Cannabis production in Canada rallied in the second half of 2023 after a seven-month decline following a high water mark in November 2022.
Chained at 2017 dollar rates, the value of cannabis production in the legal industry in Canada reached $6.47 million, the highest it has been in 2023 since February.
While the regulated industry has shown steady year-over-year growth since 2018, the level of growth has been slowing as the industry begins to hit a potential ceiling in demand within the confines of the regulations.
The low in June 2023 of $5.78 million was the lowest since November 2021, as the industry appears to be potentially levelling out.
Legal cannabis stores, which, although not as pronounced as cannabis production, have also been increasing year-over-year since 2018 despite some slight monthly declines. Through 2023, however, those increases began to slow down, with November’s $1,079,000 being slightly lower than October’s $1,082,000, although still well above $872,000 in November 2022.
At the same time, the unregulated cannabis industry has been slowly but steadily declining over the same time. In October 2018, the GDP for the unregulated cannabis industry was $2.73 million, with month-over-month declines since, arriving at $1.64 million in November 2023.
Money from unlicensed cannabis stores showed a similar decline, with revenue in October 2018 at $1.26 million, followed by month-over-month declines to just $692,000 in November 2023. Legal, fully-regulated retail stores passed unregulated stores in December 2021.
Alberta Gaming Liquor and Cannabis (AGLC) made several updates to their Retail Cannabis Store Handbook and the Cannabis Representative Handbook this week, effective immediately.
The changes relate to authorizations to sell cannabis at age-gated events, new guidance for cannabis sampling and cannabis sales between retail stores, among other changes.
Under the new rules, if a sample product is not available in the 3.5 gram size, the smallest available size of the product may be provided as a sample. Each product may be sampled no more than twice per calendar year.
Licensed cannabis retailers may also now apply to AGLC for a licence extension for the purposes of selling cannabis at a minors-prohibited entertainment event or cannabis industry trade show.
In addition, cannabis sales between licensed cannabis retailers, regardless of ownership structure, are now permitted in Alberta. The required 120-day wait time between cannabis transfers has also been removed to allow unlimited transfers of cannabis products between licensees owned by the same legal entity.
Another change is that licensed cannabis retailers are now able to apply to AGLC for a licence extension for the purposes of selling cannabis at entertainment events or cannabis industry trade shows. These events must be age-gated to preclude minors.
Cannabis retailers can now also leave cannabis products in locked display cases overnight, rather than having to move them to and from locked storage every night and morning.
This means cannabis products must either be stored in a locked showcase in the customer area or a locked storage room accessible only by authorized staff.
The Canadian Cannabis Council (C3) announced today that its President & CEO is stepping down.
George Smitherman, who has served as the head of the cannabis industry organization for four years, says he is proud of his work and looking forward to new opportunities.
“(I’m) excited for new opportunities and proud of the work we accomplished over the past four years,” Smitherman told StratCann. “Looking forward to watching the continued evolution of C3 and the Cannabis sector from the sidelines.”
The organization made the announcement in an email sent to its members at 4:19 am on January 31, saying Smitherman has left an “indelible mark” on C3.
“His leadership, thinking, and indomitable spirit have been instrumental in driving positive change for our industry and fostering a culture of collaboration and excellence among our members,” wrote Rick Savone, Chair of the Cannabis Council of Canada. “We extend our heartfelt thanks to George Smitherman for his service and wish him nothing but success and joy in his future endeavours.”
“George is stepping down after four successful, eventful years as our President. C3 is now beginning a recruitment campaign to succeed him,” Savone added in an email to StratCann. “The organization has grown exponentially over George’s tenure, and our work as the leading industry association representing producers is more impactful than ever. In a few weeks, we’ll have a new organizational leader and our achievements will continue to generate benefits for our members. We’re eager for this next stage of development, both for George and for C3.”
The Canadian Cannabis Council’s board says they will now begin a formal search for a new Executive Director and are encouraging those interested in the position to send their application to [email protected].
In the interim, C3 Treasurer Tamara Lovi and C3 Secretary Elisabeth Sieber will assume the role of Acting Co-Executive Directors, ensuring the smooth continuation of C3 operations.
The Board says it has been working to define its strategic priorities for 2024, with a mandate to continue to push for financial viability, a level playing field with the illicit market, and enhanced communications to consumers.
The Cannabis Council of Canada bills itself as a national and international representative of the country’s licensed producers and processors of cannabis, with a mission to promote industry standards, support the development, growth, and integrity of the regulated cannabis industry, and serve as an important resource on issues related to responsible use of cannabis for medical and non-medical purposes.
Smitherman has a long history in Ontario politics. He started with C3 in March 2020. Previously, he had worked in the cannabis industry in various roles. He was also a candidate for Mayor of Toronto in 2010 and served as the Ontario Minister of Energy and Infrastructure and Deputy Premier of Ontario from 2008–2009, and the Minister of Health and Long Term Care, Deputy Premier of Ontario from October 2003–June 2008.
Smitherman was also previously a member of the Ontario legislature from 1999 to 2009, and was the first openly gay MPP in Ontario’s history.
A court-appointed monitor of Trees Corporation, which operates a chain of 10 cannabis stores in BC and Ontario, is conducting a sale and investment solicitation process for the cannabis company.
FTI Consulting Canada Inc. is undertaking the process on behalf of Trees Corporation, Ontario Cannabis Holdings Corp., Miraculo Inc., 2707461 Ontario Ltd., OCH Ontario Consulting Corp., and 11819496 Canada Inc. (collectively, “Trees” or the “Companies”) in the Companies’ Creditors Arrangement Act (CCAA), R.S.C. 1985, c. C-36, as amended.
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.
The company lists among its assets, in addition to its ten locations, an established loyalty program and a “long-standing and respected cannabis heritage originating on Vancouver Island.”
On January 2, 2024, the applicants received an extension for their proceedings until February 29, 2024. Then, following orders granted by the court on January 29, 2024, FTI Consulting Canada and Trees started the sale and investment solicitation process (SISP), and a transaction agreement was approved to serve as the “stalking horse bid” in the SISP. A Stay of Proceedings was then extended to April 12, 2024.
Those who wish to submit a bid in the SISP must deliver a non-binding letter of interest to the Monitor and Trees, together with the other materials and information required under the SISP, by no later than 5:00 p.m. (ET) on February 29, 2024. Final binding offers are due in accordance with the SISP by no later than 5:00 pm (ET) on March 15, 2024, unless extended in accordance with the terms of the SISP.
Trees started as a “legacy” era medical cannabis dispensary in British Columbia before eventually transitioning to the legal market.
The declining price of cannabis means wholesale cannabis sales in BC in the last three months of 2023 were down from the previous three months, even as the volume of cannabis sold increased.
The figures were released as part of the BC Liquor Distribution Branch’s (LDB) Q3 report for 2023, covering October, November, and December.
Following an ongoing trend over several reporting periods now, 28 gram and 3.5 gram SKUs sold the most in terms of dollars, while 7 gram and 14 gram formats saw the most significant year-over-year increase in terms of dollars and grams sold.
Sales of 3.5 gram SKUs were down 21% from the same period last year in terms of dollars and 14% in terms of grams sold.
Sales (in dollars) of 7 gram SKUs increased by 81% and 80% in grams sold, while 14 gram SKUs increased 26% (in dollars sold) and 45% in grams sold. Sales in dollars in the 28 gram category increased 11%, while they also increased 18% in grams sold.
Sales were up for all producers in terms of units sold and year-over-year sales except for ingestible extracts, which declined following Health Canada’s ruling that some of these products are non-compliant.
Sales for beverages were up 21% from the same period last year in terms of dollars sold and units sold, edibles by 19% in sales and 46% in terms of units sold, flower sales in dollars were up by 9% and 4% by units, inhalable extracts sales were up 40% and 45% in units, pre-rolls up 20% and 34% in units, seeds up 10% in sales and 49% in units, topicals up 9% and 15%.
Ingestible extract sales were down 13% in terms of dollars and 20% in terms of units. Drilling down in this category, oils and tinctures were down 18% in dollars sold and units sold, while capsules and pills increased by 27% in dollars sold and 22% in grams/volume. Other ingestibles (i.e. products like lozenges that are consumed as edibles but classified by producers as extracts) were down nearly 66% in sales and SKUs sold.
Sales of disposable vape pens saw a significant increase, by about 100% in sales and units. Sales of shatter, vape kits, and wax were down in dollars and volume. Wax saw the biggest decline, with 74% less sold in dollars and SKUs.
Infused pre-rolls saw a big jump, with an 83% increase in sales and 73% increase in units sold. Resin and Rosin sales increased by 54% in dollars and 69% in SKUs.
Cart sales were up 21%, while units-moved increased by 23%.
The most popular edibles were chews or gummies, with 89% of sales, followed by chocolate at 8%, baked goods at less than 2%, and edibles and hard candies at 1%.
Infographic via bcldb.com
Inhalable extracts are divided with carts at about 48% of sales in dollars sold, followed by inhalable extracts like infused pre-rolls at 38%. Disposable vape pens were about 4% of sales, followed by resin, rosin, shatter, and hash at under 3% each.
Direct Delivery
Sales in Direct Delivery increased as well, with 702,478 grams sold in Q3 2023 compared to 362,180 last year, a 94% increase in volume for a total of $3,167,456 in sales, compared to $2,575,585 in the same quarter in 2022.
However, this was a decline from the previous quarter, where sales were 821,718 grams sold for a total of $3,777,539 in sales.
Wholesale sales in Direct Delivery increased by 23% from the same period last year, with almost $3.2 million sold. The average price per gram sold in DD was $4.51, and $3.93 for flower, down from $7.11 and $6.45 last year.
This decline in sales from Q2 2023 was driven by lower sales of cannabis flower, with $2,259,307 in Q2 and $1,863,265 in Q3. Pre-roll sales were $896,215, down from $968,026 in the previous year.
via bcldb.com
Sales of edibles and beverages were up 25% from the same quarter last year, with $16,169 sold in Q3 2023 vs $12,945 in Q3 2022.
Ingestible Extracts were way up compared to the same period last year and last quarter. In Q3 2023, sales of this product category were $24,502, doubling from $12,923 in Q2 2023 and tripling from Q3 2022’s $8,773.
A new report from Deloitte and Canadian cannabis data analytics company Neobi compares Canada’s legal and illegal cannabis markets, highlighting the advantages and challenges that the legal market faces.
On average, the price of cannabis flower in the legal market was about 10% more expensive than from illegal market. While the average cost of 3.5 grams on the legal market was $9 and $6 on the black market, the average price for 7 grams was $5.84 and $5.35, respectively, while 28 grams was $4.32 and $4.24.
The study scanned products from 624 legal private recreational cannabis stores and 57 illicit online stores in May and June 2023. Unsurprisingly, the scan found a greater variety of products in the illicit market, with more of a focus on cannabis flower and extracts, as well as larger package sizes than its legal counterparts.
This greater variety was highlighted by cannabis edibles, often with more THC and in more recognizable candy formats than legal edibles. Illegal stores were also not held back by SKU size limits like the 30-gram purchase limit for legal stores, which also likely helps the illicit market out-price the licit one.
Although both sides of the market show a majority of flower products sold in 3.5 gram SKUs, there was a more even balance of different sized SKUs at illegal stores than in the legal market. Legal stores were far more likely to carry 3.5 gram SKUs.
In the illicit market, 17.3% of flower products were in greater-than-28-gram package sizes, including a small amount as large as 56 grams (0.6%), 112 grams (6%), 224 grams (6.1%), and 448 grams (4.6%).
While unregulated, illegal websites had a high number of flower and extract products listed, they were also less likely to carry pre-rolls, beverages, and vapes compared to legal recreational stores.
The price difference between the scanned legal and illegal sources of dried cannabis flower was about 20% on average, with illegal online stores being cheaper than their heavily regulated and taxed counterparts. This price difference was more evident in smaller SKUs, while those at 7 gram and larger were
The average price a gram of cannabis flower in the illicit market was $6.24 per gram, while it was $7.96 per gram in the legal market. On average, illicit flower product prices were 78.4% of those in the legal market indicating prices in the legal market are catching up to the illegal market as compared to a 55% difference in 2019.
This price difference was most pronounced in smaller SKUs like 3.5 gram, where the illegal market was 67.8% cheaper than the legal market. The pricing for 28 gram offerings was almost the same, with average illicit prices 98.1% of the average legal recreational prices.
For a 28 gram SKU, the legal and illegal market prices were $4.32 and $4.24 per gram, respectively.
All of the sampled illegal cannabis websites allowed e-transfer as the primary payment method, with even accepting Bitcoin—only a few accepted credit cards. Unsurprisingly, 78% of illegal sites had no age gate, and many products used “common television, film, and other media brands,” potentially adding to buy appeal.
Products like psilocybin mushrooms, LSD, and DMT were found on 63% of illegal websites.
The report also says there were many instances of these illegal websites containing malware and even possible identity theft phishing schemes.
All the websites selling illicit cannabis added tax for all products at checkout, although the report says it’s uncertain whether these taxes are remitted to the government.
There are several headlines in cannabis news this week. On the international scene, StratCann reported on Israel opening an investigation into concerns that Canadian cannabis companies are flooding the Israeli medical cannabis market. Domestically, Cannabis was recently added to the Canadian Free Trade Agreement, although cross-province sales are not likely any time soon, experts say.
StratCann’s deep-dive reporter Tim Wilson asked industry experts like Trina Fraser, Tanner Stewart, George Smitherman, and others, about the ideal approach to regulating cannabis.
An Ontario man is suing the province for $2 million following an OPP raid on his cannabis production facility in Wellington North in 2021. The investigation concluded in January 2023 without charges being laid. The man alleges the police trespassed and damaged property, ultimately interfering with his ability to make money, all because of a negligent police investigation.
High Tide Inc. announced that its Canna Cabanaretail cannabis store, located at 118 Millennium Drive, Fort McMurray, will begin selling recreational cannabis products on January 27, 2024. This opening will mark High Tide’s 163rd Canna Cabana-branded location in Canada, the 79th in Alberta, and the first in the Regional Municipality of Wood Buffalo.
Cannabis activist Chris Enns says he’s leaving the industry—and cannabis—behind as his charges have been dropped. Enns said he’s looking to forge a new path in life, reports the CBC, and has told the Crown prosecutor handling the case that he intends to close his dispensary, Farm Assists, on Gottingen Street in Halifax. He said he will perhaps study law at Dalhousie University.
The Grow Up cannabis expo shared their Top 50 Dankest Canadians, which included StratCann’s own David Brown! Yay! Or is it Most dank?
Heritage Cannabis Holdings Corp. announced it is releasing new RAD products, including “liquid diamond vapes” and its new Juicy Hoots vape carts.
Finally, The New York Times ran a piece on a former US Navy lieutenant, Wanda James, who is a prominent advocate of racial justice in the changing cannabis landscape. The Times writes that Ms. James, 60, has owned multiple cannabis businesses over the years, including a pair of dispensaries and an edible company, which has given her a platform to speak about what she believes to be racial injustices in the industry.
Oh, and Nigeria says it seized 32.5 kg of “Colarado Indica” that was imported from Canada.
Saskatchewan Polytechnic has partnered with Saskatchewan-based cannabis nursery Mother Labs on a breeding program focussing on screening for mildew resistance.
The applied research project was first proposed by Mother Labs, who brought the idea to Saskatchewan Polytechnic’s BioScience Applied Research Centre (BARC). The Centre gives experts from private industry access to the polytechnic’s applied research expertise.
“Our partnership with Sask Polytech symbolizes a significant stride towards addressing a spectrum of challenges in the cannabis industry,” says Jordan Hannah, Director of Operations at Mother Labs.
Researchers use PCR-based molecular markers as a way to look for agronomic traits in cannabis plants.
Students from the BioScience Technology program extract DNA from tissue samples and use PCR-based markers (Polymerase chain reaction) to screen breeding lines for the presence or absence of specific genes.
“PCR tests, similar to the COVID PCR tests previously used for out-of-country travel, were employed by our students in the investigation of cannabis plants,” says research chair Blaine Chartrand. “Specifically, our students used PCR testing to detect plants that contained genes for resistance to powdery mildew and to determine their sex for breeding applications.”
“Collaborating with Mother Labs allowed students to gain insights into the cannabis sector through facility tours and firsthand learning experiences,” he adds.
The team accurately determined the sex of 40 different cannabis plants using PCR tests.
“As the cannabis industry continues to mature, it will be vital to develop excellent breeding programs and energy-efficient methods of propagation. Sask Polytech’s applied research will draw on techniques that are well established in the traditional agricultural space and adapt them for use in the cannabis industry to improve plant quality and performance,” said Dr. Susan Blum, Associate Vice-President of Applied Research and Innovation at Sask Polytech at the time.
This is not the only instance of such a project in Canada. Powdery Mildew is one of the most common diseases that cannabis growers often struggle with, especially in humid climates. Because of this, the industry in Canada and abroad is looking to identify and even patent genetics with resistance to the disease.
In 2020, more than $4.2 million in federal, provincial, and industry funding was announced to aid with research at the University of British Columbia (UBC) into enhanced cannabis cultivars, focusing on disease resistance for issues like powdery mildew.
Breeding is, of course, not limited to looking to address powdery mildew. In 2023, UBC’s Dr. Todesco also announced they were teaming up with a geneticist at Aurora to adapt cannabis for outdoor production.
Israel’s Ministry of Economy has sent notice to cannabis producers in Canada that it is initiating an anti-dumping investigation concerning the importation of medical cannabis from Canada to Israel.
A notice on the Israeli Government’s website dated January 18, 2024, is addressed to 10 different Canadian cannabis producers: Village Farms International, Organigram Holdings, Tilray Canada, Hexo Corp (owned by Tilray), The Green Organic Dutchman, Canopy Growth Corporation, SNDL, Cronos Group, Auxly Cannabis Group, Decibel Cannabis, and “all the medical cannabis manufacturers in Canada who export their goods to Israel.”
“The Commissioner for Trade Levies at the Ministry of Economy and Industry, announced by virtue of his authority according to Section 24(d) of the Law on Trade Levies and Defence Measures, 5591 – 1991, of his decision to open an investigation on his own initiative into the export import of cannabis from Canada, after he found that special circumstances of actual damage exist or the probability of actual damage to the local manufacturing industry and a causal link between the imported imports and said damage.” reads the document, translated.
It also contains a questionnaire for importers and exporters, which includes questions about financial statements of the company over the last three years, descriptions of the company’s ownership structure, as well as questions about the products and prices, THC and CBD levels, shipping terms, payments, and much more.
The document notes the action is being taken due to “special circumstances” and concerns over Canadian companies flooding the Israeli market with cannabis products.
The notice also includes a letter sent to Michael Mancini, the Chief Commercial Counselor with the Embassy of Canada, informing them of the investigation, dated January 15, 2024.
Canadian cannabis companies have been increasingly sending cannabis products to markets like Israel, Australia, and Germany, followed by Argentina, the UK, and the US.
Data presented last year by Health Canada indicated that cannabis exports may continue to increase significantly, with more than a thousand applications already submitted as of September 12, 2023. Canada has exported 140,958.40 kg of dried cannabis and 37,230.01 litres of cannabis oil since October 2020, with almost half of that dried cannabis (62,535.65 kg) exported in the last 12 months of data from Health Canada (July 2022-June 2023).
The federal regulator has received 1,211 applications from Canadian companies seeking to export cannabis since the beginning of the fiscal year on April 1, 2023, and has approved 1,147. In a presentation made online on Tuesday, October 24, a representative with Health Canada said they expect these numbers to continue to increase.
The number of applications and permits issued has been increasing on an annual basis, with 1,805 permits issued in 2022-2023, 1,421 in the previous year, 1,267 in 2020-21, 1,213 in 2019-20, and 272 in 2018-19.
Canada only allows the export of cannabis for medical or scientific purposes, or for hemp products.
Some Canadian cannabis brands listed by an Israeli cannabis company, Bol Phrama
Israel had more than 132,000 patients registered to receive cannabis for medical purposes as of November 2023. It began allowing imports of cannabis in 2019. A report in the Jerusalem Post in January 2023 referred to the decision to allow medical cannabis to be imported into Israel as one that has “pushed local growers and producers to desperation.” The country’s demand for cannabis at the time of the article was 52 tons per year while Israel’s own growing and production capacity is around 100 tons, continued the article.
According to Israel’s Cannabis Magazine, the investigation was triggered by five Israeli cannabis companies contacted the ministry with concerns that cannabis imports were causing prices to drop too low for them to compete.
The city of Surrey, BC, which has banned cannabis stores since the beginning of legalization, is now proposing to allow up to 12 cannabis stores in the city.
The plan, detailed in a survey the city recently posted online, says if it moves forward, there would be a maximum of two in each of Surrey’s six communities.
The city has developed a draft framework to guide the location and selection criteria, and is asking residents to complete the survey to provide feedback on the draft framework.
Surrey is the second-largest municipality in British Columbia, after Vancouver, with a population of more than 560,000 people. Vancouver, which has more than 660,000 people, currently has 80 cannabis stores, according to the city’s document (83 listed as open or in the queue according to BC).
The initial plan would have limited the number of store locations to one in each of Surrey’s six town centres (City Centre, Guildford, Fleetwood, Newton, Cloverdale, and Semiahmoo), with a preference for a city‐owned site in each Town Centre as the first location.
Graphic via City of Surrey
Councill expressed concern at the proposed locations and the idea of the city being a landlord for a cannabis business.
The new plan proposes a 200 m distance requirement from “sensitive uses and areas to limit exposure to children and youth,” as well as existing cannabis retail and production locations.
The city also says it has developed an application process for future cannabis retail store proposals. If applicants meet all pre-screening requirements, applications will then be reviewed and ranked based on the experience of the operator, a parking and access plan, visibility, lighting and crime prevention design, signage and building face design, and for Surrey-based businesses.
Deepak Anand, who lives in Surrey and is a principal at ASDA Consultancy Services, which works in the cannabis space, says the number of stores Surrey is proposing is not enough, given the city’s size.
“While Surrey moving away from being a retail desert five years after legalization is certainly progress, the ratio of one store for 47,000 people is, frankly, ridiculous. Surrey easily has the capacity and demand for over 80 stores based on its population and in comparison to other municipalities of its size.”
The Surrey Board of Trade released a statement today saying they applaud the new proposal, and hope it is implemented this spring.
“As the City invites public input through the Retail Cannabis Framework Survey, the Surrey Board of Trade supports a framework that is developed collaboratively with the cannabis industry and the public,” said Anita Huberman, President & CEO, Surrey Board of Trade. “Surrey can implement a safe and efficient cannabis regulatory framework, including amendments to zoning bylaws, business licence bylaws, bylaw notice enforcement bylaws, and municipal ticket information bylaws.”
