure they take steps in advance if they see themselves running into long-term financial issues.

“If a company is facing financial issues and it wants to restructure, it doesn’t just want to go out of business, and perhaps it fears that its secured lender is going to put it into receivership. I’d say that it has several options.

“The first option is to try to work with its creditors and suppliers on an out-of-court restructuring plan. The second would be to file for CCAA protection, and even in that type of situation, I would say that the company should be getting key creditors on board before the filing. You don’t want to surprise people.”

“You have to critically self-assess where you are. Doing nothing isn’t an option. It’s being very critical of yourself as a business owner. How are you competing?
Clark Lonergan, BDO Canada

Clark Lonergan, a Financial Recovery Services partner in BDO Canada’s Toronto office, reiterates that any company facing financial challenges needs to make tough choices early on in the process to ensure they can either bring in new investment or creditors, or have a chance to wind down their operations and liquidate assets on a timeline they control.

“You have to critically self-assess where you are,” he says. “Doing nothing isn’t an option. It’s being very critical of yourself as a business owner. How are you competing?

“What’s your balance sheet look like? Do you have sufficient capital to weather the ups or downs? And who are your stakeholders? Do you have bank debt? Is it all equity? How are you competitive in this market?”

Assessing these issues well beforehand can make a huge difference. Bringing in others who can assist in the process can also be important.

“When you get into a level of distress, it becomes more crisis management,” adds Lonergan. “So you’re dealing with stakeholders, focussing on liquidity, on meeting payroll and dealing with creditors who need to be paid. So the additional perspective of an advisor can mean the business can still run, while ensuring you have someone able to steer you through that process, with all the available options and resources you as a business owner might not know about.”

The cannabis industry had an initial burst of interest due to the excitement of legalization, he argues, but that excitement and “wild west” mentality was quickly tempered by the realities of a complex, highly regulated industry.

These realities will continue to settle in in the coming years, says Kovacevic at Insolvency Insider.

“At the end of the day, we’re still expecting more,” she says. “It’s still early in the industry cycle, people are still dealing with oversupply. There’s a lot of growing pains, a ton of consolidation that’s happening. So I think we’re still in the pretty early stages of this.”

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Pure Sunfarms’ sister company receives approval to begin building cannabis greenhouse in the Netherlands

Written by Sarah Clark on February 4, 2024. Posted in Business, Cannabis News, International, Producers.

A Canadian company will be one of a handful of companies producing cannabis for Dutch coffee shops as part of a new program in the Netherlands.

Village Farms International Inc., the parent company of BC cannabis producer Pure Sunfarms, recently announced that it had begun building its first indoor cannabis production facility in Drachten, Netherlands. Village Farms acquired Village Farms’ majority-owned (85%) subsidiary, Leli Holland in September 2021.

Village Farms intends to start production for the fourth quarter of 2024 and says Leli Holland plans to sell flower and hash products across consumer-preferred formats, including pre-rolls.

“As a limited license market with a long-established consumer base and a cannabis-friendly regulatory environment, the Netherlands represents a very attractive near-term opportunity in our international cannabis strategy,” said Michael DeGiglio, President and Chief Executive Officer, Village Farms.

“We are thrilled to build on our rich history in the Netherlands to leverage our experience as a leading, profitable cannabis business in Canada for this first major European recreational market. Our two-phased approach to ramping up production enables us to enter the market in a timely and capital efficient manner in line with the roll out of the Dutch Program. We look forward to contributing.”

The Dutch government announced its plans for the project in 2022, which include exploring the possibility of a “closed cannabis chain” for cannabis coffee shops in several cities across the country.

In December 2023, the first cannabis under this program made its way to the first approved coffee shop.

The goal of the closed-loop experiment is to explore the possibility of a quality-controlled cannabis production and distribution system in the country as an alternative to the current “tolerance policy” that has not-legal-but-tolerated “coffee shop” style points of sale and unregulated, illicit growers who supply them.