The Surrey Board of Trade released a report last year calling on the local government to begin allowing cannabis retailers to operate in the municipality. Jasroop Gosal, Policy & Research Manager for the Surrey Board of Trade, said the board had concerns with how long the proposed plan will take to implement, while other cities in BC and across Canada have already moved forward.
Surrey City Staff held a workshop in 2023 with cannabis retail industry members to gain insights and feedback on a revised cannabis retail policy and application process.
Shannon Ross has an idea to make BC cannabis the talk of the town again.
The once notorious province could get some of its edge back by letting people enjoy cannabis together in public, just like you would consume craft beer.
“I think the most effective thing we could do to get back on the stage and become a powerhouse, not only in British Columbia, but the whole international scene, is consumption spaces,” says Ross, co-founder of Antidote Processing in the Kootenays. “That would be a game changer.”
We’re not a financially successful industry for the majority of small businesses right now. We have our hands tied behind our back trying to create legal cannabis businesses.
Ross wants to know how the BC government plans to support consumption spaces. She says one of the biggest hindrances right now is the inability to get together and use cannabis socially. Ross wants public cannabis spaces to be similar to finding a place to enjoy a pint with pals. There’s still too much stigma around cannabis, she says.
She suggests creating farmers’ market-style gatherings as a valuable way for consumers to meet farmers, especially with the limitations placed on advertising.
“The marketing restrictions are so challenging on a federal level that the BC government could facilitate that consumer-grower connection and allow some marketing efforts to happen in a way that’s conducive to finding balance,” she says in an interview with StratCann.
There has to be a happy medium that encourages a certain level of responsible education and marketing, she adds.
“It’s really about connecting people and allowing them to consume,” she says, adding that even the big conferences are fading now.
Still, there are things that BC is doing well to set the stage for long-term relevance, namely farmgate and direct delivery. Ross calls them both tools for proactive change, but there are barriers to taking advantage.
The 15% markup on direct delivery products erodes the incentive, and getting retailers on board can be pretty tricky, she says. Also, there are extra expenses tied to both direct delivery and farmgate that cannabis businesses simply can’t justify.
“It takes a ton of resources that we don’t have yet,” says Ross.
“Right now the industry isn’t mature enough. We’re not a financially successful industry for the majority of small businesses right now. We have our hands tied behind our back trying to create legal cannabis businesses.”
On the bright side, Ross says the provincial government has been receptive and is showing some curiosity toward cannabis by attending industry events. She says they are hearing the voices of craft growers and adapting.
She argues that the federal government is the biggest problem, particularly the excise tax. She says that until the excise tax is reduced, people won’t jump on these programs.
“The biggest challenge is access to capital in order to meet a lot of the regulatory requirements. Banks don’t want to loan very much and there’s still so much stigma, just being able to have a low interest loan… even access to $25,000. A lot of people aren’t even able to transition to legal because there’s no access to capital.”
Kyp Rowe has a bit of a different perspective on which level of government is the most significant hindrance.
“The base hindrance is the province,” says Rowe, president of Victoria Cannabis Company (VCC). “Everybody wants to scream and yell at the feds with their excise tax, Health Canada, this, that, and the other thing. The biggest assholes in this entire industry are the provinces. The fact that they are quadruple-dipping into our pockets is making this entire industry unsustainable.”
Rowe lists the PST, GST, 15% direct delivery markup, and the province’s monopoly over the wholesale game.
“The whole thing is doomed to fail and to crush the small producer.”
While the Direct Delivery Program is a great start—“I love it,” he says—the 15% markup is aggravating. “I move my weed 30 feet into my farmgate store and I’ve got to cut them down 15%? That’s fucking ludicrous,” says Rowe.
“The Direct Delivery Program in totality as far as the rest of Canada is concerned is extremely progressive. It’s a way for the producers to make direct connections with the retailers without having the province right in the middle of it, mucking up the waters.”
Rowe also applauds farmgate but says it won’t benefit many BC producers.
VCC is only the third company to get its farmgate licence since the program came into effect over a year ago. He blames the low uptake on locations, as many facilities are in industrial parks or remote areas that don’t get much traffic. Conversely, VCC is located minutes from downtown Victoria and has 44,000 cars going past it daily.
Rowe says BC’s Liquor and Cannabis Regulation Branch made the process of getting its farmgate licence easy.
It was the City of Victoria that dragged their feet. He says it took a year to get on the city’s docket for rezoning as they kept getting bumped from the agenda. Then, in order to get approval, VCC had to pay $60,000 for a sidewalk, which cut down its parking availability.
“We had to harass the city.”
“Three levels of government you have to deal with in the cannabis industry. They don’t talk to each other. We don’t have any power. To effect change is almost impossible.”
~David Wylie. David is a writer, father, and founder of The Oz., which covers cannabis from a consumer perspective.
An Ontario judge has ruled a statement of claim by one cannabis retailer against another, as well as the provincial cannabis regulator, is frivolous and vexatious.
In a ruling posted on January 19, 2024, an Ontario Superior Court judge ruled that a claim filed by Ontario cannabis retailer Highland Cannabis Inc., with one location in Kitchener, ON, against High Tide Inc., which owns the largest chain of cannabis stores in Canada, had no hope of succeeding.
Highland Cannabis Inc. launched its action against High Tide and the Alcohol and Gaming Commission of Ontario (AGCO) in relation to a data breach at the AGCO in 2022. The leak showed data for the sales figures at retail cannabis stores for the months of July 2021 and December 2021. Law enforcement is still investigating the leak.
High Tide had asked the court to dismiss the action against the company, arguing it was “frivolous, vexatious, and an abuse of the court’s process.”
Highland Cannabis told the court that representatives of High Tide approached Highland’s owner with an offer to purchase the store following the data breach. In that meeting, High Tide is alleged to have told the owners of Highland Cannabis that it was aware of the independent retailer’s sales figures.
Although the two parties initially discussed a sale price, it ultimately did not move forward.
The court documents say High Tide received the leaked data from two sources, and there have been no allegations that the retail chain forwarded or disseminated the leaked data to any other party. It did review the data, though.
The owner of Highland Cannabis argued that High Tide accessed the data inappropriately, giving it an unfair advantage against Highland Cannabis. They also allege that another location High Tide was interested in, the Ira Needles location, was also based on their access to the retail sales data. The court disagreed, saying High Tide had identified the location prior to the leak.
Messages between the two parties, shared by the court, show that High Tide offered to buy the Highlands Cannabis location for $7.2 million.
Editor’s note: This article initially stated that Highlands countered High Tide’s offer of $7.2 million, asking for $10 million. While Highlands stated anticipated growth to $10m/y, this was not a counter offer. They did not make a counter offer. In addition, while Highland commenced this action against High Tide and the Alcohol and Gaming Commission of Ontario (AGCO), the dismissal here is only in relation to the action against High Tide, not the AGCO.
The newest version of the Canadian Free Trade Agreement (CFTA) has now been expanded to include trade in non-medical cannabis.
For the first time, the CFTA, which came into force in 2017, includes references to cannabis and the cannabis industry, with the word cannabis appearing 238 times within the text, primarily clarifying provincial rules and regulations.
Although this doesn’t mean any immediate changes to how cannabis is sold in Canada, some say it could lead to potential allowances for cannabis retailers to ship products to residents in other provinces.
Keyli Loeppky, the director of Interprovincial Affairs at the Canadian Federation of Independent Business, says she believes the inclusion of cannabis within the CFTA has the opportunity to open up cross-province sales of cannabis, pending further provincial approval.
“Putting it in the CFTA is a positive first step,” Loeppky tells StratCann. “What we’re cautiously watching is how provinces put rules in place in order to limit the sale and distribution of cannabis across the province.”
She says the issue is similar to how provinces regulate the sales of alcohol, with restrictions on direct-to-consumer, out-of-province sales, and consumers bringing alcohol back with them from another province.
A 2023 report from CFIB highlights these kinds of restrictions, noting Manitoba is the only province to allow inter-jurisdictional alcohol shipments, while Nova Scotia and British Columbia allow direct-to-consumer shipments of wine from any jurisdiction. BC and Saskatchewan also have an agreement to allow consumers to order craft spirits and wine directly from producers in the other province and have them delivered.
“Right now, there are no federal restrictions around the movement of cannabis within Canada, but provinces can put in place rules that restrict shipping between provinces,” adds Loeppky. “So exactly what we’re seeing with alcohol where someone in Alberta can’t order a craft beer from Ontario directly to their home because there are rules in place to prevent that.”
Deepak Anand, principal at ASDA Consultancy Services, agrees this is a big step forward.
“By facilitating the movement of non-medical cannabis across provincial/territorial borders, we create a platform for open dialogue and understanding. Inclusion in the Free Trade Agreement is not only about commerce; it is also a transformative step towards a progressive and stigma-reducing approach to the regulation, distribution and consumption of cannabis within Canada.”
Harrison Jordan, a lawyer with Substance Law, specializing in cannabis law in Canada, says the addition of cannabis into the inter-Canadian trade agreement is an important step, even if he doesn’t see it resulting in any immediate changes due to provincial limitations.
“The recent inclusion of cannabis into the CFTA is welcome news as it normalizes cannabis with other industries,” Jordan tells StratCann. “The inclusion means that provinces are generally prohibited from imposing barriers to inter-provincial trade subject to exceptions that had to be reserved by each jurisdiction when it was included just recently. The problem is that all the provinces have reserved some right to restrict or authorize the importation or sale of cannabis into their borders or limit market access, so we likely won’t see much, if any, interprovincial retail sale of non-medical cannabis.”
Still, federal excise tax stamps are a sticking point, argues Jordan.
“Even if the provinces didn’t seek the reservations they obtained, practically speaking, interprovincial retail sales would be difficult to implement because of excise stamps. The CRA expects that cannabis products be stamped with the respective stamp of the province that the consumer is located in at the time of delivery to them. Wholesalers in each province, run exclusively by the respective provincial government with the exception of Saskatchewan, only purchase from processors and provide to the province’s retailers cannabis products that are stamped for that specific province.”
The CFTA was created as a replacement for the Agreement on Internal Trade (AIT). It allows provinces to reconcile any differences in their jurisdictional rules and regulations that could disrupt trade within Canada.
It has encouraged provinces and territories with personal use exemption limits for the amount of alcoholic beverages transported by individuals across provincial/territorial boundaries, for personal use, for example, to either remove or increase these limits. However, the Supreme Court of Canada has somewhat upheld such limits, although not in the name of restricting trade.
The decision to include non-medical cannabis trade under the CFTA came about in December 2022, at the conclusion of a meeting of the Committee on Internal Trade, made up of provincial and territorial governments, as well as Ottawa.
This resulted in the Second Protocol of Amendment to the CFTA, which describes the relevant amendments to the CFTA for cannabis trade.
The CFTA aims to help implement advancements to Canada’s internal trade framework to enhance the flow of goods and services, investment, and labour mobility, eliminate trade barriers, expand procurement coverage, and promote regulatory cooperation within Canada.
The changes include a list of cannabis industry-related codes, such as:
A – Cannabis.
B – Services incidental to the production of cannabis plants.
C – Manufacture of cannabis.
D – Wholesale trade services, including on a fee or contract basis.
E – Retailing services, including on a fee or contract basis.
F – All other cannabis-related services not covered by B, C, D, and E.
G – Cannabis accessories
The definition of cannabis in the CTFA is the same as the definition within the federal Cannabis Act and is subject to any changes in that legislation, with some exceptions. It does not include industrial hemp, cannabis sold for medical purposes, drugs containing cannabis or combination products (as defined in the Cannabis Regulations), or cannabis that is not exempt from the application of the Food and Drugs Act.
A scan of provincial rules and regulations by StratCann shows a handful of provinces that explicitly disallow retailers to ship product to people outside of the province or for consumers to order non-medical cannabis from outside the province.
Federal regulations allow provinces to oversee the sales and distribution of non-medical cannabis while allowing the sale of medical cannabis cross-country.
Compostable packaging company TIPA announced it will be providing packaging for edibles brand Wyldfor its products in the US and Canada beginning this year. Wyld introduced “Canada’s first compostable cannabis packaging” in 2021, with further compostable expansion in 2022.
Winnipeg Free Press did a write-up on Manitoba’s“controlled access” retail cannabis licence that allows cannabis to be sold in convenience stores. The author spoke with Kerri Michell of Farmer Jane, Omar Khan of High Tide, and a representative of the Liquor, Gaming, Cannabis Authority of Manitoba about industry concerns that such licences should be restricted to rural areas only.
Radio Canada took a look at some of the unique cannabis edibles in Quebec, speaking with François-Olivier Hébert, research associate at the neuroscience axis of the University of Montreal Hospital Center (CHUM); Alexandre Poulin, co-founder of Gayonica; Geneviève Giroux, vice-president of supply and marketing at the Société québécoise de cannabis (SWDC); and Serge Brochu, professor emeritus at the School of Criminology at the University of Montreal.
The Ontario Land Tribunal has provided a deadline of May 30, 2024, for cannabis producer Redecan to provide odour mitigation documents to the town of Pelham, where it operates a production facility, says the municipality’s former Cannabis Control Committee. The issue has been brewing for years in the community, with some outspoken residents frustrated by the smell of cannabis. Phoena (formerly CannTrust) was previously located in the community before closing its doors in 2023.
After five years with Canopy Growth, Les Serres and Steve Bertrand, originally Canadian greenhouse tomato growers, say they have pivoted away from cannabis and back into produce—this time radishes. They also converted their former cannabis drying room to grow mushrooms (oyster and lion’s mane).
Canopy Growth Corporation announced that it has entered into subscription agreements with certain institutional investors in a private placement offering of 8,158,510 units at a price per unit of US$4.29 for aggregate gross proceeds of approximately US$35 million.
Organigram announced the appointment of Karina Gehring to its Board of Directors. She is one of two directors (including Simon Ashton) designated by BT DE Investments Inc., a wholly-owned subsidiary of British American Tobacco (“BAT”), as nominees to Organigram’s board. The global tobacco giant has invested heavily in the New Brunswick cannabis producer.
The Supreme Court of Canadadismissed a BC man’s drug trafficking appeal relating to 101.5 pounds of cannabis found during a traffic stop, along with edibles, cannabis oil, and cash, despite the initial judge in the case ruling the search was unlawful.
A civil forfeiture case in British Columbia involving a couple that Vancouver Police say are connected to a large cannabis oil extraction lab and a cannabis grow operation is raising questions about the province’s civil forfeiture process and police procedures. The case can be read here.
GrowerIQ, a cannabis technology company, announced this week that it had completed its successful acquisition of Ample Organics, a pioneering force in Canadian cannabis technology.
The acquisition was finalized in December 2023 and signifies a major expansion in GrowerIQ’s footprint within Canada and on the international stage, introducing exciting technological options to the portfolio available to licensed cannabis producers worldwide.
This significant all-cash acquisition positions GrowerIQ as the market leader in Canada and Europe, boasting the largest market share in the sector, says GrowerIQ in a press release. The company is pleased to confirm that all members of Ample Organics’ team have joined GrowerIQ, further enhancing the combined entity’s capabilities.
John Prentice, the former Founder of Ample Organics, expressed his enthusiasm about the acquisition, stating, “This marks another significant milestone for Ample Organics. Joining forces with GrowerIQ opens up new opportunities for innovation and growth for the company within the cannabis technology landscape. The combined expertise and resources of both teams will undoubtedly create brilliant solutions for licensed cannabis producers globally.”
Andrew Wilson, Founder of GrowerIQ, shared his vision for the combined entity, stating, “The acquisition of Ample Organics is a strategic move that aligns with our mission to provide the most effective management solutions for our incredible producers around the world. We are excited to welcome the talented team from Ample Organics and look forward to our journey together.”
About Ample Organics:
Founded in 2014, Ample Organics is a pioneer in the cannabis technology ecosystem. The technology platform makes compliance easy by tracking individual plants from seed to consumer and reporting every detail of the growth, production, and sales processes. The software continues to be a trusted solution for cannabis producers, manufacturers, distributors, physicians, clinics, laboratories, retailers, and educators. For more information, visit www.AmpleOrganics.com.
About GrowerIQ:
GrowerIQ is the operational backbone ERP that unites the fragmented systems required by cannabis production facilities around the world. The company now powers facilities in more than a dozen countries and four languages, enabling true seed-to-sale traceability. For more information, visit www.GrowerIQ.com.
Cannabis sales reached a record high of $589 million in the summer of 2023 before experiencing three straight months of decline, ending with sales of $511 million in November of the same year.
Sales in November 2023 were still higher than November 2022 at $445 million, and the same as the previous year’s peak of sales in December, which was also $511 million. All numbers are using retail sales at 2017 constant prices.
Cannabis sales have declined every November since 2020 before experiencing a boost in December and another decline in January and February, a trend seen in many retail sectors. In November 2022, sales dropped to $411 million from a peak of $471 million that August, before peaking at $511 million for the year. Sales fell to $442 million in February 2023.
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 are facing challenges, with consumer spending in many sectors declining, including food and beverages and beer and wine.
The number of retail stores across Canada also continues to grow, although the pace has slowed considerably compared to the first four years of legalization. As of October 2023, there were 3,682 (up from 3,654 in October) cannabis stores in Canada, excluding provincial online stores.
British Columbia: 511 public and private stores, either open or “coming soon”, a decline from 513 in October.
SSC provides an array of cannabis concentrate products like vape pens, hash, and infused pre-rolls. Lamplighter has similar products in markets across Canada, including Ontario, Alberta, and British Columbia, expanding SSC’s portfolio.
The deal adds up to 21 additional product listings from SSC in large product categories in Ontario, Alberta, and British Columbia.
The purchase price will be paid from future Lamplighter cash flow, equal to the net book value of the tangible assets acquired.
Jeff Swainson, President and CEO of Simply Solventless Concentrates, said in a press release that the acquisition will help the brand house expand further into the Canadian market.
“With Canadian LPs exiting the business-to-consumer market in Canada to focus on international sales, SSC has the opportunity to complement our strong organic revenue growth with acquisitions of quality assets that are accretive to revenue and profitability.”
“With projected 2023 Lamplighter gross revenue of $6.8 million, and similar revenue projected for 2024, we believe the acquisition will contribute value to our shareholders.”
SSC’s brand, Frootyhooty, launched nine initial SKUs in Alberta in December 2023. SSC plans to launch thirteen additional Frootyhooty SKUs in Alberta and Ontario during February 2024, with launches in other provinces to follow.
SSC expects the first Lamplighter sales in February 2024 and for the integration of the Lamplighter brand to be completed by May 2024.
In accordance with that RTO, SSC implemented a consolidation of its then-issued and outstanding 11,000,000 common shares on the basis of one new common share for every two existing common shares. It also joined with its wholly-owned subsidiary, 2366191 Alberta Ltd. (Subco), to form Massive Hash Factory Ltd., a new wholly-owned subsidiary of SSC.
SSC also announced this week the appointment of Randeep Gill to the position of Vice President, Commercial. Gill holds a Bachelor of Science degree in Pharmacy, a Pharmaceutical QA/QC post-graduate diploma, and a Plant Production and Facility Management diploma.
OGEN, a cannabis company that recently announced it was shutting down, has initiated the sale of its brand, intellectual property, product line, and genetics.
The sale, announced on January 16, 2024, includes OGEN’s fully trademarked brand, IP assets, marketing plans, campaigns, and social media accounts. The sale is being facilitated by the Canadian Cannabis Exchange (“CCX”).
The sale also includes 77 SKUs sold in eight provinces, including pre-rolls, dried flower, and milled flower, in a range of packaging configurations.
The selection also includes 13 cannabis cultivars for sale that Ogen says were developed through a 5-year pheno-hunting process and are supported by a collection of “historical potency results, rooted clones, and seeds.”
For all inquiries about the sale, contact CCX here.
OGEN announced it was closing its doors in November 2023. Darren Brisebois, President of OGEN Cannabis, told StratCann that high taxes and regulatory fees combined with low margins meant the end of the road for the Alberta producer.
Brisebois says the decision to close was not his; it was at the discretion of their lenders as well as pressures from the CRA.
The company, he said, which had to let nearly ninety employees go after hearing the news of receivership from their lender, had around 25,000 cannabis plants at various stages of production that had been scheduled for destruction.
Safari Flower, an Ontario-based cannabis producer, received CCAA protection on January 12, listing over $55 million in liabilities.
The Safari Flower Group says it intends to use the restructuring process to effect a reverse vesting orders (RVO) transaction with one of its secured lenders that can be used as a way to inject cash into a company.
Next Edge General Partner (Ontario) Inc., in its capacity as general partner of NE SPC II LP, will be providing a DIP loan.
Reverse vesting orders can be used to assist in recovery in complex insolvencies in Canada, especially in instances where traditional alternatives of asset sales or restructuring plans are not effective or practical.
Brigitte Simons, CEO of Safari Flower Company, says the goal is to restructure the company’s inherited debt, emphasizing that they are still growing and selling cannabis.
“Safari elected for a secured debt restructure of our indoor grow facility and Niagara land footprint after setting goals in 2023, achieving them, and putting them in front for valuations against a timeline of a Sales Initiated Solicitation Process and a CCAA end point.”
“Safari will be backed by our secured lenders in the CCAA to support the company through a healthy balance sheet and it’s international sales growth agenda. The CCAA program enables us to focus on our mission and our employees that carry the path forward for Safari’s global craft and medical cannabis flower products.”
With a 59,000-square-foot indoor facility located in Fort Erie, Ontario, the Safari Flower Group holds international certifications that permit the company to supply cannabis to the European, Israeli, and Australian medicinal cannabis markets.
“We are thrilled to have built a foundation on quality systems and developed professional talent to deliver cannabis to the stringent safety standards that patients demand in trust, the EU-GMP certification, a testament to our unwavering dedication to quality and compliance,” Simons said at the time. “This achievement reinforces our commitment to ENUA’s brand providing a medicinal variety of cannabis flower by small batch grows.”
Safari was cash-positive at its year-end in 2021 but has not been able to maintain profitability according to Insolvency Insider, noting that Safari attributes this to the price compression in the Canadian market.
The cannabis industry in Canada has experienced significant financial challenges. At least 72 cannabis companies filed for some form of creditor protection in 2023, according to listings by Insolvency Insider Canada, which focuses on the Canadian insolvency market.
Note: This article has been updated to include current comments from Brigitte Simons.
In cannabis news this week, StratCann covered the newest Canadian cannabis survey that shows the legal market is continuing to eat into the illicit market in Canada, with nearly 3/4s of all purchases coming from the regulated market.
CTV interviewed the owners of The Vault Hemp & Cannabis Boutique in Manitoba, which has a new location opening in Gilbert Plains. The company’s first store was in an abandoned CIBC bank building, hence the name. The Gilbert Plains location is one of five new stores The Vault hopes to open in Manitoba in 2024, bringing the chain’s total to eight across the province.