“By regulating the sale of cannabis, we have a better insight into the origin of the products and the quality,” Dutch Health Minister Ernst Kuipers said recently. “In addition, we can better inform consumers about the effects and health risks of cannabis use.”

The Dutch cities of Breda and Tilburg are home to the first two shops to sell this cannabis. The Leli Holland nursery is reported to be located an existing building in an industrial district in the city of Drachten.

The municipality of Smallingerland recently granted the company a permit to begin retrofitting the location. Drachten is a village within Smallingerland.

The policy that provides for these shops to exist was first introduced in the Netherlands in 1967, allowing adults to buy small amounts of cannabis in designated “coffee shops.” However, the issue of how to properly regulate the supply of these coffee shops has long-simmered in the country over concerns with public safety and law enforcement, especially with many of the commercial growers located in residential areas.

In 2009, an advisory committee looking into the issue recommended a small-scale experiment to explore how to regulate coffee shops’ supply. In 2015, the Association of Dutch Municipalities added to the pressure on the government to regulate these supply chains.

This led to the creation of the Coffee Shop Chain Act, which was successfully passed through parliament in 2020. Since then, the Dutch government has been preparing for the study based on the input of its expert committee.

The committee—which consisted of experts in public health, addiction, law enforcement, local government, criminology, and law—held round table discussions with stakeholders like mayors, coffee shop owners, cannabis producers, regulators, scientists, cannabis users, and addiction experts.

The committee recommends including numerous small and medium-sized cities across the country. Seventeen out of 23 municipalities who applied were eligible to participate.

In addition to better monitoring of both the safety of the cannabis and its supply chains, the program will also seek to evaluate consumer purchasing habits. This includes data such as how many purchases occur within the currently “tolerated” system vs the entirely unregulated illicit market.

Like Canada, the committee’s report also discusses the challenges of such an experiment and any possible future legalization, which contradicts existing international laws. This is one reason why the government is not seeking to import any cannabis for this trial.

Growers selected for the program must pass various microbial and pesticide testing standards and potentially adhere to Good Agricultural Practice (GAP) and Good Manufacturing Practices (GMP). The committee also recommends a “soft” approach to any recommendations for irradiation or remediation, given stakeholder feedback citing consumer distaste for such a designation.

Product labels will be required to include warnings, related information, and a THC logo, and products must be sealed in a resealable, child-safe container. Selected growers will be required to be registered with the Chamber of Commerce.

Featured image of the location where the Leli Holland facility will be built. Image via Google Maps

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Week in Weed – February 3, 2024

Written by David Brown on February 3, 2024. Posted in Business, Cannabis News, Government, International.

It was another busy week of industry news at StratCann. We looked at a new market scan from Deloitte that compares pricing in the legal and illegal market, shared the news of George Smitherman moving on from his long-held position as head of C3, and looked at new market figures that show revenue on cannabis production rallying in the second half of 2023.

Alberta announced several changes to their cannabis rules, including cannabis sampling rules, event sales, and more. The BCLDB’s newest quarterly report shows the market continues to mature, with a greater variety of products eating into dried flower dominant market share, while also showing some of the first significant declines in overall sales.

We also shared the newest evolution in the retail chain behind Trees Corporation seeking investors or buyers in an effort to hold on to its stores in BC and Ontario. Nextleaf Solutions announced that they are debt-free and cash flow positive.

We also shared the story of Kootenay Aeroponic, a micro cultivator and processor located in Creston, BC.

Last but not least, our friends at Marigold PR announced their upcoming Radical Femmes networking event in Toronto on March 8, Canada’s largest networking event celebrating women in cannabis.

In other cannabis news

Cannabis consumers in Nunavik, located in the northernmost region of Quebec, are much less likely to purchase cannabis from the legal market compared to the rest of Canada, say the Nunavik Police Service. The region has no legal storefronts, and online purchases from SQDC.ca require a credit card, something many residents don’t have, says an insightful article at Nunatsiaq.com. A Nunavik police captain argues the province should allow more payment options to better compete with the illicit market.