University of Saskatchewan (USask) researchers are developing models to more accurately determine the effects of cannabis on consumers by conducting studies that utilize a novel cannabis smoke delivery system to burn commercially available cultivars.
THC BioMed Intl Ltd., located in Kelowna, BC, is facing delays in filing its annual financial statements due to unpaid auditor fees, which also led to a management cease trade order by the British Columbia Securities Commission. The company expects to receive payments from various provincial cannabis operations in Canada later this month, which it believes will be enough to settle the outstanding audit fees.
A new report shows that federal scientists in the US recommend easing restrictions on cannabis. The recommendations are contained in a 250-page scientific review provided to a Texas lawyer who sued the US Health and Human Services officials for its release and then published it online on Friday night.
Health Canada’s most recent summary of its annual survey of cannabis users shows an increasing number say they are purchasing products through the legal, regulated market (73%).
The percentage of respondents who use cannabis and reported daily, or almost daily, use has been stable since 2018 (~25%), including among youth (~20%).
There was, however, an increase in the number of people aged 16-19 who reported using cannabis at least once in the past 12 months, from 37% in 2022 to 43% in 2023. This number has fluctuated between those two percentages since legalization.
All other age groups reported a slight decrease in cannabis use from the previous year.
Past 12-month cannabis use for non-medical purposes, by sex and age group, 2018 to 2023
The annual Canadian Cannabis Survey (CCS), which Health Canada has been conducting and releasing since 2017, helps track trends among cannabis consumers before and after cannabis was legalized.
The new 2023 survey results are based on data collected from May 2 to July 20, 2023, from around 11,690 respondents aged 16 and older across all of Canada.
The survey also asked Canadians about their perception of how socially acceptable products like alcohol, tobacco, e-cigarettes, and cannabis are. All products showed an increasing social acceptance, with regularly drinking alcohol being seen as the most accepted at 75%, followed by eating or drinking cannabis (58%), vaping cannabis(55%—this combines two questions on vaping dried cannabis and liquid/solid cannabis extracts), and smoking cannabis (54%).
The number of Canadians who reported using cannabis with alcohol and/or together declined in 2023.
The perceived risk of using these products was highest for smoking and vaping nicotine, although both were down slightly from the previous year. This was followed by drinking alcohol, which saw the perceived risk increase significantly from previous years. The perceived risk of vaping cannabis also increased from the previous year, although less so than alcohol.
Those who perceived risk of smoking cannabis increased slightly from the previous year, a trend over the last few years, while the perceived risk of eating and drinking cannabis has continued to decline.
Around 26% of those Canadians surveyed aged 16 and older admitted to consuming cannabis for non-medical purposes in the past 12 months. This number has remained relatively steady since legalization, which was 22% in 2018 and 27% in 2022.
Of those Canadians who reported using cannabis, 57% reported using cannabis three days per month or less, while 15% reported daily cannabis use.
Fifteen percent reported getting their cannabis from a “social source” such as sharing with friends or family. Just 5% reported growing their own cannabis or having it specifically grown for them. Both of these sources have declined since legalization..
Only 3% of people reported using an illegal purchase source such as an illegal store, illegal website, or “dealer,” down from nearly 30% in 2018. A new data point captured in 2023 shows that only 2% reported getting their cannabis from a storefront in a First Nation community.
Men continue to be more likely than women to report using cannabis, while those who identify as bisexual (56%), another sexuality (54%), or lesbian or gay (48%) were more likely to report using cannabis compared to those who identified as heterosexual or straight (23%).
Frequency of cannabis use for non-medical purposes among those who have used cannabis in the past 12 months, 2018 to 2023
Dried flower continues to be the most commonly used cannabis product, although the figure continues to decline as other products become available. In 2023, 60% of cannabis users said they consumed dried flower, down from over 80% in 2018.
Edibles were the second most commonly consumed cannabis product in Canada in 2023 at 54%, up about 41% in 2018. Vape pens were the third most popular cannabis product, with about 34% of consumers choosing these products, up from about 18% in 2018 (respondents could choose more than one product).
Cannabis oils and capsules for oral use were the fourth most popular cannabis product in Canada, with 26% reporting using these products, up from about 18% in 2018.
Cannabis products usedamong those who had used cannabis in the past 12 months, by reason for use, 2023
Dried flower was the product most commonly used daily or near-daily, followed by vape pens, ingestible oils and capsules, concentrates, and topicals. Edibles and beverages were more widely consumed less than once a month.
Of those who smoked or vaped dried cannabis, the average amount used was just under 1 gram (down from 2018 and 2022).
Those who used edible cannabis consumed about 1.4 servings (up from 2018 and 2022).
The average amount of cannabis oil for oral use consumed was 2.3 millilitres (up from 2018 and 2022).
In 2023, consumers who used vape pens reported using an average of 10.3 puffs a day. Those who drank cannabis beverages daily reported having 1.2 drinks.
Only around 10% of Canadians who reported using cannabis in the past 12 months, and just 4% of all Canadians, said cannabis had been grown in their home in the same reporting period, down from 2020 and 2022.
About one-fifth of those who reported having cannabis grown in their home (21%) said it was grown by a person authorized by Health Canada to grow for medical purposes for themselves or for another person. The average number of plants was 3.4; people who reported more than 25 plants were not included in the averages to allow for comparability to previous years.
The BC government says it needs more time before it decides on previously announced potential changes to its retail cannabis rules, such as the number of stores one company can own.
Following a feedback process, the BC Liquor and Cannabis Regulation Branch (LCRB) will need additional research to decide whether it should increase the number of cannabis stores one company can operate in the province. The current limit is eight.
“In a dedicated pursuit of continuous improvement and industry responsiveness, the Liquor and Cannabis Regulation Branch (LCRB) is committed to reviewing these market controls,” said BC Minister of Public Safety and Solicitor General Mike Farnworth in an email posted online by a board member of the Retail Cannabis Council of British Columbia (RCCBC).
“Most recently, they concluded an engagement focused on licence cap considerations. This engagement involved discussions with industry partners and licensees, fostering a constructive dialogue to ensure a well-rounded understanding of the intricacies involved. The Ministry has now completed an initial analysis of the feedback and determined that additional research is required before any changes to current market controls, including the CRS licence cap, can be considered.”
If the government can have 39 stores then we should be allowed to. If the government doesn’t have the same rules for us and for them, I don’t find it to be a fair game.
Farnworth, who serves as the province’s lead on the cannabis file, previously told a group of cannabis industry stakeholders in April 2023 that the province was considering raising the retail cap and making changes to their tied house policies, among other possible regulatory and policy charges.
“The Liquor and Cannabis Regulation Branch has now completed initial analysis of the feedback from this engagement. The ministry will engage further as we continue to explore this and other possible market controls.”
BC Ministry of Public Safety and Solicitor General
Under BC’s rules, a “tied house” is a connection between a cannabis retail store licensee and a cannabis producer, which is not allowed. Several other provinces have permitted this type of relationship, with a handful of cannabis producers running retail stores under the same name or through an affiliated company.
The Ministry confirms they are continuing to look into these issues but have yet to arrive at any specific decisions.
“The ministry recently concluded an engagement which specifically focused on licence cap considerations,” a representative with the Ministry of Public Safety and Solicitor General shared with StratCann.
“The LCRB has now completed initial analysis of the feedback from this engagement. The ministry will engage further as we continue to explore this and other possible market controls.”
The Ministry did not provide any additional information on the status of the tied house rule or any engagement; instead, it just explained the definition of tied house in response to a direct question about the engagement process.
Industry response
A representative for the Retail Cannabis Council of British Columbia (RCCBC), representing several BC cannabis retailers who opposed raising the cap, says they are happy with the province’s decision not to make a decision yet.
“We are pleased that the LCRB has decided to take the time to further research the potential market impacts of a licence cap increase,” Jaclynn Pehotas, the Executive Director of RCCBC told StratCann via email. “A significant majority of our membership made it very clear via member polling that an increase to the cap was not a change they were in favour of and felt that an increase would be detrimental to their businesses.
“We communicated these polling results to the team at the LCRB with the recommendation that other market controls should be considered prior to any change in the current eight store cap. It is an unfortunate fact that the sector has seen significant negative impacts on licence holders in other provinces due to over saturation of the retail market. RCCBC feels it is critical to the health of the BC cannabis sector to protect our existing small businesses from the risk that oversaturation presents.”
“A significant majority of our membership made it very clear via member polling that an increase to the cap was not a change they were in favour of and felt that an increase would be detrimental to their businesses.
Jaclynn Pehotas, Retail Cannabis Council of British Columbia
Jeff Guignard, the Executive Director of BC’s Alliance of Beverage Licensees (ABLE BC), which also operates an advocacy group for cannabis retailers in the province, says he understands the province is taking its time to get the policy right. ABLE had previously advocated for the cap to be raised to 12 stores.
“Given the lengthy history of BC’s cannabis culture, there are a lot of diverse perspectives on the best way forward. I think the government is working hard to understand and respect those perspectives, which is why these consultations take time. In our conversations with Solicitor General Mike Farnworth, he seems genuinely committed to making the right policy changes, which is encouraging.
“We’re encouraged that the government is working hard to understand the whole picture before it acts. For example, we’ve also been advocating for a minimum door-to-door distance criteria between retailers to be implemented at the same time as a small increase to the eight-store cap. We know from our work on behalf of liquor stores that distance rules are a very effective way to protect investments and ensure fair competition. It would make sense for those two things to be implemented at the same time.”
“A small increase to the eight-store cap would be good news for industry, especially if it’s combined with a regulated minimum distance between new stores. It would support incremental growth for businesses already at the cap, while still protecting the diversity of individual businesses at their current size. Increasing to the cap to 12 or 16 stores would give everyone room to grow while still preventing any one chain of stores from growing large enough to skew the market. Long term, increasing the cap will be essential for the financial health of BC’s cannabis retailers.”
“I understand the concerns of the mom-and-pop stores. I started out with one store, but my dreams and my goals are bigger. I want to be able to serve more communities and scale this business out.”
Vikram Sachdeva, Seed and Stone
Vikram Sachdeva, the Founder & CEO of Seed and Stone, a retailer with five locations in BC, says he thinks there is a need for a modest increase, especially since the BC government currently has 39 stores across the province.
“All I’ve ever wanted is a fair playing field,” Sachdeva tells StratCann. “If the government can have 39 stores then we should be allowed to. If the government doesn’t have the same rules for us and for them, I don’t find it to be a fair game. I’m not saying 50 stores or 100 stores, all I’m saying is if it’s eight, maybe double that to 16 stores.”
This kind of increase would address the concerns of those who don’t want to see large chains dominating the market, like in Ontario, where the retail cap was doubled to 150 on January 1 of this year.
“I understand the concerns of the mom-and-pop stores. I started out with one store, but my dreams and my goals are bigger. I want to be able to serve more communities and scale this business out.”
Sachdeva adds that getting even one new store approved, given the myriad of checks and balances in place for cannabis stores in BC, plus distance regulations in many cities, means Seed and Stone even getting to 15 stores would be a considerable feat.
Omar Khan, the chief communications and public affairs officer at High Tide Inc., which owns and operates the largest chain of cannabis stores in Canada, says he believes lifting the cap in BC will help the government better displace the illicit market.
High Tide owns Canna Cabana, with 162 current locations in British Columbia, Alberta, Saskatchewan, Manitoba, and Ontario. It has eight locations in BC.
“Given the relative strength of the illicit market in BC, we encourage the provincial government to continue looking for ways to work with legal cannabis retailers like us to secure a sustainable and thriving legal cannabis sector in the province. This includes looking at reasonable increases to the provincial retail cannabis store cap and lowering provincial wholesale markups.”
Other regulatory changes
The province has also previously committed to reviewing the direct delivery program that allows producers to send directly to retailers, as well as the 15% service fee that applies to products sold through the program. Many in the industry say the fee, which is the same fee charged on product physically sold through the provincial distribution centre, is too high to make the program viable.
However, a representative with the Ministry of Public Safety and Solicitor General could only confirm that they are continuing to look into the issue, noting that any profits generated by the LDB’s cannabis sales are remitted to the provincial treasury to support vital public services such as healthcare and education.
“The ministry is currently considering potential adjustments to the direct delivery program, including exploring changes to the 15 per cent charge that is applied to direct delivered cannabis products.”
Two cannabis stores in BC have faced break-ins this week, causing significant damage to the stores and a loss of product.
The most recent store to report a burglary was UEM Cannabis in Langley, which first posted about the incident on their social media. The post, shared on Tuesday, January 9, says that in the early morning hours of that day, two vehicles, a truck and a car, arrived with six individuals who broke into the store.
The individuals reportedly did significant damage to the store itself to gain access, with the men quickly making off with products like vape pen batteries, cannabis beverages, and extracts.
UEM Cannabis is one of the busier cannabis stores in BC, selling a large volume of cannabis products from their location in the middle of BC’s Lower Mainland. UEM also has a location in Vancouver. An employee at the Langley store told StratCann on Wednesday, January 10, that they are still open for business.
Seed and Stone’s Chilliwack location was the second store to face a similar burglary. Seed and Stone operates five stores in BC.
Vikram Sachdeva, the Founder & CEO of Seed and Stone, confirms with StratCann that the burglary also occurred around 4:30 in the morning, similar to the previous burglary at UEM Cannabis. No employees were present at the store at the time.
Sachdeva says, like UEM, his store faced considerable damage from the burglars gaining entry to the store and then gaining access to glass display cases. He says the store is currently closed but is expected to open again in the coming days.
Retailers need to be very vigilant, he argues, as the industry has a “target on its back” with many assuming cannabis businesses are awash in cash.
“We face so many issues,” says Sachdeva. “Banking is hard to come by. Margins are slim. And when we face something like this, it can be easy to get discouraged. But we just keep pushing forward. It’s what we have to do.”
He says the community has already shown him a lot of support, with customers stopping by the store offering encouragement and his landlord being very cooperative.
“From a business point of view it puts another roadblock in front of us. But we are still here, still doing the work.”
Tilray reported the financial results for the second quarter of its fiscal year 2024 ended November 30, 2023, with a loss of US$46.2 million.
The company reported record net revenue of US$194 million, an increase of 34% in the second quarter compared to US$144 million in the prior year quarter.
Cannabis net revenue increased 35% to US$67 million in the second quarter compared to $50 million in the prior quarter. The gross margin for cannabis was 31% compared to 43% in the second quarter of the previous year.
Net revenue from Tilray’s alcohol sales increased 117% to US$47 million in the second quarter.
Tilray says it leads the Canadian cannabis market in revenue, sales volume, and market share with a 12.5% position during its second quarter, leading sales in cannabis flower, oils, concentrates, and THC beverages, buoyed by its acquisition of HEXO Corp. and Truss Beverage.
Tilray also says it is continuing to focus on expanding its distribution of medical cannabis into various international markets. It also hopes that it can expand its distribution of cannabis products into the US, pending any future changes to the country’s federal cannabis laws, especially by utilizing Tilray’s investment in the US brand Med Men.
Net revenue from cannabis sales for the six months ended November 30, 2022, was US$108.5 million, while adjusted gross profit was US$51 million.
For the three months ending November 30, 2022, net revenue on cannabis products sold was US$50 million, with an adjusted gross profit of US$21 million.
For the three months ended November 30, 2023, net cannabis revenue was US$67 million, with an adjusted gross profit of US$24 million.
Revenue from Canadian medical cannabis during this time period was US$6.4 million. Revenue from Canadian adult-use cannabis was US$73 million. Revenue from wholesale cannabis was US$4.3 million, and revenue from international cannabis was US$11.4 million, for a total of US$67.4 million, after some US$27.8 million in taxes.
Revenue from Canadian medical cannabis sales remained relatively the same as in the same reporting period from the previous year, while revenue from Canadian adult-use cannabis, wholesale cannabis, and international cannabis sales increased significantly.
Canadian cannabis stores sold more than $16 billion worth of cannabis products from October 2018 to October 2023, according to the newest figures from Statistics Canada.
Despite monthly fluctuations, Cannabis sales continue to climb in Canada year over year, with more than $448 million sold by the nearly 3,700 cannabis retailers nationwide as of October 2023. This is an increase from about $392 million in October 2022, although down from an August 2023 high of almost $467 million.
Monthly retail cannabis sales across Canada, October 2018-October 2023
The number of retail stores across Canada also continues to grow, although the pace has slowed considerably compared to the first four years of legalization. As of January 2024, there were 3,694 cannabis stores in Canada, excluding provincial online stores.
British Columbia: 510 public and private stores either open or “coming soon”
Local outlet Orilla Matters spoke with several Ontario cannabis retailers—Susan Yu, owner of BudTimez Cannabis, Ayla Qualls of Tokyo Smoke, and Jay Belcourt of Bigfoot Cannabis—about what makes rural cannabis shops succeed.
CBC spoke with Vancouver cannabis retailers Mike Babins of Evergreen Cannabis and Ehren Richardson of Sunrise Cannabis about high markups by the LDB, as well as Vancouver City Councillor Pete Fry about the lack of excise tax sharing by the province, both topics StratCann readers are very familiar with. An audio version of the story is also available.
Village Farms announced the first shipment and launch of two cannabis brands in the United Kingdom, Pure Sunfarms and The Original Fraser Valley Weed Co., which will be distributed by 4C LABS, a Canadian medical cannabis company with import and distribution licences in the UK. Pure Sunfarms has also exported cannabis to Germany, Australia and Israel.
Auxly Cannabis Group Inc. announced that it has signed a non-binding term sheet to amend and restate the credit facility between its wholly-owned subsidiary Auxly Leamington Inc. and a syndicate of lenders led by the Bank of Montreal as administrative agents.
The Journal of Agricultural and Food Chemistry posted a paper on the chemical composition of commercial cannabis[love the alliteration!], compiling a list of >6,000 chemical constituents in commercial cannabis.
Calgarypolice are investigating a recent break-and-enter at the Co-Op Cannabis Store on Centre Street North. They say about $500 worth of merchandise was taken before the three suspects left.
Humble & Fume Inc. has filed for CCAA protection. It announced that the Company and its subsidiaries, Humble & Fume Inc. (Manitoba), P.W.F. Holdco, Inc., Windship Trading LLC, B.O.B. Headquarters Inc., Fume Labs Inc., and Humble Cannabis Solutions Inc. (together with the Company, collectively, the “Humble Group”) have initiated proceedings in the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act.
A new study in the International Journal of Drug Policy made rounds this week. While many headlines have focussed on how the study did not find evidence of increases in health service use or incident cases of psychotic disorders in the first 17 months of legalization in Ontario, it did note “clear increasing trends in health service use and incident cases of substance-induced psychotic disorders” over a broader observation window (2014–2020).
A cannabis company in Canada is named in a class action lawsuit recently filed by two migrant farm workers who say their rights were violated under Canada’s Seasonal Agricultural Workers Program and the Temporary Foreign Workers Program.
The lawsuit, seeking a half billion dollars in compensation, was filed in Ontario against the Attorney General of Canada. It alleges that the federal government in Canada violated the workers’ rights to liberty and security of the person under section 7 of the Charter.
The Plaintiffs, Kevin Palmer from Jamaica and Andrel Peters from Grenada, are agricultural workers who came to Canada on a series of fixed-term contracts as part of the Seasonal Agricultural Workers Program (SAWP) and the Temporary Foreign Workers Program (TFWP-Agricultural) programs. The lawsuit contends that the two workers brought this action on their own behalf and that of all other current or former migrant agricultural workers in the SAWP and the TFWP-Agricultural Stream over the past 15 years.
They allege that the imposition of “tied employment” in both programs violates the rights of Class Members under sections 7 and 15 of the Charter because it prevents workers from leaving their employment and finding a new job in Canada.
The lawsuit alleges that Peters, a 28-year-old father of two from Grenada, first came to Canada in 2018 through the SAWP on a five-month contract to work at a cannabis farm near Leamington that the lawsuit says was operated by federally licensed cannabis producer Tilray, formerly by Aphria. (In December, 2020, Aphria and Tilray announced plans for a merger, with Aphria losing its name in the deal.)
The lawsuit continues, stating that Peters arrived in April or May 2018 and worked until approximately October 2018 before returning to Grenada. Then, in April 2021, Peters signed a new two-year contract with Tilray. In late May 2022, Peters went back to Grenada for a two-week vacation, the first time he had been able to return home to see his family in three years, argues the lawsuit.
While in Grenada, Peters says he received a phone call from Tilray telling him his employment was being terminated without cause. A letter from Tilray followed, confirming that he was dismissed without cause, effective June 14, 2022.
Peters then received two weeks’ pay in lieu and notice, but he alleges he was not allowed to return to Canada to retrieve any of his belongings.
He says that while working at the cannabis farm, he lived in a bunkhouse on the farm property with around a dozen other migrant workers, with approximately six people sharing a bedroom.
Peters alleges he worked around 45 hours every week and was paid $14 per hour to start before receiving a raise to $15 an hour. He was not eligible for any overtime pay and had deductions for EI taken out of his paycheck. Despite this, he was unable to make any EI claims.
The Plaintiffs, in this case, estimate that the Government of Canada has collected more than $472 million in EI premiums from Class Members and their employers since 2008 while excluding these Class Members from ever benefiting from these services.
Peters also says he was concerned about the safety of some of his job duties, which included pruning, spraying the plants with chemicals, inspecting plants, and working in the processing room. Despite his stated concerns, he says he was not provided with a respirator, gloves, or similar safety equipment.
The lawsuit also alleges that while working at the Tilray facility during COVID-19, he and other migrant workers were not allowed to leave the farm property, although Canadian workers were.
That kind of tied employment, argues the lawsuit, restricts the freedom of migrant agricultural workers to resign from their employment and seek employment at a different agricultural employer. If a worker quits their job, they are unable to seek new employment in Canada and instead must leave the country.
The basis of such programs is rooted in racist ideology, the lawsuit contends, and was created “as a means to restrict the freedom of Black and Indo-Caribbean farmworkers on racial grounds,” detailing the foundation of this argument extensively.
“Canada’s prolonged collection of EI premiums from Class Members—impoverished workers from the global south—while systemically undermining their ability to access regular and sickness benefits, was a scheme that enriched it at the expense of those who needed those benefits the most. It has irreparably harmed the lives of Class Members, putting them at a demonstrably disadvantaged position in comparison to those who have the freedom to access benefits for which they pay premiums.”
A request for comment was sent to Tilray. They were not immediately available for response.
As the cannabis landscape continues to evolve, so does the demand for skilled professionals across various sectors. Whether you’re an experienced industry veteran or a newcomer seeking entry, our carefully compiled list features diverse opportunities that span cultivation, marketing, research, and beyond.
Dive into our monthly resource and take the next step of your journey in the dynamic world of cannabis.
Production:
Battle River Pharmaceuticals Inc., a cannabis producer in Ponoka, AB, is looking for a Production Worker/General Laborer, with work including harvesting, trimming, drying cannabis plants), packaging and facility sanitation. Full and part-time positions are available.
Cielo / Alta Verde Québec Inc., in Lachute, QC, is looking for a Technicien(ne) en Cultivation (Cannabis)/ Horticulture. Responsibilities include preparing equipment for cultivation, harvest and trimming, monitoring plant activities, and more.
Canadian cannabis production licence revocations and expirations picked up steam in 2023 as some producers threw in the towel, but they were still slightly outpaced by new licence holders entering the arena.
There were 154 new licences issued in 2023, and 133 licences revoked at the request of the licence holders or allowed to expire by the licence holder. There were also two licences suspended.
Of those new production licences, micros outpaced standard licences, with 93 new micros, 57 new standard, and four new cannabis nursery licences.
Of the revocations, 60 were standard licences, 41 were micros, and six were nurseries. Of the 26 licence expiries, 13 were standard, and 13 were micros. Both suspended licences are/were standard licence holders. One was later revoked at the request of the licence holder, while the other remains suspended.
Ontario is home to the most commercial cannabis production licences with 30%, followed closely by BC (25%), and Quebec (21%). Combined, these three provinces represent more than 75% of all licences in Canada. The Yukon is the only of Canada’s three Territories with a federal cannabis production licence, Arctic Pharm.
PEI has the most producers on a per-capita basis, with one for every 22,000 people, followed by BC with one producer for every 24,000, and New Brunswick and Nova Scotia with one for every 32,000 residents.
Newfoundland had the least number of producers on a per-capita basis, with one for every 77,000 residents followed by Manitoba with one for every 64,000 residents, and Ontario with one for every 55,000 residents. With 951 federal licences and a population of nearly 40.5 million people, Canada has approximately one licence for every 43,000 residents.
As of December 31, 2023, there were 951 federal cannabis production licences in Canada. Of those, 481 are standard licence holders, 407 are micros, another 25 are cannabis nurseries, and 38 are authorized for medical sales only. (Note: Health Canada’s list currently includes nearly 50 revoked, expired, and suspended licences, bringing the total number of licence holders on their list to over 1,000)
Cultivation – 75
Processing – 117
Cultivation/Processing – 289
Micro-Cultivation – 238
Micro-Processing – 45
Micro-Cultivation/Micro-Processing – 124
Nursery – 25
Medical Sales Only – 38
According to Health Canada’s figures, since October 17, 2018, there have been 240 licences revoked at the request of the licence holder, three revoked by Health Canada, and 39 allowed to expire by the licence holder, for a total of 282 inactivated licences (and one currently suspended).
Featured image of Jazz Cabbage, a micro cannabis cultivator and processor in Nova Scotia
The National Post did an in-depth feature on cannabis excise tax, with comments from Barry Katzman, CEO of Peak Processing, Owen Allerton, CEO of cannabis retailer Highland Cannabis, Ari Cohen and Tabitha Fritz of Fritz’s Cannabis Company, Niklas Kouparanis, CEO and co-founder of Bloomwell Group, one of Germany’s largest private cannabis companies, Darwin Fletcher, who is the founder and CEO of CANEXEC, and StratCann’s own David Brown.
Lineage Distribution (formerly Rogue Processing) was featuredin an in-depth piece in the Winnipeg Free Press. The company was recently approved for a distribution agreement with Manitoba Liquor and Lotteries Corporation. The article also features comments from Trent Emmel of T8C, a cannabis grower in Saskatchewan, and CJ Cowan from Bud Mountain Aeroponics in Calgary.
The Barrie retail cannabis market is saturated, says Barrie Today, with 25 stores in the city listed as authorized to open and another five applications in progress. The author spoke with local retailers Ryan Grenville of One Plant Retail and Ray Le, manager at Budssmoke.
In November, Ontario announced it would soon increase the limit of cannabis retail store authorizations from 75 to 150 per licensed retail operator and their affiliates. That change comes into effect January 1, 2024.
High Tide will be opening its first Canna Cabana in Mississauga, Ontario. This opening will mark High Tide’s 162nd Canna Cabana branded location in Canada, the 54th in the province of Ontario and the first in Mississauga.
Molecule Holdings Inc., a Canadian cannabis beverage production company with brands like Phresh and Dulces, announced the revocation of the “failure to file” cease trade order issued on October 5, 2023. Trading in the common shares of the company is expected to resume soon.
Cannabis News outlet Green State ran a piece entitled Dabbing culture and the rise of concentrate consumption. It referenced Vancouver’s Boro and Beyond, a company that sets up dab bars to help educate consumers about dabbing and the different tools that go along with it.
An appeal of a conviction relating to charges connected to cannabis production and trafficking at Muileboom Organics was dismissed in Ontario. However, the court found that the sanctions imposed by the trial judge—a fine, forfeiture, conditional sentences, and probation—the inclusion of the electronic monitoring and house arrest for the duration of the conditional sentence orders resulted in a sentence that was demonstrably unfit.
The court deleted the electronic monitoring conditions in both conditional sentence orders and set aside the probation order. Muileboom was operating under personal and/or designated medical production licences.
Numerous hot-button issues emerged in the Canadian cannabis industry in 2023. Among the many topics we covered, we’ve compiled this summary to put these issues at your fingertips.
Bankruptcies, closures, and licence revocations have also been a common theme in 2023 as the cannabis industry experiences serious economic challenges along with broader economic challenges not only in Canada but around the globe. Here are a few of those stories as captured by StratCann.
Edible or ingestible extracts was also a hugely popular topic in 2023, with Health Canada beginning a long process of pushing back on an array of products in the market that they say are not compliant with federal regulations. We wrote about this so much we had to create it’s own article. You can read all about it here:
The cannabis market in Canada continued to evolve as it entered its fourth year in 2023, with new products emerging and consumer trends continuing to shift away from cannabis flower. National and provincial reports consistently show dried flower SKUs beginning to lose some market share to extracts, especially vape pens and infused pre-rolls.
Too much weed! While the surplus of cannabis in the market appears to finally (potenitally) have peaked, it’s still an industry wide challenge, driving prices downward.
Like most regulations, cannabis regulations in Canada are constantly changing and evolving.
When federal cannabis legalization came into force in 2018, followed by regulatory regimes in provinces, First Nations, and municipalities, it was the beginning of a long, never-ending cycle of push and pull between industry, consumers, and regulators for a standard that balanced all of these interests.
In 2023, we have seen several examples of these regulations changing—at all levels of government—in most instances for the better as far as industry and consumers are concerned. While some of the “big picture” needs of industry are not always immediately met, such as excise tax reform or an increase of the 10mg THC limit for edibles, small changes to federal regulations continue to make at least modest improvements in the daily activities of the industry.
Below are a few examples from Health Canada, the provinces, First Nations, and municipalities.
Health Canada cannabis regulations
As of October 1, 2023, Health Canada said it would phase out inspections for authorized activities change requests from processors to add the activity of sale of extract, edible, and topical cannabis products. This change applies to all processing licence holders, micro or standard.
In March 2023, Health Canada published a Notice of Intent in the Canada Gazette, Part I, seeking feedback on potential amendments to the Cannabis Regulations. The agency’s goal with these potential amendments is to streamline and clarify existing requirements, eliminate duplicative requirements, and reduce burdens where possible.
Not all changes were seen as positive, though. Health Canada had been engaging with industry for much of 2023 on the subject of “minor intoxicating cannabinoids” such as Delta-8 THC, THC-V, as well as CBN, among others.
In October, Health Canada released a document offering background and considerations for guidance on microbial and chemical contaminant tolerance limits, seeking feedback from industry on the proposed changes.
Although the Manitoba NDP said they wanted to make several changes to the province’s cannabis policy, including saying they did not support the provincial ban on growing cannabis at home prior to this year’s election, since they formed government in October the province has been mum on the subject.
In Saskatchewan, the SLGA announced in June that all cannabis retail stores in the province were no longer required to ask for proof of age on every retail transaction for in-store purchases and pickups. In addition, effective immediately, the SLGA will only require personal and corporate disclosures for the applicant and any individuals, corporations, and other entities with an ownership stake of at least 10 percent of the applicant.
Also, Saskatchewan retailers who have received a cannabis store permit from First Nations Cannabis Licence Authorities (FNCA) are able to purchase cannabis from registered suppliers and permitted wholesalers in the province. With FNCA approval, they can also sell cannabis wholesale to other provincially-approved retailers.
Previously, Alberta had one of the strictest age-gating rules of any province in Canada, with retailers only able to show product information on their websites if users had verified their age with an ID, either in-person or through an online form. Most provinces simply require a self-attestation, such as entering a date of birth or answering yes or no to a simple age prompt.
The Mohawk Council of Kahnawake gave the go-ahead for retail sales of cannabis in the community to begin when it voted to lift the moratorium on sales and possession for retail sales during its Monday meeting. The chief responsible for the dossier said she expects sales to begin in the New Year.
StratCann interviewed MCK Chief Tonya Perron about their plans for cannabis regulations in 2021. The lifting of the moratorium allows the Kahnawake Cannabis Control Board (CCB) to begin issuing the three licences that will be available for sales of cannabis, and possession of cannabis for sale, as soon as they get through what Perron expects will be a mountain of work on awarding those licences. Numerous stores operating in the area say they do not recognize the Council’s authority.
A new cannabis flower monograph was adopted at a session of the European Pharmacopoeia Commission in June 2023. The monograph on cannabis flower is now available online and will be published in European Pharmacopoeia (Ph. Eur.) Supplement 11.5 in January 2024.
One of the more significant stories of 2023 was that of ‘ingestible extracts’ – products sold for oral consumption that contain more than 10mg per serving and per package, as limited for edible products by federal regulations. StratCann was there for every step of this evolving industry subject, analyzing its impact on producers, distributors, retailers, and consumers.
The subject continues to evolve, with products appearing, disappearing, and, in some cases, reappearing again, while Health Canada maintains that these products are not compliant. Nonetheless, consumers love them based on all available sales numbers.
Health Canada also issued a warning to the public in March about these products, urging consumer caution.
On March 31, Organigram filed for a judicial review of Health Canada’s decision to require an end to sales of “edible extracts” that exceed the federal 10mg THC packaging limit.
Organigram’s argument in their application to the court was, in part, that the Jolts Lozenges are not edibles because they do not contain any sweeteners and that Health Canada was not transparent in their decision-making process.
In August, a judge approved Organigram’s application for judicial review of Health Canada’s decision to effectively ban these products. The case was then sent back to Health Canada for their opportunity to respond.
Rather than agreeing with Organigram’s contention that the products were compliant, the judge ruled that the federal health agency’s process to reach that conclusion was unfair and deserved further analysis.
The judge ruled that the unfairness of Health Canada’s decision on the ingestible extracts was partly due to it including additional factors in its decision-making process that Ogranigram was not given an opportunity to respond to.
In October, Organigram began offering their Jolts products again in several provincial markets, saying that Health Canada had accepted the Judge’s ruling and that its initial ruling on Jolts being out of compliance is void.
Following that announcement from Organigram in November, Health Canada said it was in the “redetermination process” regarding its initial ruling on Edison Jolts.
Health Canada maintains that it considers any product intended to be consumed in the same manner as food is not an extract. The agency sent out a memo to licence holders in December again reiterating this point, noting that the “classification of a cannabis product does not mean that the product is compliant with all regulations pertaining to that class of cannabis. Licence holders are responsible for making sure their cannabis products meet all the applicable requirements of the Cannabis Act and Cannabis Regulations.”
Interestingly, the disappearance of these products from shelves in BC appears to have led to an increase in the sales of cannabis oil capsules, with some consumers potentially discovering these products for the first time. While the capsules can still only contain up to 10mg THC each, they come in containers of 10, 30 or even 100, and at a much lower price.
In Canna Pubco news, Canopy is getting rid of its This Works brands, Organigram posted a net loss of $248.6 million in 2023, and Auxly Ottawa recalled one lot of Mandarin Cookies from Manitoba due to a minor labelling error.
The National Post shared a piece on the “monopoly” the OCS enjoys on online sales, speaking with Jennawae Cavion, executive director of NORML Canada and owner of Calyx+Trichomes, along with Sam Gerges, owner of MaryJane’s Cannabis, and Nick Baksh of cannabis shop Montrose. Unsurprisingly, given the source, the piece quickly morphed into a call for more enforcement against illicit online retailers. The OCS had 42.8 million in sales through OCS.ca, their online consumer store, or about 3% of total sales for the OCS. This is down from $72.7 million in the previous year.
Trees Corporation announced that the company and its subsidiaries had received an order for creditor protection from the Ontario Superior Court of Justice under the Companies’ Creditors Arrangement Act. The Trees Group currently has 13 branded Trees storefronts in Canada, including nine stores owned and operated in Ontario and four stores owned and operated in BC.
Organigram appointed a new CFO, Greg Guyatt, formerly of Phoena Holdings Inc (formerly CannTrust), effective January 8, 2024.
Quebec’s Médicibis, owner of Mendo Medical, announced an agreement with Ontario micro cultivatorKilometer Cannabis Limited, operator of the Headwater Cannabis brand. The agreement means the Mendo Medical platform, mendocannabis.ca, will now include Headwater’s offerings.
Tilray announced the launch of two new cannabis edibles across Canada, including Ontario, British Columbia, Alberta, and Saskatchewan, under its Chowie Wowie brand. Both products have 10mg THC and 10mg CBD.
High Tide is opening a Canna Cabana location within the Tsuut’ina Nation in Alberta. This opening will mark High Tide’s 160th Canna Cabana branded retail cannabis location in Canada, the 78th in the province of Alberta, and the first Canna Cabana on the Tsuut’ina Nation. The Tsuut’ina Nation is located southwest of Calgary.
The Global Cannabis Times also recently interviewed Raj Grover, CEO of High Tide, where he says they are just 4.5% of Canada’s total brick-and-mortar store count, but 9.5% of the Canadian retail market share in terms of dollars.
The Good Shroom Co Inc., which sells cannabis products in several provincial markets under its Nordique Royale brand, as well as wellness beverages, released its financial results for the quarter ending October 31, 2023. The company saw revenue of $1,510,586 and $92,126 in net profit, primarily from cannabis sales. The same quarter last fiscal year was a net loss of $191,569.
An Enniskillen, Ontario, man who has been fighting to keep cannabis from being grown at a Tilray greenhouse just 28 meters from his home now has permission to be part of a hearing at the Ontario Land Tribunal. Cannim Canada, an Australian-based cannabis company, has already received a licence to cultivate and process cannabis at the Lasalle Line greenhouse.
A Colombian-Canadian cannabis company near Bogota is frustrated by regulatory red tape and political hurdles it says are stifling the country’s cannabis industry. Reuters reports that more than 17 acres of land owned by a Colombian-Canadian company near Bogota was once meant to grow 25 varieties of cannabis, but over the past year, weeds have overtaken greenhouses, and 200 of its 218 employees have been fired.
“We’re going from bad to worse. It’s slow agony and the clock is going against us with pressure from partners and without cash flow,” said the owner of the Colombian-Canadian company, who asked for anonymity because he is seeking new investment to save his $20 million business.
Hong Kong customs officers have arrested three men and confiscated 228kg of cannabis hidden in a seaborne tire shipment from Canada.
US President Joe Biden has announced pardons for certain federal cannabis convictions and clemency for 11 people imprisoned for non-violent drug crimes. The executive order covers those convicted under the federal law of simple possession, attempted simple possession, or use of cannabis. The White House has said thousands of people would be eligible for the pardons.
Cannabis stores in Canada continue to be targets for robbers and burglars, while retailers say they are doing what they can to mitigate risks.
A recent string of violent armed robberies in Calgary made headlines in the last few weeks, adding to the number of burglaries, thefts and vandalism at cannabis stores in several provinces in recent weeks and months.
Police recently made arrests related to that string of armed robberies in Calgary, and two men were also recently arrested on charges relating to another armed cannabis store robbery, this time in Gleichen, Alberta, just outside of Calgary.
A business in BC was also recently burglarized on December 6, with $2,500 worth of cannabis products stolen from a store in Masset, on Graham Island in Haida Gwaii. The thieves gained entry by breaking the front window of the store.
Cannabis growers and processors have not been immune, either. Earlier this year, at least two cannabis producers in BC’s Lower Mainland were the victims of early-morning burglaries.
Retailers say they are having to spend more money to secure their stores as this new “cost of doing business” continues.
Brionne Lavoie, the owner of the Frontier Cannabis store in Masset that was recently burglarized, says he’s now installing heavy vault doors on his storage rooms to avoid similar break-ins in the future. In addition, the value of the cannabis stolen and damage to the store was below the deductibles for his insurance.
“At the end of the day it’s all deterrence,” says Lavoie. “If someone wants to break in or cause harm, they’re going to find a way without the extent of bank security, it’s just one of those things.”
Lisa Bigioni, co-founder and CEO of Stok’d Cannabis, which has four retail locations in Ontario and experienced two break-ins the week before Christmas 2022, told StratCann earlier this year that they have made several upgrades to their properties.
“Metal gates have now been installed in our stores, and we sleep a lot better at night. It’s been costly. The gates were about $2,000 per store.”
“The fact that we’re compliant with our security cameras helped us capture them in action,” says Bigioni. “And this helped the police find them. In both cases, the police arrived before we did. The detective assigned to the cases was fantastic, and kept us well-informed along the way. Based on the evidence, he was confident the guys would be caught, which they were less than a week later.”
Ryan Roch, who owns two cannabis stores just outside Calgary, says he has a similar perspective, saying retailers can guard against this by being more vigilant with security measures.
“Just keep your head on a swivel,” says Roch. “Do cash drops on a regular basis so there’s no excess cash sitting around. Make sure security cameras are working. Make sure staff are properly trained. Make sure you have panic buttons. There’s a lot you can do to make sure it’s a much safer environment.”
A First Nation in British Columbia has filed a lawsuit against individuals it says are, among other activities, using the Nation’s land for growing and selling cannabis without a license.
The Nisg̱a’a Nation, located northeast of Prince Rupert, filed a lawsuit in the Supreme Court of British Columbia on December 14, 2023, accusing a group referring to themselves as the “Raven Clan Outlaws” of illegally occupying and undertaking harmful activities at a site within Nisg̱a’a traditional territory and the Nass Wildlife Area.
“The occupants’ activities at the site include: damaging forest resources by clear-cutting trees; erecting permanent cabins and structures; marketing accommodations; operating a farm; raising and selling livestock near waterways (now at risk of contamination),” reads a press release from the Nation. “They also appear to be growing and selling cannabis without a license. They have stated they do not recognize provincial or federal laws, and we understand that they have not applied for or received approval from any government to use this land.”
Nisg̱a’a Lisims Government (NLG) launched the lawsuit in order to stop what they say is an unsanctioned occupation of their land, arguing that under the Nisg̱a’a Treaty, Nisg̱a’a citizens have constitutionally protected harvesting rights within the Nass Wildlife Area and they have a responsibility to Nisg̱a’a citizens and to protect Nisg̱a’a treaty rights as well as the environment.
The actions of the Raven Clan Outlaws, the suit continues, prevent Nisg̱a’a citizens from exercising their treaty rights to safely harvest wildlife in the area, noting that hunting near an occupied site would be dangerous and against Nisg̱a’a laws. The occupants, it says, are clear-cutting forests, not complying with environmental and cannabis legislation, polluting the grounds with farm waste, and potentially contaminating nearby waterways.
“Nisg̱a’a Lisims Government is taking this action to protect our citizens’ rights, our traditional lands, and the larger Nass Wildlife Area,” said NLG President Eva Clayton. “The occupiers are causing real harm to the environment and cannot be allowed to continue to undertake their unlawful activities at the site. The Nisg̱a’a Treaty provides our citizens with the right to hunt and harvest wildlife to provide for their families, as they always have. We will do everything we can to protect these hard-won rights.”
A statement on their website says the Nisg̱a’a Nation is represented by NLG, which has the authority to pass laws on a broad range of matters. It also states the Nisg̱a’a lawmaking authority is concurrent with federal and provincial authority.
The Raven Claw Outlaws are described on their website as reoccupying stolen lands, saying they do not apply for permits to harvest resources on traditional lands, do not recognize provincial legislation on traditional lands, and do not recognize federal legislation on traditional lands.
A phone number on the Outlaw’s website is no longer in service. A link on their website directs to a “Mail Order and Local Delivery Cannabis Dispensary” with the Outlaw’s fist and raven logo, saying the crops are grown on traditional land and under traditional law.
The website also mentions plans for a store at the Ravens Nest Ranch located at 11km on Cranberry Connector on Gamlakyeltxw Lax Yip.
The Gitanyow Hereditary Chiefs October newsletter refers to both the Ravens Nest Ranch, established in 2023, as well as community members working to build capacity “on the farming of pigs, chickens, rabbits, cannabis, and hemp.”
Organigram reported that net revenue increased 11% to $161.6 million in 2023, but the cannabis producer still had a net loss of $248.6 million, according to its new fiscal report.
The New Brunswick-based company had $233.6 million in gross revenue in the past year, paying $72 million in federal excise taxes. The cost of sales was $136.4 million.
The company leveraged its spending to help secure its position in several product categories in Canada, holding the top position in the milled flower, gummies, and hash categories, the number three position in Ontario and Quebec, and the number one position in Atlantic Canada (according to Organigram’s market scans). It also says it holds the number three position in dried flower.
Organigam introduced 16 SKUs in the last quarter of 2023 for a total of 143 in the market. It sells an array of cannabis products in Canada under brands like Edison Cannabis Co., SHRED, Big Bag O’ Buds, Holy Mountain, and others.
It also completed its first harvest at its “craft” cultivation and hash production facility in Lac-Supérieur, Quebec, which it acquired in 2021 from Laurentian Organic. Organigram has made significant inroads in the market with its SHRED X Rip-Strip hash brand.
Organigram also signed its first UK supply agreement with 4C Labs Ltd. to distribute medical cannabis to UK-based patients, along with its first German supply agreement with Sanity Group GmbH to distribute medical cannabis to Germany-based patients.
Organigram completed international shipments totalling $18.9 million in 2023, an increase of 25% over Fiscal 2022.
In November, British American Tobacco (BAT) announced that it would invest nearly $125 million into Organigram, more than doubling its equity position in the cannabis company from about 20% to 45%. The deal is still subject to shareholder approval.
As part of that partnership, Organigram and BAT are developing what they say are new technologies in the cannabis edible, vape, and beverage categories in addition to “new disruptive inhalation formats.” The launch of these new products will include gummies, which will feature “a new nano-emulsion technology.”
Organigram also invested in new vape technology in 2023 through a product purchase agreement with vaporization technology company Greentank, and reached an agreement with Phylos, a U.S. cannabis genetics company and provider of production-ready seeds, based in Portland, Oregon.