BC’s Village Farms International announced it has begun the build-out of its first indoor cannabis production facility in Drachten, Netherlands. Through its subsidiary, Leli Holland, Village Farms holds one of 10 licences permitting legal production and distribution of recreational cannabis in the Netherlands under the new Dutch Program. The Company is targeting the start of production in the fourth quarter of 2024. Leli Holland plans to sell flower and hash products, including pre-rolls. Village Farms owns Pure Sunfarms in BC and Balanced Health Botanicals in the US.

High Tide released their audited 2023 financial results, with fourth-quarter revenue of $127.1 Million, adjusted EBITDA of $8.4 Million, and free cash flow of $5.7 Million—all records for the company. Among the results, revenue from High Tide’s Cabanalytics platform, including ad revenue, was $26.3 million for fiscal 2023, compared to $21.7 million for fiscal 2022, representing an increase of 21% year-over-year. Cabanalytics revenue grew to $6.8 million in the fourth fiscal quarter of 2023, representing an increase of 3% sequentially.

Aurora Cannabis announced (further?) share consolidation and an upcoming quarterly report investor call.

Law enforcement

Winnipeg Police announced a new Don’t Drive High campaign, as well as two arrests related to a convenience store found to be selling illegal cannabis and tobacco products.

Another person in Ontario who was caught up in a large-scale raid against illegal cannabis operators in 2020, called Project Woolwich, received a 12-month conditional sentence recently. The man was among 17 people from Niagara, the GTA, and British Columbia arrested in August 2020 following the joint police investigation.

Montreal Police were assisted by the Sûreté du Québec, Laval police, and OPP in 11 raids on residences and commercial buildings in Montreal, Laval, Blainville, Saint-Lin-Laurentides, Mirabel, and Sainte-Anne-de-la-Pérade, with more than one tonne of cannabis and 4,930 cannabis plants seized. Three arrests were made.

The Halifax Regional Police arrested four people for illegally selling cannabis, seizing 50 pounds of cannabis, 400 edibles, 300 grams of cannabis resin, and $3,000 in cash.

A large drug bust in Brantford, Ontario, resulted in the seizure of large amounts of cannabis, cannabis oil, and hash, as well as psilocybin, MDMA, cocaine, cash, and weapons.

A man in Ontario was ordered to pay a fine and court costs related to the odour of cannabis bothering his condo neighbours and breaking condo rules.

Meanwhile, a Vancouver man received a conditional sentence for selling cannabis, psilocybin, and GHB from a tent in the city’s Robson Square.

International cannabis news

The New York Times did an in-depth piece on the differences between inhaled cannabis and cannabis edibles and their potential effects and risks.

In a nice step forward, the Colorado Tourism Office is finally including cannabis content in its promotional material.

Washington state lawmakers are looking at ways to crack down on cannabis store robberies, which industry leaders say have been happening at an alarming rate. They are also looking at allowing people to grow up to four cannabis plants at home.

In the US, cannabis sales are booming while alcohol wanes, as more drinkers—especially younger ones—see cannabis as a healthier alternative, reports Bloomberg.

Radicle Femmes celebrates women in cannabis on March 8

Written by Contributor on February 2, 2024. Posted in Business, Cannabis News.

Marigold PR, an award-winning public relations agency to the North American cannabis industry, presents the inaugural Radicle Femmes, Canada’s largest networking event celebrating women in cannabis.

Held on International Women’s Day, March 8, 2024, in Toronto, ON, the event is in collaboration with VIP sponsor the Ontario Cannabis Store (OCS), as well as cannabis advisory firm The Panther Group, creative agency Sister Merci, and cannabis wellness brand Solei. Radicle Femmes will highlight the achievements of women entrepreneurs, professionals, and advocates in shaping the industry landscape, and will discuss challenges that women continue to face, including access to funding and low representation in the sector.