As part of the partnership, Phylos has been developing production-ready first-generation (“F1”) hybrid cannabis seeds for Organigram. The milestones achieved so far consist of delivery of a 1:1 THCV cultivar at 10%+ THCV potency; a 3:1 THCV cultivar at target 18% THCV (16% minimum); and four THC aroma specific cultivars (in either Berry, Citrus, or Gas).
The Moncton-based producer says it’s up-to-date on all its excise tax remittances, but notes that many other producers are not, something it says acts as a “source of alternative financing.” It also notes that THC inflation remains a significant challenge in the industry, saying it has seen the stated amount of THC on some products inflated by more than 50%. Organigram says it’s confident that efforts by Health Canada and provincial boards like the OCS will help address this issue.
In an effort to become more “asset-light”, Canopy says it has sold off its ownership in a skincare and wellness brand for a fraction of what it paid just a few years ago.
Canopy announced that it had completed the divestiture of its This Works skincare and wellness brand to Inspirit Capital, a London-based investment firm, early morning on Monday, December 18.
“We are resolutely focused on achieving North American cannabis market leadership, and this completed sale represents a further step to enable this through the transformation of Canopy Growth into a simplified, asset-light, cannabis-focused business,” said Canopy CEO David Klein in a press release on Monday.
“In addition to realizing the proceeds from this sale which will further strengthen our financial position, we’re pleased to have found a buyer that is committed to the continued development of the This Works brand.”
Canopy made headlines in 2019 when they initially purchased This Works for $73.8 million. At the time, the cannabis company said the deal was a “key aspect of a multi-faceted hemp and CBD strategy” that “currently includes thousands of acres of hemp production across several continents, hundreds of millions of dollars of capital investment into hemp-derived CBD production and processing, rapid expansion across the European Union and other key regions, and the introduction of new CBD-infused products and brands to the global beauty, wellness, and sleep solution space.”
Since that time, Canopy has significantly scaled back its approach to the cannabis market, seeking to focus on a handful of higher-end cannabis products rather than dominating in every possible category.
This Works is Headquartered in London, England, and offers a range of skincare and sleep solution products.
Earlier this year, Canopy announced that it would sell its flagship facility in a former Hershey factory in Smiths Falls, Ontario, back to Hershey Canada for $53 million. Canopy, then known as Tweed Marijuana, acquired the former chocolate factory in 2013 for $7 million.
A facility that Canopy built in PEI sat idle for years, unused as of a year ago. Canopy’s own documents show that in 2018, the company committed to paying more than $24 million over five years to a numbered company that owns the land. On January 5, 2023, in an email to CBC News, Canopy confirmed it continues to lease the land but said it wasn’t ready to discuss next steps.
Canopy recently announced a deal for share consolidation in an effort to ensure it maintains a listing on the TSX and NASDAQ.
According to the company’s recent financial reports, the gross margin for Canopy’s This Works segment was $2.9 million in the first quarter of fiscal 2024, compared to $2.6 million in the first quarter of fiscal 2023. The gross margin percentage was 48% of net revenue in the first quarter of fiscal 2024, consistent with 48% in the first quarter of fiscal 2023.
Revenue from This Works was $6 million in the first quarter of fiscal 2024, as compared to $5.5 million in the first quarter of fiscal 2023.
A new research project looking at THC levels in different products on the Canadian market is once again highlighting the lack of reliably labelled dried cannabis flower.
The lead researcher involved in the project says this is a failure by Heath Canada to set and enforce reasonable variability limits on Cannabis Flower or pre-rolls, leading to a lack of credibility in the market domestically and internationally.
Rob O’Brien, CEO and CSO at Supra Research and Development, an analytical testing lab in Canada that includes cannabis testing in its repertoire, says he worked with seven other labs across Canada to sample an array of cannabis products and compile the results. O’Brien has shared similar results on the subject in the past.
The goals, says O’Brien, were to more effectively highlight the extent of the problem in Canada and prove that analytical testing labs can accurately test cannabis without much deviation between them.
While the issue of THC inflation is relatively well-known, one of the reasons some have suggested for a lack of enforcement of THC levels on dried flower is the level of deviation in results depending on the lab used. But what these results show, says O’Brien, is that different labs all testing the same or similar samples can still come up with results that are relatively close to each other.
Summary Dried Flower Results. Column one shows which labs tested the sample ID’d in column two. Column three shows the actual THC result. Column four shows the variation between labs that tested the sample. Column five shows the THC on the label. Column six shows the difference in THC levels measured in mg/g. Column seven shows the deviation between label claim and secondary testing by percent.
This is highlighted by the project’s findings, which showed not only the deviation between the posted THC levels on the label of a cannabis product but also the deviation in the results between those labs. Three to four labs would receive the same sample, and in most cases, their results came within the same range, showing that when these labs use the same methodology, they can arrive at relatively similar measurements.
“Clearly there have been suggestions that there are THC inflation problems in the Canadian and US marketplaces. And people have been trying to identify the source of that and fingers have been pointed in many directions, including the accuracy of labs in Canada,” says O’Brien.
“I think it’s undermining the whole industry in Canada and the US,” he adds. “I think it’s outrageous that these shenanigans are allowed to continue. Health Canada is partially responsible because they’re not enforcing reasonable limits. And this clearly shows that if they do set reasonable limits, Producers can be within 15% of label claim.”
Summary Pre-roll Results
How it worked
The research, conducted by eight analytical testing labs in Canada, tested 16 different brands of 3.5 g dried flower products available in several provincial markets, four different brands of pre-rolls (non-infused), and 15 different brands of infused pre-roll flower product.
Researchers used an allowable variance for the dried flower and pre-rolls of 25% and 15% for infused pre-rolls, similar to the allowable limit within federal cannabis regulations. Note: this means, for example, that a product labelled as having 30% THC could be over or under that number by 7.5 percentage points, or 23.5% THC or 37.5% THC.
More than half (nine) of the samples from the 3.5-gram dried flower SKUs were found to be more than 25% below the stated label claim, and two of those were more than 40% lower than the label claim.
Meanwhile, only one of the four brands of non-infused pre-rolls was outside the 25% allowable range, with one sample coming in just 2.1% lower than the label.
For the infused pre-rolls, only three samples were outside the 15% range, and none were outside the 25% range.
None of the dried flower or pre-roll samples were above the stated label claim, while two infused pre-rolls showed results slightly above the label claim.
Summary Infused Pre-roll Results
While some may point to the issue being devious labs, the resulting research paper, which O’Brien shared with StratCann, speculates the issue may have more to do with sample bias by producers who are selecting top colas or other high-THC flowers as their representative sample instead of sampling the finished product after it’s packaged.
The fact that there was greater THC inflation and label inconsistency in the dried flower samples from the research project highlights this issue more, O’Brien says. Since pre-rolls are more likely to be homogenized as part of the manufacturing process, there is less variation between the label claim and the actual products.
The issue is even more pronounced with infused pre-rolls, which are considered an extract under federal regulations and, therefore, subject to a strict 15% deviation allowance.
While a cannabis flower may have a certain level of THC at harvest or after drying and curing, the process of processing and packaging that flower results in a loss of Trichomes that significantly reduce the THC content, which is why he says these products should be tested after packaging rather than before.
“While we cannot pinpoint the origin of the discrepancies, we can speculate that the label claims >30% higher than the actual Total THC concentration in the finished product may be using artificially high COA’s from a harvest rather than testing products after being handled and processed into the finished form,” says the paper. “Active cannabinoids are compartmentalized in fragile trichome structures that can easily be dislodged during mechanical processing. Non-processed flowers may have a higher amount of cannabinoids than processed flowers.”
Still, the paper doesn’t entirely discount the possibility that some labs are also inflating numbers.
“Furthermore, there is also the probability that some labs are artificially generating high COA’s or that the producers are sending samples that are doctored. However, these possibilities can not be determined from this type of study.”
Three or four packages of each brand were obtained from cannabis stores in several provinces. These were then sent to a central lab, sorted, and randomly sent to the other labs involved in the study.
Although they’re not releasing the names of the specific brands they tested because they don’t want to harm any brand, O’Brien says the full data set will be shared with Health Canada and provincial cannabis distributors. The hope is that when producers with accurate label claims are contacted, they will permit the publication of their name to create positive news stories about this issue.
More information about these results, including all participating labs, is expected to be released at a future date.
Herb ran an interesting piece comparing and contrasting Canada’s federal legalization and the patchwork State’s rights approach taken in the US. While Canada’s approach offers more stability and consistency, the US offers greater product innovation, says the author.
L’Éclaireur Progrès spoke with the owners of Quebec micro cultivator LaHoja Organique about the fierce competition in the cannabis industry and their current pivot from the Quebec market into Ontario.
Health Canada’sForward Regulatory Plan: 2023-25 includes continuing to think about maybe considering amendments to the Cannabis Regulations (Flavours in Cannabis Extracts), their proposed Approach to the Regulation of Health Products Containing Cannabidiol (CBD) that would not require practitioner oversight and Streamlining Certain Regulatory Obligations.
Canopy Growth announced a one-for-ten share consolidation in an effort to regain compliance with the Nasdaq minimum bid price requirement. The post-consolidation shares are expected to start trading on the Toronto Stock Exchange and the Nasdaq at market open on Dec. 20, subject to final confirmation from the TSX and the Nasdaq.
The CBC reported that the CRA is claiming medical cannabis advocate Chris Enns didn’t report more than $2.5 million worth of sales at dispensaries he operated a decade ago. Enns says the claims are based on inaccurate police records. At the same time, the CRA alleges Enns inaccurately reported income from cannabis sales and the resulting benefits he received as a company shareholder. This spring, the CRA quietly set up a full-time “illicit income” program that includes 80 auditors across the country.
An investigation that arose from a double shooting in Vancouver in September led police to a grow op in East Van and one in Abbotsford. The BC government now wants to seize more than $7 million in property and cash as the proceeds of crime.
Politico shared some older news about the $167.6 million Veterans Affairs Canada spent on cannabis for medical purposes in 2022-2023. VAC has spent $600.6 million to reimburse veterans for cannabis since Canada legalized in 2018, although the program predates the legal non-medical regime.
Continuing their series on cannabis, Nature looked at cannabis use and teens. James MacKillop, a clinical psychologist at McMaster University in Hamilton, says that while there was no initial spike in cannabis use among adolescents when the drug was legalized in Canada five years ago, there was a rise in use when illegal cannabis stores that are not licensed by the government began to open.
Greenhouse Canada looked at novelty soil amendments with Seaborn Organics’s Cannabis Indoor Cultivation Research Labs (Cannabunker) at the Daniel J. Patterson campus in Niagara-on-the-Lake.
The Ontario Cannabis Store helped facilitate nearly $1.5 billion in cannabis sales through the distribution of 315,000 kilograms of cannabis products across a network of more than 1,600 stores, as well as online sales, in its most recent annual report.
By provincial order, the agency was required to pay its net profits of $150 million from its cash balance into Ontario’s Consolidated Revenue Fund (“CRF”).
The report, covering the 2022-23 fiscal year ending March 31, 2023, shows the provincial cannabis distributor and online retail generated a net income of $234.2 million over the past year and revenue of $1,474.5 million, marking a growth of $293.7 million compared to $1,180.8 million in 2021–22.
The province captured nearly 60% of the cannabis market with its sales, a continued increase in the total share of the market.
Sales increases were assisted by establishing the OCS’ Flow-Through program, which, combined with the number of products held in stock in the distribution warehouse, grew to 2,950 SKUs, a 46.5% increase over the previous fiscal year.
A product sold through the OCS Flow Through program sits at the OCS warehouse
The total number of units sold through the OCS Flow Through was 1.4 million. The total number of LPs that the OCS partnered with as of March 31, 2023, was 239, which is an increase of 90 compared to 2021–22.
(Editor’s note: The above paragraph has been edited to note that the 1.4 million units sold were through Flow-Through.)
The number of stores in Ontario has continued to increase, even as store closures have also been picking up pace. Ontario added an additional 345 Authorized Cannabis Stores in the most recent fiscal year, growing to 1,661 stores across the province as of March 31, 2023. (The AGCO currently lists more than 1,700 stores as Authorized to Open.) Another 144 stores closed during this time period.
Online cannabis sales through OCS.ca decreased in the last fiscal year as the provincial agency says it has made efforts to improve its wholesale service levels to retailers and deprioritized large or material enhancements to the online consumer platform.
Dried flower sales through OCS.ca saw a significant decline, from 49.8% of all sales in 2021-22 to 37.6% in 2022-23. Sales of generally smaller SKUs like pre-rolls, oils, capsules, vapes and concentrates, edibles and beverages increased through the online platform.
The total revenue for the OCS sales from wholesale and online sales in 2022–23 reached $1,474.5 million, marking a growth of $293.7 million compared to $1,180.8 million in 2021–22.
Wholesale sales of vapes, pre-rolls and edibles showed growth in the most recent fiscal year, but cannabis flower still dominates with 42.7% of wholesale revenue sales in 2022-23. Combined with pre-rolls at 19.4% (non-infused), this accounts for 62.1% of total revenue share.
Vapes and concentrates represented the next largest share of revenues, with 26.2%, followed by edibles at 4.5%, oils and capsules at 3.4%, and beverages at 2.7%. Vapes and concentrates were up from 18.8% in the previous fiscal year.
The OCS will be lowering its margins on wholesale products in Q2 of 2023–24, which it expects will inject approximately $35 million into the marketplace and roughly $60 million by 2024-35 with even further planned reductions.
Currently, the fixed wholesale markup OCS charges on cannabis products ranges from 20-29%.
The total finance income for the OCS in 2022–23 reached $16.8 million, marking a growth of $14.7 million compared to $2.1 million in 2021–22.
Ontario Cannabis Store Fixed Wholesale Mark-up Rates by Subcategory. Image via OCS.
The most recent fiscal year was the most profitable year for the OCS so far, with a reported total comprehensive income of $234.2 million, compared to $184.4 million in 2021–22.
The OCS has used these profits to repay the loan provided by the Ontario Financing Authority. In 2022–23, $7.6 million in loan principal was repaid, and $1.8 million in interest was paid, for a total payment of $9.4 million. The balance of the loan as of March 31, 2023, was $59.7 million. It completed a total of $37.6 million in payments to various governments in 2022-23.
The federal government received $27.6 million in harmonized sales tax (HST) remittances from Ontario cannabis sales in 2022–23, an increase from $27.0 million in 2021–22. The Ontario provincial sales tax component of the HST was $17.0 million in 2022–23, compared to $16.6 million in 2021–22.
On or before September 29, 2023, the Ontario Cannabis Retail Corporation was required to pay into Ontario’s Consolidated Revenue Fund (“CRF”) its net profits in the amount of $150 million from its cash balance as of March 31, 2023.
Each year the OCS has four scheduled product calls, one in the spring, summer, fall, and winter. The next product call is January 2024 for the 2024 summer product call schedule
Hamilton, ON – December 13, 2023: Zentrela, Inc., the leading Canadian neurotechnology company, is proud to announce that Health Canada has authorized its novel EEG-based research model for Category 3 non-therapeutic cannabis effect studies, unlocking the ability to provide Canadian LPs with objective and regulatory-compliant product effect evidence.
While a Category 1 NTRC license allows for sensory testing, it is sometimes also used to informally collect reported cannabis effect information. However, this latter type of non-scientific data is not reliable nor compliant with Health Canada’s NTRC regulatory framework, therefore its value is limited. It is important to remember that Health Canada’s regulations stipulate that under the non-therapeutic research on cannabis (NTRC) framework, license holders should only study cannabis effects under Category 2 or 3 NTRC studies.
The Category 3 NTRC was created to enable Canadian cannabis companies to generate product effect evidence using scientific research instruments like EEG devices through interventional studies based on the full consumption of pre-commercialized products.
Zentrela’s unique EEG-driven research model for objectively quantifying the psychoactive and mood effects of cannabis products is the result of 7+ years of R&D to master the ability to combine proprietary portable EEG technology with Machine Learning to characterize cannabis effects accurately and affordably. Since 2021, Zentrela has been continuously refining its EEG-based research solution, generating more algorithms and standardizing its master research protocol to make it the most objective, fast-to-conduct, and replicable solution in the market.
“This is a game-changing event for the Canadian cannabis industry and Zentrela,” said company founder and CEO Israel Gasperin. “Before our offering, there didn’t exist a standardized, objective and quantifiable way of characterizing cannabis effects. Health Canada’s approval of our EEG-driven research methodology is making the application and activation for a Category 3 NTRC license very straightforward and affordable. Instead of investing in regulatory consulting fees to start an L3 NTRC application process from scratch, now LPs can work with us right away to unlock the business benefits of generating product effect evidence objectively and in compliance with the Cannabis Act and its regulations.”
Zentrela is awaiting from Health Canada’s Licensing and Security Division to finalize the review of the security aspects of their research facility to start receiving pre-commercialized cannabis products and conducting non-therapeutic cannabis effect research under the Category 3 NTRC license.
For further information, contact Roy Agostino at (416) 659-0678.
About Zentrela, Inc.
Zentrela, Inc., a trailblazer in the field of cannabis research, harnesses advanced EEG technology to objectively study the effects of cannabis on the human brain. Our commitment to scientific rigour, credibility, and innovation makes us a leader in providing actionable insights for the cannabis industry. Visit Zentrela’s website to learn more.
The Nova Scotia Liquor Corporation (NSLC) says it will reinstate cannabis home delivery after some rural customers were cut off when the NSLC switched from Canada Post to a private courier company “to harmonize…home delivery programs for both beverage alcohol and cannabis.”
Kelowna, BC is planning on lowering its annual fees for cannabis retailers, from $9,500 to $650. “We’re doing an update to the cannabis licence bylaw, which is going to happen in January or February, but we’re holding off on formal renewals of the $10,000 cannabis licences – there’s 18 – until after we change the bylaw next year so that they’ll pay the same fee as a retail liquor store,” City of Kelowna Planning Director Ryan Smith said.
Charges against a Winnipeg man accused of handing out cannabis gummies on Halloweenhave been stayed. Sheldon Chochinov and his wife, Tammy Sigurdur, allegedly gave out THC candies to multiple children on October 31, 2022. Sigurdur previously pleaded guilty to charges of supplying cannabis to a young person and possessing cannabis that is not packed, labelled or stamped. Sigurdur is expected to return to court for a sentencing hearing in January.
Cannara Biotech Inc. announced its Q4 2023 report with net revenues of $18.3 million, net income of $4.6 million, and gross profits of $9.8 million. As of October 2023, Cannara has an 8.8% market share in Quebec, 3.2% in Ontario, 2.3% in Alberta, and 0.9% in BC. The company also increased production capacity by 50% in 2023.
The Mohawk Council of Kahnawake gave the go-ahead for retail sales of cannabis in the community to begin when it voted to lift the moratorium on sales and possession for retail sales during its Monday meeting. The chief responsible for the dossier said she expects sales to begin in the New Year.
StratCann interviewed MCK Chief Tonya Perron about their plans for cannabis regulations in 2021. The lifting of the moratorium allows the Kahnawake Cannabis Control Board (CCB) to begin issuing the three licences that will be available for sales of cannabis, and possession of cannabis for sale, as soon as they get through what Perron expects will be a mountain of work on awarding those licences. Numerous stores operating in the area say they do not recognize the Council’s authority.
Researchers with Nova Scotia Healthspoke with CBC about a national study into the long-term effects of cannabis on young people.
According to new data shared by MJBiz, medical cannabis companies in Australiaexported 1,510 kilograms of cannabis in 2022 and produced 24,900 kilograms, up from 16,700 kilograms in 2021.
The US DEA is now warning Georgia pharmacies to stop selling THC products. Georgia recently became the first US state to allow cannabis sales in pharmacies.
BZAM announced today that it has entered into a definitive share exchange agreement to acquire Final Bell Canada Inc. from Final Bell Holdings International Ltd, a hardware, packaging and brand development company serving the cannabis industry.
The deal will make BZAM the fifth-largest Canadian LP, including a production facility in Ontario.
The company also lists cannabis brands operating in Canada like Tweed, Spinach, Sherbinskis, Foray, Ace Valley, B40, Beurre Blanc, Kolab, Cookies, and others among its clients. Products from Jeeter Canada at a recent cannabis industry event in Ontario list Final Bell on the packaging. Jeeter Canada’s website also says “Proudly Brought to You by Final Bell Corp.”
Under the terms of the agreement, FBHI, the sole shareholder of FBC, will receive 90,000,000 common shares of BZAM at a deemed price of $0.15 per share, representing approximately one-third of the issued and outstanding shares of BZAM. The transaction is anticipated to occur on or about December 18, 2023, subject to customary closing conditions.
BZAM says it will also enter into a supply agreement in which FBHI’s wholly-owned subsidiary, 14th Round Inc., will continue to provide child-resistant packaging, vaporization hardware, and pre-roll cones to BZAM.
“This Transaction combines BZAM’s cultivation, production, and sales infrastructure with the exceptional portfolio of international brands that Final Bell has brought to market in Canada. FBHI, together with Greg Boone and his team at FBC, have done an incredible job introducing the biggest names in cannabis to Canadian consumers and creating significant value in the process. We are pleased to bring this team and these brands to BZAM,” said Matt Milich, Chief Executive Officer of BZAM. “This combination also brings in FBHI as an invaluable strategic shareholder to the Company, which creates additional opportunities for long term growth and value creation.”(2)
“This combination places the combined entity as the 5th largest Canadian L.P. on a proforma basis”(1)(2) said Robert Meyer, CEO of FBHI. “BZAM’s demonstrated prowess in the Canadian marketplace, coupled with our brand portfolio and packaging and hardware innovation are a recipe for continued growth with many competitive advantages.”(2)
“We are proud of the work we have done to bring many of the leading cannabis brands from California to Canada and I am excited to continue the work of developing those brands under the BZAM umbrella with the incredible resources BZAM brings to the table,” said Greg Boone, CEO of FBC.
As part of the Transaction, Greg Boone will join BZAM as President, and Jennifer Maccarone will join as VP of Operations. FBC’s Chief Legal Officer Christy Zhou will assume the same role at BZAM, and Lana MacKenzie will also take on a senior role within BZAM. Matt Milich will remain as CEO of BZAM. In addition, FBHI will be entitled to appoint a new member to BZAM’s board of directors.
After FBHI completed the acquisitions of 14th Round Inc. and Final Bell Canada Inc. in late 2022, Boone noted the company’s early success in the Canadian market.
“Final Bell’s success in Canada as a co-manufacturer and commercialization partner is reflected not only in how quickly we are climbing the LP rankings – specifically in Cannabis 2.0 products – but also in the innovative SKUs launched with our brand partners.”
14th Round is the company behind many of Final Bell’s vape brand partnerships.
Further to the transaction, the combined Company will be the Canadian home of several well-known cannabis brands – including Cookies, Sherbinskis, and Wyld.
The amount of unpackaged inventory cannabis producers are sitting on has continued to decline from a peak in late 2022, while approved indoor grow space has been slowly declining from a peak in early 2020.
Approved outdoor production space has also declined from a peak in late 2021. Unsurprisingly, the estimated number of people employed on federally licensed cannabis production sites has also been declining from a peak in late 2021.
Dried flower still dominates cannabis sales, but cannabis extracts and edibles continue to slowly eat away at that market share.
While the volume of unpackaged, dried cannabis flower licensed producers have in their vaults is still over one million kilograms, that amount has been somewhat declining in 2023. The peak volume held by these processors was 1.3 million kilograms in October 2022.
The most recent figures provided by Health Canada, through June 2023, show that figure sat at about 1.2 million, a decline of approximately 161,000 kilograms, or 13%.
While not a significant decline, it does show a trend of a long-standing cannabis surplus beginning to show signs of not only levelling out but even beginning to decline. This surplus of cannabis is a significant reason why prices have been dropping so significantly, often due to larger producers trying to offload large volumes from their vaults at cut-rate prices.
Unpackaged inventory of dried cannabis shows a similar decline, from a peak of 293,188 kilograms in October 2022 to 135,453 kilograms in June 2023. That number dropped even lower, to 110,290 in February of this year, a low not seen since January 2021.
Dried cannabis sales remain the most commonly sold product, with 53% of all medical and non-medical sales in packaged units, compared to 24% cannabis extracts and 22% cannabis edibles.
Cannabis extracts packaged sales, via Canada.ca
Cannabis edibles and extracts continue to eat into that market share dominated by dried flower. In October 2020, dried cannabis sales represented 68% of total sales, with 6,989,846 packaged units sold. At the time, edible cannabis sales represented 17% of total sales, while extracts were 15%.
By March 2022, dried cannabis sales represented 58% of total sales, edible cannabis sales represented 23% of total sales and cannabis extracts 19%.
Edible cannabis packaged sales, via Canada.ca
Edible cannabis packaged sales continue to increase year-over-year, with large spikes in December each year. There were 4.4 million packaged units of edible cannabis sold in June 2023, compared to 3.8 million in June 2022 (medical and non-medical).
Packaged sales of cannabis extracts (medical and non-medical) have also been increasing, from 3.3 million in June 2022 to 4.9 million in June 2023. Meanwhile, packaged inventory of cannabis extracts held by producers, as well as provincial distributors and retailers, appears to be settling at around eight to nine million in each category.
Sales of cannabis topicals, which are still a small fraction of the overall market, have also been increasing, with 76,000 packaged units sold in the medical and non-medical stream in June 2023, down from a previous peak in December 2022 of more than 81,000 units sold, and up from June 2022’s nearly 58,000 units sold (medical and non-medical).
However, the total inventory of topicals held by licensed producers, as well as provincial distributors and retailers, has been declining significantly, from a peak of 553,077 units in March 2022 to 333,438 units in June 2023.
The number of non-flowering cannabis plants in Canada’s legal, commercial industry continues to fluctuate seasonally, with spikes in inventory each May or June and declines later in the year. However, while the peak in May 2022 was 3.7 million plants, 3.5 million in June, 2021, and 3.2 million in June, 2020, the high listed amount for 2023 was just over 3 million.
While relatively low, overall, the number of cannabis plants sold in the medical and non-medical channels spiked in 2023 as more cannabis clones made their way into the non-medical “recreational” market. More than 10,000 cannabis plants were sold to medical and non-medical consumers in June 2023, compared to just under 3,000 in June 2022 (and fewer than 1,000 in May and July 2022, respectively).
The number of flowering cannabis plants has also declined, from a peak of 3.8 million in September 2022 to 2 million in June 2023.
The total amount of packaged inventory of seeds has also been declining, especially among provincial distributors and retailers, from a previous high of 136,767 packaged units in July 2021 to 59,699 in June 2023.
Sales of cannabis seeds continue to spike in the spring of each year, with 14,459 units sold in April 2022 and 14,784 sold in April 2023. The vast majority of these seeds were sold into the non-medical stream.
In other cannabis news from Canada and around the world:
Cannabis grown and packaged by Yellowknife’s Boreal Cultivation is now for sale in the NWT city for the first time. Boreal began selling its Gas Banana strain in some parts of Canada three months ago, but Friday marked its first day on sale within the Northwest Territories.
Delta 9 announced that it received a certificate of compliance with Good Agricultural and Collection Practices (GACP) for its Winnipeg-based cannabis cultivation and processing facilities. The certification—which means Delta 9’s operations are in compliance with guidelines for starting materials and medicinal products of herbal origin and within the requirements of international destination countries—is valid until November 9, 2025.
Organigram says that its US partner Phylos Bioscience Inc., a cannabis genetics company in Oregon and provider of production-ready seeds, has achieved the first milestone under an agreement entered into in May 2023, unlocking the next round of funding to Phylos.
As part of the partnership, Phylos has been developing production-ready first-generation (“F1”) hybrid cannabis seeds for Organigram. The milestones achieved so far consist of: delivery of a 1:1 THCV cultivar at 10%+ THCV potency, a 3:1 THCV cultivar at target 18% THCV (16% minimum), and four THC aroma specific cultivars (in either Berry, Citrus, or Gas).
GreenwayGreenhouse Cannabis Corporation reported its interim financial statements for the second quarter of 2023, which ended September 30. Greenway reported $1,185,611 of revenue with an average cash cost per gram expensed for the quarter of $0.67, comprising all crop inputs and wages, bulk packaging, shipping, and facility repairs and maintenance.
AdastraHoldings Ltd. reported financial results for Q3 2023 with gross revenues of $8.1 million, gross profit of $2.2 million, and net loss and comprehensive loss of $642 thousand. Adastra is a processor and producer behind the brands Endgame and Phyto Extractions. Endgame ranks among the top selling concentrates in Alberta and BC and vape pens in Ontario.
CanadaBisCapital Inc. posted net revenue in 2023 of $22.2 million and gross profit of $11.8 million during the year ended July 31, 2023. CanadaBis operates several production facilities and owns the Stigma brand, INDICAtive Collection, and 95% control of Goldstream CannabisInc.
MTL Cannabis Corp reported its Q2 2023 results with $19 million in revenue and gross profits of $6.3 million. MTL is the parent company of MTL Cannabis in Québec, Abba Medix Corp. in Ontario, and IsoCanMed Inc. in Québec.
The Globe and Mail looked at Indigenous cannabis businesses operating within and outside of provincial and federal regulations, speaking with Robert Stevenson of Medicine Wheel andVikram Sachdeva of Seed & Stone.
The Supreme Court of Canadadismissed the appeal of a man who was found with 100 lbs. of cannabis in his vehicle. The full ruling can be read here.
A recent survey conducted by CAA South Central Ontario (CAA SCO) shows what they call an alarming trend indicating a rise in cannabis-impaired driving, particularly involving edibles. Unsurprisingly, the data does not appear to distinguish between people who consumed cannabis and people who are legally impaired by cannabis.
The Resort Municipality of Whistler’s (RMOW) framework for approving cannabis retail has come under scrutiny after a prospective retailer triggered a judicial review of the process in BC’s Supreme Court.
The National Post ran a story in which some Canadian veterinarians say they feel left out of the legal cannabis framework. Dr. Ian Sandler of the Canadian Veterinary Medical Association claims the federal Health Minister’s office assured them this was an oversight in 2019 and that it would be a part of the five-year review.
Policy Options ran an incredibly poorly researched bit of clickbait about OCS revenues in Ontario that misrepresents how these finances are managed and distributed.
New Scientist launched the first of a three-part, in-depth podcast series on cannabis, looking first at the plant’s history and then at current policies and research. You can read all of New Scientist’s coverage on cannabis here.
In New South Wales, Legalise Cannabis Party MLC Jeremy Buckingham made headlines when he waved around some cannabis in parliament while introducing a bill to legalize the drug. “What’s to be afraid of? Here it is, Mr President, a bit of cannabis, medicinal cannabis,” Mr Buckingham said, pulling the cannabis from his suit jacket pocket.
BZAM Ltd., a Canadian cannabis company with facilities in BC and Ontario, reported its third-quarter financial results for 2023. The company posted $21 million in revenue, with $1.6 million in direct gross profit after expenses.
Direct gross profit is calculated before changes in the fair value of “biological assets”, i.e. cannabis plants.
The company’s net revenue increased significantly compared to the same quarter in 2022, when it was just under $10 million, and a smaller increase compared to Q2 2023, which saw just over $19 million in sales.
Direct gross profit for Q3 2023 was 8% before changes in “fair value of biological assets”, compared to 6% in Q3 2022 and 16% in Q2 2023. BZAM attributes the decrease from Q2 2023 primarily to “inventory cost provisions and the clean-up of old inventory through sales at or below cost.”
Quarter-on-quarter increases in net revenues for BZAM were powered by the increase in sales from its Highly Dutch brand, -ness vapes, and infused pre-rolls but were partly offset by the discontinuation of some low-margin SKUs.
The BZAM brands include core brands BZAM™, TGOD™, -ness™, Highly Dutch Organic™, TABLE TOP™, and partner brands Dunn Cannabis, FRESH, and Wyld.
Loss from operations was $12.9 million in Q3 2023, compared to $8.7 million for Q3 2022 and $12.1 million in Q2 2023.
In the most recent quarter, BZAM also received orders under its international distribution agreements in Germany, Australia, and the United Kingdom following the acquisition of its EU-GMP certification in Q2 2023. As of October 31, 2023, the company had delivered export orders to those three markets totalling $1.05 million.
After the quarter’s end, BZAM also received $1.79 million in borrowing from Stone Pine Capital Ltd., a company controlled by the BZAM’s largest shareholder and current Chairman, Bassam Alghanim. He invested another $5 million into BZAM earlier this year, as well.
BZAM’s share value has declined considerably in 2023, from about 60 cents in late November 2022 to about 15 cents in late November 2023.
The Social Impact Fund is part of our continued commitment to making a positive impact in Ontario and beyond, and will provide a growing opportunity to invest in programming and research that aligns with OCS’s social responsibility objectives.
Dr. Jenna Valleriani, Senior Manager, Social Responsibility at OCS
The OCS has provided $500,000 to support programs, services, and research by incorporated not-for-profits, registered charitable organizations, and researchers affiliated with academic or research institutions that “contribute positively to the Ontario public and legal cannabis industry.”
These first projects cover an array of related subjects, including but not limited to studies on the physical health impacts of cannabis exposure, digital storytelling about cannabis harm reduction, and cannabis workforce empowerment programs.
More information on the program, the recipients, and the 2024 call for applications can be found here.
“We are thrilled to introduce the inaugural Social Impact Fund project teams, and look forward to supporting this important work over the next year,” says Dr. Jenna Valleriani, Senior Manager, Social Responsibility at OCS. “The Social Impact Fund is part of our continued commitment to making a positive impact in Ontario and beyond, and will provide a growing opportunity to invest in programming and research that aligns with OCS’s social responsibility objectives.”
Michael Athill, the director of the Cannabis Social Equity and Equality Development (SEED) Initiative, which seeks to create opportunities for Black, Indigenous, and People of Color (BIPOC) individuals to succeed in the cannabis industry, also commented.
“The legalization of cannabis in Canada has spawned inspiring stories of both local and global impact,” said Athill, who was also the co-founder of a cannabis micro production facility in Ontario, North America’s first entirely Black-owned, federally licensed cannabis cultivation and processing facility.
“The SEED Initiative is our chance to write more of these stories, especially from marginalized communities,” he continued. “SEED is not just a platform; it’s our commitment to building a pipeline of success by minimizing the obstacles that hinder progress. Together, let’s lift as we climb.”
Funding through the initiative can range from $25,000 to $100,000 for projects that are eight to 12 months in length, and the first round of organizations had until May 25 of this year to apply.
The OCS initially set aside up to half a million dollars for the first year of the project, with a goal of providing capital for initiatives that are aligned with the three key pillars of OCS’s social responsibility strategy for 2021–2024: establishing a foundation for environmental sustainability, supporting a diverse and inclusive cannabis industry in Ontario, and advancing cannabis knowledge and responsible consumption.
Cronos Group Inc. says it has entered into an agreement to sell and lease back its Stayner, Ontario facility known as the “Peace Naturals Campus.”
The agreement, once fulfilled, would see Future Farmco Canada Inc. buy the facility from Cronos for $23 million in cash. Peace Naturals was one of the first licensed commercial medical cannabis facilities in Canada, licensed in October 2013. Cronos significantly expanded the site in 2017 into the cannabis campus.
Cronos acquired Peace Naturals in 2016, taking on all issued and outstanding shares of Peace Naturals Project Inc. In 2019, Altria, an American tobacco company, became the largest shareholder in Cronos Group.
The new deal with Future Farmco Canada Inc., a vertical farming company, will allow Cronos to continue to utilize part of the Peace Naturals space through the leaseback agreement.
“The sale-leaseback of the Peace Naturals Campus supports Cronos’ goal to reduce costs across the Company,” said Mike Gorenstein, Cronos Chairman, President, and CEO. “More specifically, this sale will aid in improving the gross margin profile of our business, while lowering costs and increasing our agility. This sale only strengthens our industry-leading balance sheet and allows us to continue to pursue organic growth and future transactions that bolster Cronos’ existing value. We do not expect any interruption to our current operations and plan to carry out existing growth plans within our leased space at the facility.”
The deal still needs to be approved by the buyer after 180 days.
Plans announced by SNDL to close its cannabis production facility in Olds, AB, will not affect the cannabis training courses offered by Olds College of Agriculture and Technology, a college spokesperson says.
Indiva posted its Q3 2023 report with a record $9.8 million net revenue, representing a 30.4% sequential increase from Q2 2023 and a 21% increase year-over-year from Q3 2022. The cannabis producer attributes this increase largely to the continued growth of its edibles sales, such as the Pearls by Grön gummies, Wana products, and the introduction of No Future gummies and vapes. Net revenue in Q3 from edible products alone was $9 million.
The company also posted inventory impairment charges in Q3 2023, totalled $0.6 million and $2.1 million cumulatively year-to-date, related primarily to bulk lozenges and packaging, which can’t be sold due to Health Canada’s order to halt production and sale of these products, as well as the write off of aged and out of spec bulk and finished goods, and certain marketing, packaging and raw materials. Indiva says it will continue to “work to monetize any impaired inventory which remains saleable.”
Indiva also entered into a supply agreement with SNDL whereby SNDL will supply the company with certain distillate products on an exclusive basis.
The McGill Daily ran a five-year retrospective on legalization in Canada, noting industry struggles and public health concerns.
CTV reported that three men broke into Dank Cannabis in Calgary. The group stole money from the cash register and took an employee’s vehicle. Police say a witness reported seeing a gun. No one was injured.
CannaPharmaRXharvested its first crops on August 10 and September 11 in a former Aurora Cannabis facility northwest of Cremona in Mountain View County, Alberta. CannaPharmaRX hopes to sell cannabis to a company in Israel, Y.S.A. Holdings.
Australian cannabis producer Cannim now has a licence to cultivate cannabis in Canada as of October 27. The facility, a large greenhouse, is in Petrolia, Ontario. The Petrolia Lambton Independent reports that local zoning regulations prevent cannabis from being grown at the site. The news site also reports that Cannim announced a merger with Chatham-Kent based Medisun in a $12 million deal in 2021.
Herbal Dispatch’sthird quarter results for 2023 show a gross revenue of $1.5 million, a 45% increase from Q2 2023. HD has over 200 customers on its direct delivery retailer platform and over 2,000 active customers on its medical sales platforms.
Jazz Pharmaceuticals Canada Inc. announced that Health Canada has approved Epidiolex® (cannabidiol oral solution) for use as adjunctive therapy for the treatment of seizures associated with Lennox-Gastaut syndrome (LGS), Dravet syndrome, or tuberous sclerosis complex (TSC) in patients two years of age and older. The Health Canada approval was based on results from five double-blind, randomized, placebo-controlled Phase 3 clinical trials, with a total of 939 LGS, Dravet syndrome, or TSC patients enrolled, making it one of the largest global clinical trial programs to date in rare refractory epilepsy syndromes.
The company also completed its second export sale of cannabis to Australia in November 2023, consisting of 130 kilograms of dried cannabis, generating revenue of $0.5 million. This export sale will be reported in revenue in Q4.
The Six Nations Elected Council and the Six Nations Cannabis Commission (SNCC)condemned what they say was the handing out of cannabis at the recent Six Nations Santa Claus parade. The commission also said it was “disheartening” that the float won first place. Six Nations is demographically the largest First Nations reserve in Canada. The SNCC has established their own cannabis regulations; however, some cannabis businesses in the community oppose these regulations and operate outside of them.
Foothills County council in Alberta has given first reading to a bylaw allowing for a cannabis store at the Heritage Pointe Mall on Dunbow Road.
A new study published in Nature reveals key genetic factors behind cannabis use disorder, linking it to psychiatric disorders and potential lung cancer risks.
A new study shows that about one in nine people in Germany uses CBD-containing products. When the study was conducted at the end of 2020 and the beginning of 2021, 40.2% of the German participants had already heard of products containing CBD, and 11.4% had actually used them; 42.1% of the users consumed such products regularly, at least once a week, primarily orally via oils or tinctures, and purchased them mainly online. More than half of the study participants perceived the health benefits of CBD use as high or very high.
Retail cannabis sales in Canada declined 4.9% in September, from an August high of $589 million to $560 million.
Sales increased month-by-month from February 2023 to August following a post-Christmas decline from a previous peak of $511 million in December 2022. (at 2017 constant prices).
Cannabis sales in Canada have continued to increase annually despite periodic declines. While these declines in sales are generally after Christmas, smaller drops have also occurred just before December.
This current decline occurred alongside a downturn for other parts of the Canadian economy. Core retail sales for all of Canada—excluding gasoline stations, fuel vendors, and motor vehicle and parts dealers—were down 0.3% in September.
Data on retail trade for October will be released on December 21, 2023.
Wholesale trade for cannabis also declined from a peak in August of $288 million to $261 million. The previous high was $260 million in September 2022.
The number of retail stores across Canada also continues to grow, although the pace has slowed considerably compared to the first four years of legalization. As of October 2023, there were 3,654 cannabis stores in Canada, excluding provincial online stores, an increase of 14 stores from September.
British Columbia: 513 public and private stores either open or “coming soon”
PEI sold nearly $23 million worth of cannabis, the equivalent of 4,094 kg, in the 2022-23 fiscal year period from April 1, 2022, to March 31, 2023.
This represents an increase of more than half a million dollars from the previous year, with the province bringing in $6.3 million in revenue from sales and its share of excise taxes.
Total sales in the province were $22,500,680, compared to $21,894,379 the previous year. Net income was $2,909,096, compared to $2,609,580 the previous year.
Despite being the least populated Canadian province, with around 174,000 residents, PEI says its Charlottetown store, one of just four stores on the island, is one of the busiest in the country. Online sales in PEI accounted for just 0.87% of total sales, or $194.991 worth of cannabis.
The province has plans for a fifth store just southeast of Charlottetown, in Stratford.
Just under half of sales were dried flower, while 23.7% were pre-rolls. Concentrates represented just under 10% of total sales, while ingested extracts and edibles were each just under 5%.
Prince Edward Island Cannabis Management Corporation is a wholly-owned Crown Corporation of the Province of Prince Edward Island. It is responsible for the distribution and sale of adult-use cannabis throughout the province.
A Toronto city councillor wants to know why Ontario has not shared the additional promised tax revenue from cannabis sales with the city.
James Pasternak, Toronto city councillor for Ward 6 York Centre and the Chair of the North York Community Council, first tabled a letter in late September to the Toronto City manager asking about revenue from cannabis sales that the Ontario government had promised to cities like Toronto.
Although the province had fulfilled its initial promises to distribute $40 million over two years to municipalities who opted in to allowing private retail cannabis stores, Pasternak says the provincial government has yet to fulfil an additional promise to distribute half of any additional tax revenue the province receives from its portion of federal excise tax on cannabis sales that exceeds $100 million.
The city says it has not received any update on cannabis excise tax revenue sharing from the Ontario government.
Toronto has received just under $9 million as part of its share of this initial $40 million (Ontario distributed $30 million, setting aside another $10 million for “unforeseen costs”) in four payments, with the majority of funds delivered in three payments in 2019, along with one smaller payment in 2021. All funds were received and contributed to Toronto’s Cannabis Reserve Fund.
In a letter to Councillor Pasternak, the Toronto City manager says that of the $8.97 million received in the City’s Cannabis Reserve Fund, $8 million has been withdrawn to support enforcement actions against illicit cannabis businesses, like cannabis retail owners and production facilities, and enforcement of cannabis laws like impaired driving and other cannabis-related penalties. The remaining funds are expected to be used within the next year.
Despite these initial payments, the Ontario government reported a total revenue of $310 million in Ontario’s portion of the Federal Cannabis Excise Duty during the 2022/2023 fiscal period, $210 million beyond the $100 million threshold set.
The Ontario Government has also budgeted another $269 million from its portion of the Federal Cannabis Excise Duty for the 2023- 2024 fiscal period.
On October 13, Toronto City Council sent a letter to the Ontario Board of Health requesting info on what the cannabis funds had been spent on and whether any such allocations included funds for addiction treatment or addressing mental health issues.
The Board of Health will be considering the question on November 27, which will then be considered by Toronto City Council on December 13, 2023, subject to the actions of the Board of Health.
Cities in other provinces have raised similar concerns about what they say is their share of the federal excise tax from cannabis. For years, cities in BC’s Lower Mainland have been raising the issue.
Earlier this year, municipalities in New Brunswick were asking for their share. In 2021, the Association of Manitoba Municipalities released a position paper that called on the province to share 25 percent of its cannabis tax revenue with its municipalities. More recently, the provincial government in Manitoba said there were few “societal costs” associated with legalization.
The same issues were raised in the association’s pre-budget plan. The report notes that the Federation of Canadian Municipalities (FCM) says that municipal administration and local policing costs related to legalization will total $3-4.75 million per 500,000 residents, representing a range of approximately $210-335 million per year in costs incurred by municipalities across Canada.
“According to the Federation of Canadian Municipalities (FCM), municipal administration and local policing costs linked to cannabis legalization will total $3-4.75 million per 500,000 residents on an annual basis,” wrote the AMM in an email to StratCann. “Since these costs should not be downloaded to municipalities, it is imperative that municipalities be included as meaningful participants in revenue-sharing conversations. We continue to urge the federal and provincial governments to co-develop a revenue-sharing model that respects municipal authority.”
City Council in Centre Wellington, ON, has again opted to defer making a decision on whether they will allow retail cannabis stores. The township initially opted out of allowing retail cannabis after legalization in 2018, but directed staff to prepare a report to re-examine this decision in light of a delegation by a local resident and county councillor this past May. The decision will go to the Economic Advisory Committee for further deliberation before it returns to council for a permanent decision.