Held at Soluna Toronto, this event will draw a diverse audience, including entrepreneurs, marketers, consultants, retail decision-makers, licensed producers, brand representatives, and various ancillary services. The format will feature a dynamic program of panel discussions and valuable networking sessions that create a platform for business opportunities. The event’s official tagline, “I can’t believe we still need these events,” reflects the sentiment of many women in the cannabis industry and beyond, as the Women Entrepreneurship Knowledge Hub estimates that only 18% of businesses are majority-owned by women in Canada.

“Women are underrepresented in leadership positions in many industries, including the cannabis industry, despite their significant contribution to the sector,” says Tanya Watkins, Vice President, Corporate Affairs, Social Responsibility & Strategic Engagement at the OCS. “The OCS’s commitment to enabling a vibrant cannabis marketplace is tied to supporting a diverse and inclusive industry. We’re proud to sponsor Radicle Femmes, which celebrates the many contributions of women who continue pushing the legal cannabis industry forward.”

Radicle Femmes invites potential partners to join in celebrating and promoting women in cannabis. Sponsorship packages are available and offer a unique opportunity to align your brand with this impactful event. For more information on sponsorship opportunities, please contact [email protected].

Esteemed media partners of the event include ADCANN, Cannabis MarketSpace, Cannabis Prospect Magazine, Cannabis Retailer, Grow Opportunity, and StratCann. Media representatives are encouraged to be part of this event. For more information, please contact [email protected].

Attendance at Radicle Femmes is strictly limited to those aged 19+. Pre-registration is required to guarantee your spot.

To stay up to date with event details, follow @radiclefemmes. For more information and to register for the event, please visit Eventbrite.

Read the press release here.

Nextleaf Solutions announces they are debt-free, cash flow positive

Written by Sarah Clark on February 1, 2024. Posted in British Columbia, Business, Cannabis News, Producers.

In its 2023 financial report, BC-based cannabis processor Nextleaf Solutions Ltd. says it achieved four quarters of consistently positive cash flow in the past fiscal year.

The company is now debt-free, which is attributed to reduced operating expenses, increased revenue, and improved gross margin. Nextleaf reports total gross revenue for the fiscal year-end (FY) 2023, totalling nearly $10 million, with a gross profit of $2.3 million.

The cannabis producer’s year-over-year gross revenue increased by $4.6 million, representing a growth of 186.1% compared to the previous year. In just the fourth quarter of 2023, Nextleaf generated around $3.3 million in revenue, a 24% increase from the previous quarter and a 77.7% year-over-year growth from Q4 of FY2022.

Located in Coquitlam, BC, Nextleaf offers an array of cannabis 2.0 products, such as cannabis oils, capsules and vape pens.

Nextleaf has experienced significant commercial growth in Fiscal Year 2023, marked by a series of impactful initiatives and successes. In 2023 it launched 15 new products into the Canadian non-medical market, including three softgel SKUs, four ingestible oil SKUs, and eight vape SKUs. It also recently launched an in-house brand called High Plains that includes infused pre-rolls.

The company’s products are now distributed in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, and Nova Scotia. The company’s Glacial Gold brand is the top-selling cannabis softgel brand in BC, a category that saw an uptick in sales in BC in 2023. It was the number four selling softgel in Ontario in Q4 2023.

“This was a monumental year for our business. 2023 delivered the framework for financial stability. This provided the confidence that we have the tenacity, talent, technology, and tactics to ride the waves inherent in this industry. Despite the complexity, we’ve remained very focused on delivering one simple premise…value,” shares Emma Andrews, Interim CEO.

“We’ve worked through growing pains and roadblocks, overcoming setbacks and stigma. It has fortified our team, and I’m proud of how far we’ve come,” continues Andrews, “we’ve put in a lot of hard work to get here, and we’re just getting started. There’s a collective understanding of the unique inflection point we are at.”

Note: Nextleaf is located in Coquitlam, not Port Coquitlam as this article briefly stated.

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