The City of Nelson, BC, plans on lowering the cost of a retail cannabis licencefrom $2,500 to $210, bringing the business licence fee in line with others in the city. Cannabis retailers will be informed of the amendment once council adopts it. In 2023, the city issued four business licenses for cannabis retailers. BC currently lists three cannabis stores in Nelson: The Kootenays Cannabis Tree, Buddy’s Place, and The POTORIUM.
SNDL and Nova Cannabisannounced 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 plan had been repeatedly delayed due to what it said was continued review by one provincial regulator. SNDL and Nova reaffirm their strong commitment to their ongoing partnership under the management and administrative services agreement.
SNDL also shared its third quarter results with net revenue of $75.5 million, an increase of 14.1% compared to the same quarter of the prior year, and net revenue from its cannabis operations segment was $21.0 million, a 77.4% increase compared to the third quarter of 2022. SNDL’s cannabis sales are from the company’s 186 locations under its four retail banners: Value Buds, Spiritleaf, Superette, and Firesale Cannabis.
Nova’s proprietary data licensing program resulted in revenue for the third quarter of 2023 of $4.0 million, compared to $1.4 million in the third quarter of 2022, representing a 53.8% growth compared to the second quarter of 2023.
As of November 13, 2023, the Spiritleaf store count is 87 (22 corporate stores and 65 franchise stores), the Value Buds store count is 92 corporate stores, the Superette store count is five corporate stores, and the Firesale store count is two corporate stores.
MediPharm Labs Corp, a pharmaceutical company specializing in “precision-based cannabinoids,” announced its financial results for the three months ended September 30, 2023. The results included the settlement of a dispute with Hexo for a total of $9 million, including net cash of $7.3M collected in October, $1 million in Tilray Brands, Inc. cannabis products, and a four-year agreement where Tilray will purchase $0.5 million of MediPharm product. (Tilray acquired Hexo earlier this year). The company posted a gross profit of $2.4 million.
Delta 9 Cannabis released its Q3 financials for 2023l, with net revenue of $18.4 million. The cannabis producer and retailer attributes its increase in year-over-year and sequential net revenue to increases in retail revenues relating to the Company’s acquisition of Uncle Sam’s Cannabis and Discounted Cannabis and the Company’s acquisition of the Garden Variety cannabis stores in the third quarter of 2022. The Company’s loss from operations for the three-month ending September 30, 2023 was $4.5 million.
Dried flower constitutes about 70% of the company’s sales, while pre-rolls are 15%, and oils, extracts, derivatives, and other products occupy the other 15%.
Auxly Cannabis Group Inc. released its financial results for the three and nine months ended September 30, 2023, showing total net revenues of $28.2 million in Q3 2023, representing an increase of $8.4 million or 42% compared to the same period in 2022.
Nova Scotia based Aqualitas Inc. received a European Union Good Manufacturing Practices (EU-GMP) Certification issued by Beizirksregierung Köln (District of Cologne, Germany) and a Drug Establishment License (DEL) issued by Health Canada. Aqualitas’medical products have been distributed across Canada and exported to Germany, Australia, Poland, Israel, and the USA.
Toronto-based Avicanna Inc., a biopharmaceutical company focused on the commercialization of proprietary cannabinoid-based products, released a Q3 2023 report with revenue of $6.27M. Avicanna operates MyMedi.ca, which absorbed 96% of active patients from Medical Cannabis by Shoppers when it moved away from cannabis earlier this year.
Trees Corporation, a cannabis retail chain, shared its second quarter financial results for the three and six month periods ending September 30, 2023. The chain saw revenue from sales for the last three months at $4.6 million, with a 35% profit margin from product sales.
MTL Cannabis CEO Mike Perron spoke to Steve Darling from Proactive Investors to discuss the “ethos and operations of their family-founded company,” which places a high value on the quality and potential of the cannabis plant.
Canopy Growth says it has found a buyer for its Biosteel sports drink business and received a court’s approval to go ahead with the sale of the company.
The Simpson Foundation issued a press release touting the presence of RSO in many provincial markets in Canada.
Herb ranked what they claim are Canada’s top “cannabis colleges.” The article highlights five Canadian institutions—Seneca College, Niagara College, Durham College, McMaster University’s Continuing Education, and NACPT Pharma College, each offering different cannabis education programs.
Law enforcement
York Regional Policeraided an unlicensed dispensary in Newmarket that recently opened despite the city’s ban on legal cannabis stores. Police attended Newmarket Smokes Loud on Leslie Street on November 16 and 17. Newmarket district Det.-Sgt. Sherwin Bachoo confirmed police executed a search warrant, cleared the store, and arrested two people found to have been operating it over the past two days. The store first opened on October 20.
The Sûreté du Québec announced Thursday that it made seven arrests and seized cannabis and other illegal drugs, as well as nearly $1 million in cash, during a series of raids a day earlier on Montreal’s South Shore. Among the products seized were nearly 470 kilograms of cannabis and 1,400 “wax pens”.
International
A 27-year-old woman suffered a fatal asthma attack last year in what health and workplace safety officials said was the US cannabis industry’s first reported occupational asthma death.
Snoop Dogg says he’s stepping away from the herb, at least for a while. Many fans have noted he has made similar comments in the past, only to eventually return to the sweet, sweet Mary Jane. But a lil’ T-break never hurt no one, no how. Do your thing, Snoop.
NORML Canada is petitioning the government of Canada to raise the THC limit on edibles from 10 mg per package to 100 mg THC.
In a petition launched November 8, the cannabis advocacy organization argues that the THC limit needs to be raised to better address consumer demands, further eroding black market demands, while also addressing wasteful packaging.
Jennawae Cavion, the Executive Director at NORML Canada, as well as the founder at Calyx + Trichomes in Ontario, says she’s sympathetic to why Health Canada initially set the package limit for edibles at 10mg THC and that it has been dealing with a global pandemic, but argues that four years into these products being legal in Canada, it’s time to raise the limit.
“We appreciate the reasons why this hasn’t been addressed up to this point,” explains Cavion. “Health Canada has been dealing with a global health crisis. But it’s time for this to be reviewed now.”
While the legal industry is doing a good job of matching price and product availability in many categories—especially dried flower and vape pens and, increasingly, cannabis concentrates—edibles, she says, still have a hard time competing with the illicit market.
Although the petition already has the required 500 signatures to be tabled in the House of Commons, she hopes to see it reach around 5,000 before that happens. The petition is open until March 7, 2024. As of publication of this article, the petition has more than 1,300 signatures.
“Consumers of edible cannabis are seeking much higher limits than what is available through the legal market in Canada, diverting consumers to the illicit market, or simply leading individuals to buy many packages to obtain the desired amount legally.”
Patrick Weiler, MP for West Vancouver-Sunshine Coast-Sea to Sky Country
Patrick Weiler, the Liberal MP sponsoring the petition, says cannabis consumers want to buy edibles with more THC, which is driving them into the illicit market.
“Since cannabis was legalized in 2018, we have seen a safe and regulated supply of cannabis make significant progress in displacing the illicit market while creating tens of thousands of jobs, new business opportunities for Canada’s economy, and a $43.5 billion boost to Canada’s GDP,” Weiler tells StratCann via email.
“While legalization has largely been a success, we have learned a great deal over the past five years that requires us to improve upon our policy and legal frameworks. More needs to be done to ensure that Canadians have access to safe and regulated products, rather than turn to the unknown and potentially dangerous illicit market. Consumers of edible cannabis are seeking much higher limits than what is available through the legal market in Canada, diverting consumers to the illicit market, or simply leading individuals to buy many packages to obtain the desired amount legally.
“Introducing this change will encourage consumers to source their product from a regulated source, while simultaneously reducing excessive packaging. An elevated limit further corresponds with the limits established in many US states that have legalized cannabis sale and use. I was therefore willing to authorize such a petition that raises this important issue, and look forward to hopefully seeing its presentation in the House sometime next spring.”
In addition to serving as MP for West Vancouver-Sunshine Coast-Sea to Sky Country in BC, Weiler is the Co-Chair of the all-party Parliamentary Cannabis Caucus.
Many in the industry, as well as consumers, and even Canada’s Competition Bureau, have long protested the 10mg THC limit for cannabis edibles in Canada. The Competition Bureau’s report noted that in recent years two US states, Alaska and Oregon, increased the THC limit from 5 mg per unit and 50 mg per container to 10 mg per unit and 100 mg per container/package, bringing it in line with regulations in other states like Washington and Colorado.
Oregon’s regulatory body, the report explains, said that these updated policies sought to strike a balance between consumer health and safety concerns with economic interests in an effort to displace the illicit market.
Health Canada’s reasoning for the 10mg THC limit on edibles has been around public health concerns, in part informed by feedback from states like Colorado and Washington that legalized cannabis for non-medical purposes several years before Canada. When these states initially legalized, they had very few restrictions on edible potencies and saw some problems with people consuming too much, increasing emergency room visits and other health and safety concerns.
Canada’s cannabis legalization and regulation task force report references these concerns as well, noting that controlling the amount of THC in a product, as well as establishing a standardized serving size, is important to avoid or limit such incidents.
“We appreciate the reasons why this hasn’t been addressed up to this point,” explains Cavion. “Health Canada has been dealing with a global health crisis. But it’s time for this to be reviewed now.”
Jennawae Cavion, Executive Director at NORML Canada
All edible retail cannabis products in the first two states to fully legalize cannabis must come in single servings of 10 mg THC or less, with no more than 100 mg THC per product.
Many public health stakeholders who engaged with the task force had recommended that edibles not be allowed in Canada’s legal market.
From that report:
“The Task Force is concerned by the reports of an increase of accidental ingestion by children in states where cannabis is legal. We acknowledge that a lack of regulation contributed to this risk. Should edibles be allowed for legal sale in Canada, they should, at a minimum, conform to the strictest packaging and labelling requirements for edibles currently in force in U.S. states. Since these measures are fairly recent, the markets (Canadian and U.S.) should be closely monitored to determine the effectiveness of these measures.
“In the event that future research and monitoring identifies new risks with existing or new cannabis products, including increases in use, the Government should be ready to react. The system must be flexible enough to adapt in a timely way to new information and to provide appropriate safeguards as evidence indicates.”
Editor’s note: This article initially stated that the petition has also received support from NDP MP Don Davies and Conservative MP Scott Reid. That was incorrect. The two MPs are, however, members of the Cannabis Caucus. We apologize for the error.
A strike that had impacted up to 26 cannabis stores in Quebec for more than a year is coming to an end.
The Société québécoise du cannabis (SQDC) posted the news on Monday, November 13, and the Canadian Union of Public Employees (CUPE-5454) shared their confirmation on November 14.
The strike began 18 months ago and called for better working conditions and wages for the 300 members currently employed in two dozen SQDC branches. The SQDC has said that they hope to reach a negotiated agreement to the satisfaction of all parties involved.
The wage scale of employees at the SQDC was reviewed as part of the negotiations and now includes fewer wage steps. Also, beginning in 2024, new hires will be paid $21 an hour. For 2025-2026 and 2026-2027, the wage rates will increase in accordance with the general parameters negotiated by public sector unions. The union expects wages to be between $21.60 and $25.45 an hour. The agreement from the union is for a period of 5 years.
“Our members decided to fight to the hilt to get better working conditions and wages on par with those paid by other Crown Corporations. We set the bar high and cleared it. We’re proud of our success that we owe to the solidarity, combativeness, and determination of our members,” said David Clément, president of CUPE 5454.
Other negotiated terms include reduced uncertainty for workers, with improved schedules and hour guarantees.
“Our members’ acceptance of the conciliator’s recommendation allows us to emerge from this crisis with our heads held high. These recommendations include an improved wage scale and settlements of all disputes. We now have to sign these new contracts which, once signed, will take effect and remain in force until March 31, 2027,” added CUPE union representative Daniel Morin.
The SQDC says it is “pleased to count on the professionalism and commitment of all of its teams in its 98 branches in order to pursue its mission of ensuring the sale of cannabis from a health protection perspective” and notes that the resumption of normal opening hours could take place over a few weeks. Schedules will be posted on the SQDC.ca website.
“The SQDC salutes the valuable work of the striking branch managers, who oversaw the operations of their reduced-staff branches for several months,” continued the press release. “We would also like to thank customers for their understanding during this period.”
The holiday season is a crucial period for cannabis brands, a time to strengthen their presence and in a competitive market, differentiation between brands becomes the primary pillar of success.
Regulatory guidelines have clamped down on some of the most obvious means of brand differentiation, creating a blurry filter between end-consumers and brands vying for their loyalty.
However, what’s not limited is brand building—a promise made by a brand and brought to life by all aspects of its business.
It involves cultivating a unique identity and reputation that consumers and industry can recognize and trust. In an industry that is still working to reduce social stigma and improve consumer education, engaging with Budtenders and retail decision-makers is a strategic imperative. When done right, these individuals can serve as valuable brand advocates, helping you increase sales and build a loyal customer base.
The Power of Budtenders
1. Influence Over Customer Choices
Budtenders are in a unique position to influence consumer purchasing decisions. On a daily basis, they recommend specific products and brands, making them indispensable when it comes to driving sales. As an emerging market, consumer education is low, especially during the holiday season when gift-giving and experimentation are prevalent. A well-informed Budtender can provide essential information about effects, dosages, terpene profiles, and cultivation and consumption methods.
2. Brand Advocacy
Engaging budtenders and retail decision-makers can turn them into brand advocates. When they have a positive experience with your brand, they’re more likely to recommend them to customers, driving sales and strengthening your reputation. Building a loyal group of advocates among industry professionals can significantly amplify your brand’s reach and influence.
3. Feedback Loop & Market Insights
Budtenders are in a unique position to gather real-time market insights. They interact directly with customers, understanding their preferences and evolving demands. Brands that take the time to build relationships and listen can gain valuable feedback, allowing them to refine their methods, products, and marketing strategies to better align with consumer needs.
Bridging the Gap
1. Educational Initiatives
Invest in education for Budtenders. It’s not enough to just have a great product; you must ensure that Budtenders are knowledgeable about your offerings and their unique selling points. Packaging restrictions limit the amount of valuable information that can be conveyed to differentiate products and enhance the consumer experience, so providing Budtenders with detailed information that goes beyond brand name, price, and THC percentage will help them confidently recommend your products and address customer queries.
Each year, Tether, Canada’s Budtender community, surveys 300+ Budtenders from across Canada to gain valuable insights into what they are looking for from brands, their retail environment, and the industry at large. In the 2022 survey, 92% of Budtenders surveyed said they prefer to learn from the source – schedule brand visits and make sure to hit smaller markets and remote areas who feel as though they don’t get enough support from brand reps.
Participate in sampling events where Budtenders can build their confidence and enthusiasm for your brand. Include resources like marketing materials, brochures, and product information that can assist in Budtender education. In Tether’s 2022 survey, 75% of Budtenders indicated this is their preferred way to learn about new products. Seeing is believing, and having first-hand experience is most important to Budtenders.
Tether’s Holiday Showcase served as a testament, seeing 200+ RSVPs to its Budtender and retailer sampling event in Hamilton, Ontario. The event gathered 18 cannabis brands and community partners to educate the industry and build community.
Several companies also released their quarterly reports this week, including Canopy, Aurora, and Nova Cannabis.
In other Canadian cannabis news…
CBC ran a story on a study that found evidence of THC and CBD in the bones of two people, a woman around age 50 and a teenage boy, who both lived in 1600s Milan, Italy. The researchers say the finding not only suggests that cannabis was consumed by all ages and genders at the time but also that it was used recreationally, most likely prepared in cakes and infusions.
Centre Wellington, Ontario, could decide next week on whether to allow cannabis stores to operate within the city. A report going before an upcoming Centre Wellington committee of the whole meeting includes two options for council: either to opt in to permit the retail sale of cannabis or to continue to opt out. The region, located northwest of Guelph, has about 30,000 residents. You can read the full report here.
A town in Ontario is shocked to discover that banning legal cannabis stores won’t stop illegal ones from popping up. A new illegal business offers 24-hour service and deals on its cannabis despite the fact the Town of Newmarket opted out of allowing retail cannabis stores to operate within its boundaries.
In Manitoba, CBC spoke with Josh Giesbrecht, owner of Ashtown Market, about expanding his cannabis store to also carry groceries. The move was because the company was having a hard time making ends meet in the cannabis market.
CannMartannounced the launch of its Roilty brand in Newfoundland & Labrador while enjoying kudos from multiple AdCann award nominations. They are also the title sponsor at the 2024 CannExpo in Toronto in March 2024.
A group representing companies operating on the Hibernia oil platform off the coast of Newfoundlandlost its court battle to fire an employee for using CBD oil for colitis.
New Brunswick welcomed its seventh licensed private retail cannabis store, Pinnacle, located in Saint-Quentin in the north of the province.
In international cannabis news…
MJBiz reports that Portugalexported 5,438 kilograms of cannabis for medical purposes in the first half of this year, putting the Portuguese medical cannabis industry on pace to surpass last year’s record export figure of 9,271 kilograms.
Canopy Growth brought in $39 million from its Canadian cannabis businesses in the past three months, down from $52 million in the same quarter in 2022 (July-September).
Sales from Storz & Bickel, which Canopy owns, were $12 million in the three months ending in September 2023, compared to $13.5 million in July-September 2022.
Canadian cannabis businesses delivered a net revenue of $39 million in Q2 FY2024. Canadian medical cannabis net revenue increased for Canopy by 6% compared to the prior year period, even as Canada’s overall medical cannabis market contracts.
Canopy continues to operate at a loss, although it is losing less than it was in the past. The company lost $7 million from continuing operations, which was much lower than the $149 million loss in the same period in 2022. Adjusted EBITDA loss was $12 million in Q2 2024, compared to a loss of $56 million in Q2 2023.
Canopy claims its increasing sales are due to an increase in quality, citing its Tweed Kush Mints being nominated for a 2023 Karma Cup award, as well as moving up to the top three supplier of cannabis flower in British Columbia, compared to the eleventh place slot the company held in the same time period last year.
It also plans to re-introduce its Wana brand edibles into the Canadian non-medical market, products that have remained successful for Canopy in the US. It will also ship five new SKUs to international markets in Q3 of this year, focusing on the Australian medical cannabis market.
Wana also launched 11 new products in four US markets in August 2023, while Canopy’s Jetty launched its vape products in Colorado in July 2023 and California in August, and its Acerage Superflux products were released in New Jersey in November.
A strike that has been affecting 26 SQDC cannabis retail outlets across Quebec could be ending soon, says the union behind the action.
On November 7, both parties received a recommendation from a mediator, which both accepted. The union will now present it to the approximately 230 members of CUPE 5454 to renew their collective agreement in a vote at a special meeting on November 12. It will be recommending acceptance of the decision.
The union has been calling for better working conditions and wages for their 300 members currently employed in two dozen SQDC branches. The SQDC has said that they hope to reach a negotiated agreement to the satisfaction of all parties involved.
“We managed to put an end to this crisis, which will finally enable the workers we represent to be paid wages befitting a Crown Corporation. They will have the last word, but our bargaining committee believes that this recommendation deserves acceptance,” commented CUPE representative Daniel Morin.
SQDC has not yet released a comment on the topic. In an update posted on October 29, the provincial agency listed several striking locations that were expected to occasionally close over “the next few weeks.”
Earlier this year, a Superior Court of Quebec issued an injunction to limit union “pressure tactics” against SQDC.
Note: This article has been edited to change the number of impacted stores form 24 to 26.
Aurora Cannabis is seeing an increase in sales of cannabis for medical purposes, buoyed by export markets, as well as a decline in sales in the non-medical market.
Total net revenuewas $63.4 million in Q2 2023, compared to $48.6 million in the same period in 2022. As in the previous quarter, Aurora attributes the increase from the prior period to growth in its global medical cannabis business and quarterly revenue in its plant propagation business, Bevo.
The company sold nearly 13.6 million kilograms of cannabis at a cost of $4.75 per 2 grams of cannabis. This is a decrease in the sale price from the same quarter in 2022 at $5.21 for two grams of cannabis.
Medical cannabis net revenue was $43.8 million in the most recent quarter, a 42% increase from the prior year quarter, delivering 69% of Aurora’s Q2 2024 consolidated net revenue and 85% of Adjusted gross profit before fair value adjustments.
The company accrued $6.5 million in excise taxes from cannabis sales ($2.3 million in medical sales and $4.2 million in non-medical sales. The company also wrote off $4.6 million in inventory and biological assets fair value and impairment adjustments, compared to a gain of $25.6 million in the same quarter in 2022 and a write-down of $3.3 million in the previous quarter.
Aurora says this increase in net revenue of $12.8 million was mostly due to growth in its European business, which benefited from the introduction of new proprietary high-potency cultivars and higher volumes sold to Australia.
However, Aurora’s consumer cannabis net revenue for Q2 2023 was $12 million, down from $13.7 million in the prior year quarter. This decline in revenue is attributed to Aurora’s previously announced exit from the US CBD market and the destruction of Reliva CBD inventory resulting from the company’s decision to wind down its Reliva operations, as well as a “refocus” on premium categories.
Aurora’s recent shift of one of its greenhouses in Alberta to a cut (non-cannabis) flower facility contributed $7.2 million of net revenue, about half of what non-medical cannabis sales brought in.
Net income from continuing operations for the three months ended September 30, 2023, was $300,000 compared to a net loss of $45.5 million for the same period in 2022. Aurora attributes the decrease in net loss of $45.7 million from the comparative prior year quarter to an increase in gross profit of $33.5 million, an increase in other income of $19.1 million, and a decrease in SG&A expense of $6.1 million.
Health Canada’s 2022–2023 Departmental Results Report shows the cannabis industry in Canada continuing to evolve and expand.
In the past year, the federal health regulator granted an additional 179 licences for the cultivation, processing, and sale of cannabis for medical purposes, 125 licences for research, analytical testing, and/or cannabis drug, and 120 for industrial hemp. The agency also granted 1,805 import and export permits, primarily for export.
The number of Canadians utilizing the legal market has also increased, with the proportion of household spending on cannabis in the legal market growing from 9% in Q3 2018 to 71% in Q4 of 2022.
Health Canada also continues to oversee the country’s medical cannabis framework. In April 2022, Health Canada published the Guidance on Personal Production of Cannabis for Medical Purposes, based on stakeholder feedback, outlining factors that Health Canada may use when considering whether to refuse or revoke a registration for personal or designated production of cannabis for medical purposes.
In addition, Health Canada has been seeking additional evidence from healthcare practitioners to substantiate or support authorizations for high daily amounts of cannabis, and communicated concerning trends to the appropriate healthcare practitioner, often the Provincial College of Physicians.
Health Canada has been increasingly using its authority to refuse a request for authorization for medical cannabis if it was not supported by evidence and could be considered to represent a risk to public health and safety, especially if it is believed the cannabis was being diverted to an illicit market or activity.
Health Canada also made amendments to the Cannabis Act and its Regulations that came into force in December 2022 that sought to better facilitate cannabis testing by improving access to testing materials and broadening the educational qualifications for those responsible for testing cannabis at licensed sites, as well as increasing the public possession limit for cannabis beverages to better align with other cannabis products.
In March 2023, Health Canada published a Notice of Intent in the Canada Gazette, Part I, seeking feedback on potential amendments to the Cannabis Regulations. The agency’s goal with these potential amendments is to streamline and clarify existing requirements; eliminate duplicative requirements; and reduce burdens where possible.
In that report, Health Canada screened 91 instances of adverse reactions associated with cannabis products (24% required hospitalization and 4% were reported as life-threatening). The Department also published two annual reports highlighting adverse reactions involving cannabis products (October 17, 2018 – December 31, 2019 and January 1, 2020 – December 31, 2020).
In the past fiscal year, Health Canada also continued to conduct scientific assessments to characterize any possible risks associated with certain formulations or ingredients in cannabis products and responded to over 250 risk-related requests.
Health Canada says it also continued to deliver public education and awareness campaigns in 2022-23. The Department updated and relaunched its Pursue Your Passion marketing campaign as both a virtual, ambassador-led program in schools and a teacher-led interactive lesson focussed on educating youth aged 13-15 on the physical and mental health effects of cannabis use. In March 2023, over 120 of these “ambassador-led sessions” were hosted in schools across Canada.
In May 2022, Health Canada also launched its s Reduce your risk: Choose legal cannabis campaign—a social media outreach campaign designed to provide Canadians with information on the risks of illicit cannabis products and how to recognize the differences between legal and illegal cannabis products. The campaign utilized web content, infographics, video, and various social media content.
Health Canada also invested over $9.6 million in contribution agreements In 2022-23 through its Substance Use and Addictions Program (SUAP) to support 24 projects related to the use of cannabis and its health effects, with a focus on youth and Indigenous populations. The majority of these projects were completed in 2022-23.
The federal health agency also led the development of multiple marketing campaigns on cannabis to raise awareness of the risks of cannabis and help prevent cannabis-related harms, especially to children.
Health Canada’s Indigenous Navigator Service, which supports Indigenous-affiliated applicants through the federal commercial cannabis licensing process to encourage Indigenous participation in the industry, supported an additional 13 licences for cultivating or processing cannabis to Indigenous-owned or affiliated applicants in 2022-23. This brings the total of licensed Indigenous businesses in Canada to 56. In addition, six licences were awarded in 2022-23 to Indigenous-owned or affiliated applicants to cultivate or process industrial hemp, for a total of 27.
The race to the bottom in prices is good for consumers but bad for growers, says Darren Brisebois, President of OGEN Cannabis, which closed the doors at its Calgary facility last week after going into receivership.
The company, which suddenly had to let nearly ninety employees go after hearing the news of receivership from their lender, has around 25,000 cannabis plants at various stages of production now scheduled for destruction. Its vaults, though, are mostly empty, says Brisebois, with their products selling quickly into several provincial markets.
Moving product wasn’t enough for OGEN to keep the lights on and payroll fulfilled. The company was at a difficult crossroads, he explains, struggling with the debt taken on to build their 60,000 sq ft facility (35,000 sq ft of cultivation space) while seeing the cost of cannabis products continue to drop.
The only path out that he could see, continues Brisebois, was to increase production somehow to lower the overall cost per gram to be able to eke out a profit in a market with wholesale indoor dried flower going for under $2 a gram, and production costs often over the $2 a gram mark. While his facility was producing about 5,000 kilograms of cannabis a year, he figured he needed to double that within the same facility to pay his bills and bring in a profit.
“We’re chasing this down, and the only way to be sustainable is to produce more. All of our costs are fixed.”
“Everyone on the market, they want to buy it for a buck, buck fifty right now,” he adds. “And the smaller producers can’t get the economies of scale that I have. So if you’re a small producer, I can’t see you getting below two (dollars a gram), indoor.”
The other big problem, he says, is government taxes and fees, both at the federal and provincial levels. “When I look at my profit and loss statement, I’m paying somewhere between forty and forty-five percent right off the top to various government agencies. The selling price is now well below the cost of production.”
In addition, as more companies are closing and their supply gets sold at below-market rates, prices are further eroded, creating a downward spiral.
“The B2B market is really a big factor in this with a lot of different facilities closing. That puts even more downward pressure on the selling price per gram.”
Brisebois says the decision to close was not his, it was at the discretion of their lenders as well as pressures from the CRA.
Despite this need to get bigger, he says he also sees the pitfalls of growing too large and taking on too much debt—something he attributes to the early days of legalization when the industry was flush with cash.
Being small carries some advantages, but he thinks it can be a bit of a trap where it’s tough to really grow as a business. “I wouldn’t want to be really big. I would rather be really small, frankly. And maybe there’s a labour of love in it. But it’s a catch-22 because maybe you can break even on that scale. Then how do you grow to establish yourself across the country?”
Another issue, he says, is the increasing cost of power in some parts of the country. In Alberta, this has been increasing significantly, contends Brisebois. Although he was able to lock in a low rate a few years ago, if paying current market prices, he says he would have seen his monthly electricity bill double from about $170,000 a month to more than $300,000.
This is exacerbated by an increasing cost to build, meaning anyone wanting to expand right now will have a hard time, especially with capital markets shunning most of the cannabis industry.
The future is probably somewhat bleak, he says.
“I think there’s going to be a handful of companies that will own portfolios of brands. I see a consolidation of market share.”
Companies will continue to swoop up the successful brands, he says, or just start their own brands with distressed assets they get from other closing companies. This is ultimately driven by consumer demand and what provinces buy, and is impacted by an enormous amount of regulatory and tax burden.
“It’s a very price-sensitive market. Price and THC. It’s really unfortunate, but that’s how it is for most consumers.”
Nova Cannabis Inc., a retail chain with 92 locations in three provinces, says it’s beginning to see consistent green on its spreadsheet through market stabilization, data licensing agreements, and a private label partnership with a cannabis producer.
Nova, which has locations in Alberta, Ontario, and Saskatchewan, primarily under its Value Buds and Firesale Cannabis banners, reported net earnings of $2.1 million for Q3 2023, compared to a loss of $1.5 million for the same period in 2022.
Nova estimates its market share was approximately 19.1% in Alberta for the third quarter of 2023. Stabilization, specifically in the Alberta retail market, helped the company report record gross margins and profits, with 60 Value Buds locations listed by the Alberta cannabis regulator.
In Ontario, a market with nearly 2,000 retail stores, it estimates it has about 3.5% of the market share, with about 35 locations either approved or in the approval process.
The company reported a record gross margin of $17.0 million (25.1% of revenue), a 52.8% increase from $11.1 million for the third quarter of 2022 (18.9% of revenue), and a 16% increase from the previous quarter from $14.6 million (22.8% of revenue).
Nova’s “data licensing program” continues to grow exponentially, with $4 million in revenue for the third quarter of 2023, compared to $1.4 million in the third quarter of 2022 and $2.7 million for the second quarter of 2023. Previously, the company expected its data licensing revenue to increase its gross margin by approximately two percentage points each quarter.
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 156 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.
Another Alberta cannabis producer is shutting its doors. On November 3, Calgary-based OGEN Cannabis closed its facility, laying off 87 people as a result.
Applicants wanting to sell their cannabis in Alberta, for example, must pay the AGLC $3,000 for a process that can take five to six months, Jeff Karren, President of Joi Botanicals, a standard producer in Calgary, explained to StratCann earlier this year.
“We just went through our second round. The maximum licensing period before a registrant must resubmit due diligence info is 6 years, but for some reason, the AGLC decided that we needed to resubmit after about 4 years. You pay the $3,000 upfront, and if additional work is required, they might charge you more.”
In a recent online post in reference to OGEN closing, Karren also estimated the loss in tax revenues could be in the tens of millions.
“How much tax revenue will be lost in Alberta before changes are enacted?” Karren asks in his LinkedIn post.
Just three weeks ago, the company was hiring for a position in Calgary.
The AGLC even requires the full names and birthdays of all children—dependent or not, including step-children. (A PDF of the 61-page Cannabis Registration Representative application can be found here.)
“It’s the same level of scrutiny that a casino owner gets,” says Tim Mallett, CEO and master grower at Alberta Bud, a micro producer in Edmonton. “It’s painful, time-consuming, and expensive. We’ve been through it three times in two years.”
There are currently 949 federal licences listed as active by Health Canada. Ninety-one of these are located in Alberta. Health Canada also lists recent licence revocations (on request of the licence holder), eight of which are producers in Alberta.
British American Tobacco (BAT) announced today that it will invest nearly $125 million into New Brunswick’s Organigram, more than doubling its equity position in the cannabis company from about 20% to 45%.
The move still requires the approval of Organigram shareholders.
Since 2021, BAT, the British multinational that manufactures and sells cigarettes, tobacco, and other nicotine products, has made several minority investments in the cannabis space, including its 19.9% equity in Organigram in their “Beyond Nicotine” campaign.
Jupiter, the strategic investment pool, is expected to accelerate Organigram’s ambitious growth plans, enabling further geographic, technological, and product expansion.
Beena Goldenberg, CEO of Organigram
Organigram sells an array of cannabis products in Canada under brands like Edison Cannabis Co., SHRED, Big Bag O’ Buds, Holy Mountain, and others. Organigram’s most recent quarterly report said SHRED products, one of the more popular in Canada, have made nearly $190 million in retail sales in the previous 12 months.
Despite these concerns, Organigram’s recreational net revenue was $92.5 million for the nine months ended May 31, 2023, an increase of $8 million over the same prior-year period. International sales for the first nine months of fiscal 2023 also increased considerably, nearly doubling from $9.5 million in 2022 to $18.4 million.
In a press release, BAT says its increased investment in Organigram is due to the company’s performance and “careful financial governance” in an economic downturn.
Most of BAT’s investment will be used for Organigram to establish a “strategic investment pool, intended to be applied for emerging opportunities within the cannabis space to accelerate Organigram’s growth and to support geographic, technological and product expansion.”
Organigram says the majority of the $124.6 million investment will be used to create a strategic investment pool named Jupiter, focusing on “emerging cannabis opportunities,” including “geographic expansion”.
“We are excited to bring this transformative transaction to Organigram’s shareholders, reinforcing our commitment to delivering shareholder value,” says Beena Goldenberg, CEO of Organigram, in a press release.
“This investment bolsters an already strong balance sheet and solidifies our position as a leading cannabis company. In addition, this deepens the strategic partnership between Organigram and BAT, and we look forward to continuing to leverage BAT’s global capabilities and scientific expertise. Jupiter, the strategic investment pool, is expected to accelerate Organigram’s ambitious growth plans, enabling further geographic, technological, and product expansion.”
Meanwhile, Health Canada still says cannabis intended to be consumed as food is not an extract, even as more products in this category appear and reappear on shelves.
In other cannabis news this past week…
A new online survey conducted by Research Co found that 64% of Canadians are in support of cannabis legalization. The survey also found that 53% of Canadians say they have never consumed cannabis in Canada. Of those who have used it, 4% say that all their cannabis products were purchased at a licensed retailer, while only 17% say they have never bought it from a licensed retailer.
The OPP published a five-year retrospective on legalization, referencing findings in the Minister of Health and the Minister of Mental Health and Addictions Expert Panel’s legislative review of the Cannabis Act.
The Calgary Herald spoke with Alberta cannabis retailers bemoaning provincial red tape and regulatory fees with comments from Brooks Pries of Strathmore’s The Garden Cannabis Co, Blaine Emelson of Bud Supply, with nine locations in the province, and Omar Khan of High Tide, which has 78 retail stores in Alberta under its Canna Cabana brand.
The article also included a comment from the office of Dale Nally, minister of Service Alberta and Red Tape Reduction, that said, “We want cannabis businesses to have the tools they need to succeed and grow, and we want Albertans to continue to be able to responsibly and safely enjoy the products and services they offer.”
Health Canada has also begun outreach to the industry on proposed guidance for microbial and chemical contaminant tolerance limits for cannabis products. The regulator is currently developing a guidance document to assist regulated parties in meeting this requirement. More info on this at StratCann soon.
Le Journal de Montreal reports that Uber Eats wants to deliver cannabis and related products for the SQDC based on a listing on the register of Quebec lobbyists. The article also mentions that the SQDC says its new warehouse will be operational in 2027.
Delta 9 Cannabis Inc. announced that it has been approved to supply recreational-use cannabis products to Cannabis NB for sale in New Brunswick. This is Delta 9’s ninth Canadian provincial and territorial supply approval after Manitoba, Saskatchewan, Alberta, British Columbia, Ontario, Newfoundland and Labrador, Yukon Territory, and the Northwest Territories.
Christina Lake Cannabis Corp in BC released its Q3 2023 report, posting a gross profit of $4 million and $495,000 in losses after expenses, attributing the decline in gross margin to a significant drop in the price of wholesale distillate, even as sales increase.
BC’s Human Rights Tribunal dismissed a complaint from a former KoppertCanada Ltd consultant who said she was constructively dismissed from her job after being in a cannabis farm gave her a “contact high” and symptoms stemming from a disability. The tribunal ruled that she had no reasonable prospect of success.
BC-based Community Savings Credit Union CEO Mike Schilling spoke to Business in Vancouver about his lobbying efforts in Ottawa as part of the Canadian Cannabis Council’s (C3) recent Grass on the Hill lobbying event, held October 16-18.
The Time Colonist in Victoria, BC, published an opinion piece focussed on “troubling” concerns relating to cannabis-related hospitalizations and claiming that cannabis use “rivals alcohol consumption as a leading cause of road-related accidents and fatalities,” a rather dubious claim.
Some councillors in Aurora, Ontario, want to put a cap on the number of stores in the city, keeping it to no more than the thirteen currently operating in the small city, saying the costs for things like city bylaws and law enforcement are too high for the city to bear.
A group calling itself Selkirk Innovates, led by cannabis advocates Tracey Harvey and Sarah Campbell, is seeking funding to create a cannabis tourism sector in BC’s Kootenay region and Cowichan Valley under the REDIP Economic Diversification stream.
A Kamloops man who was caught with more than a kilogram of illegal cannabis packaged for sale by the eighth, along with 94 grams of shatter, was given six months on house arrest.
In Colorado, policymakers are considering banning licensed cannabis businesses such as retailers, growers, and extractors from participating in unlicensed cannabis activities such as ticketed or money-oriented cannabis dinners and food pairings, movie screenings, art exhibitions, and other events where pot consumption is allowed.
The number of stores and the amount of cannabis sold in BC has continued to increase while the price of cannabis products continues to drop.
Dried flower and pre-rolls combined still dominate sales, but inhalable extracts, especially infused pre-rolls and vape carts, continue to eat into their market share. Consumers are also continuing the shift to larger volume dried flower offerings, while 3.5 and 7-gram SKUs remain the most popular overall.
The BC LDB’s newest quarterly report for 2023, covering July, August, and September, shows a 40 percent year-over-year increase in wholesale grams, for a record of 33,879,347 grams and a 24 percent increase in wholesale sales for a total of $137,126,714.
The price of cannabis again dropped to its lowest ever, at $4.05 a gram for all cannabis product categories and $3.33 a gram for dried flower. There were 490 stores, an increase from 452 in the same quarter in 2022, and 483 at the end of the first quarter of 2023.
Chart via LDB.com
Following trends in previous quarters, single grams and eighths selling at more than $5 a gram saw significant declines in year-over-year sales as consumers continued to shift purchasing habits to higher-value and larger volume SKUs like 7, 14, 28, and (a handful of) 30 gram.
Reversing a trend in the previous quarter, though, consumers are showing an interest in paying more than $5 a gram in these larger volume SKUs. In Q1 2023, sales for 7 and 14 gram SKUs were down 46 percent, and 14 percent year-over-year, respectively, but were up 15 and 18 percent this quarter. This can relate to consumer preference or to product availability.
via LDB.com
While eighths and 28-gram SKUs were still the most popular overall, the less expensive 7, 14, and 28-gram offerings saw the most significant increase in sales compared to Q1 2023 and, where applicable, Q2 2022. (Some SKUs were not available one year ago).
As in Q1 2023, inhalable extracts sales outpaced dried flower sales (excluding non-infused pre-rolls) at $46 million compared to $44 million. ($42 million and $41 million Q1). While flower sales year-over-year were up just under seven percent and four percent in units, inhalable extracts—dominated by vape pens and infused pre-rolls—grew nearly 58 percent in sales and 68 percent in units sold.
Cartridges and infused pre-rolls dominate the inhalable extracts category, with 48.5 percent and 38.4 percent of sales, while products like shatter, resin and rosin, and Hash were each under three percent of sales. Still, these latter categories saw significant year-over-year and quarterly growth as the product category became more competitive.
Pre-rolls (non-infused) came third in sales at $31.7 million, a 20 percent increase year-over-year and a 19 percent increase in units.
via LDB.com
Sales of cannabis edibles and beverages came in far behind with $7.4 and $2.7 in sales, respectively. For edibles, this represented a 17 percent increase in sales year-over-year and a 24 percent increase in units sold. Beverages saw a 40 percent increase in both dollar sales and units sold.
Topical sales increased 26 percent year-over-year to $748,087 and 29 percent in units sold. Sales of cannabis seeds declined 25 percent to $12,929, a decrease of units sold compared to the same quarter last year of 24 percent.
Sales of ingestible extracts, which includes products Health Canada declared non-compliant earlier this year, saw declines of about one percent in sales and six percent in units sold. The category still had $4.3 million in sales. The decline was driven by a 73% year-over-year decline in the sale of the types of lozenges and other products Health Canada deemed non-compliant and an eight percent decrease in oils and tinctures, but was buoyed by a 29 percent increase in capsules and pills.
Overall, the province gained three retail stores since the previous quarter and 38 since the same quarter last year. The largest market in BC, the Greater Vancouver area, had 140 stores in this most recent quarter, up three from Q1 2023 and up from 113 in Q2 2022.
The second largest retail market, Vancouver Island, has 121 stores, a decrease from 123 in Q2 2022. The third largest region, the BC Interior, saw an increase in the number of retail cannabis stores, from 161 in Q2 2022 to 168 in the same quarter in 2023, and an increase of three stores from Q1 2023. The number of stores in Northern BC increased from 58 in Q2 2022 to 64 in the most current quarter, up from 61 in this year’s previous quarter.
Figure prior to Q3 2022 were not reported in units sold
The amount of cannabis sold through the program—limited to small-scale BC producers and therefore a fraction of total provincial sales by design—continues to grow, although this could potentially be reaching a plateau as sales in the last two quarters were relatively steady.
While the program is popular among retailers and producers taking part, many of the small producers the program was built to assist say the baked in provincial fees make it challenging.
Despite the costs to sell into the program—which not only include added logistics to handle multiple deliveries, but still come with a 15% “proprietary fee” to the province—the cost per gram sold in the program continues to decline. This is good for consumers, but not good for producers or retailers who hope the program can act as a lifeline.
The average price per gram of cannabis sold in the program is just $4, while the average price of all cannabis products sold through the program is $4.60 a gram.
The amount of dried cannabis flower sold through direct delivery stayed about the same compared to Q1 2023 while edibles and beverages declined significantly and inhalable extracts grew.
Health Canada says it is currently in the “redetermination process” regarding its initial ruling on Edison Jolts from Organigram, following the recent announcement by the New Brunswick producer that it was re-releasing the products into several provincial markets.
In early January 2023, following the release of several “ingestible/edible extracts” by a handful of cannabis producers, Health Canada sent a notice to producers highlighting their concerns with these products. Companies had until May 31, 2023, to cease sales and distribution.
Organigram challenged this ruling in March, filing for a judicial review of Health Canada’s decision to require an end to sales of ingestible extracts that exceed the federal 10mg THC packaging limit.
The filing, posted March 31, 2023, as Organigram Inc. v. Minister of Health et al., falls under Section 18.1 Application for Judicial Review. Judicial review is a process by which the courts can ensure that the decisions of administrative bodies like Health Canada are fair, reasonable, and lawful.
In August, that application for judicial review of the ruling was approved. Organigram had also hoped to see Health Canada’s order quashed or set aside, but the court required Health Canada to determine that Edison Jolts lozenges are a cannabis extract and do not constitute edible cannabis under the Regulations.
While cannabis edibles are limited to 10mg THC per package, extracts are limited to 1000 mg THC per package.
In an email to StratCann, Health Canada maintains that it considers any product intended to be consumed as food cannot be considered an extract.
“Edible cannabis is cannabis that is intended to be consumed in the same way as food and is excluded from the definition of a cannabis extract,” wrote a media representative of the federal health authority.
“Health Canada is continuing to assess edibles and extracts in accordance with the promotion statement that we issued to federal licence holders in March of this year. The factors for determining whether a cannabis product is correctly classified remain the same.
“The department has identified a number of edible cannabis products marketed as cannabis extract products and is working with licence holders to resolve these issues. We continue to communicate with licence holders to make sure they understand the federal rules relating to edible cannabis and cannabis extracts.”
“Health Canada has acknowledged that it accepts the decision of the court, and that it considers its initial classification decision on JOLTS to be void. As such, pending the final redetermination by Health Canada, Organigram has reinstated the commercialization of JOLTS,” a representative with Organigram told StratCann via email.
“Organigram remains of the view that Edison JOLTS are properly classified as a cannabis extract.”
The products, the spokesperson says, are being sold in New Brunswick now, and Organigram expects Jolts to be in retail stores in Manitoba, Saskatchewan, and Ontario soon.
The BC Community Safety Unit has seized $3 million worth of cannabis so far this year, for a total of $38.18 million since it began enforcement actions in 2019.
BC’s Community Safety Unit (CSU) is the provincial agency charged with monitoring and enforcing the province’s retail cannabis rules and regulations. CSU investigators can conduct compliance and enforcement activities against unlicensed cannabis retailers and other illegal sellers across the province.
The agency began with a mandate of education in 2019, in many cases first visiting stores and informing them of provincial cannabis laws and regulations before moving on to issuing fines, seizing products and equipment, or shutting down unlicensed businesses.
It has undertaken four enforcement actions so far in 2023, for a total of 95 seizures since 2019. The most significant number of product seizures was in 2020, worth $13 million, following 227 educational visits in 2019.
There have been 230 stores that have closed as a result of those education visits, nine of them in 2023.
The number of seizures and correlating value has been declining since then, with $10 million worth of cannabis products seized in 2021, $7 million in 2022, and $3 million in the first ten months of 2023.
In Parliament earlier this year, BC Minister of Public Safety and Solicitor General Mike Farnworth said that the CSU has also conducted nine enforcement actions on First Nations reserves in the province, seizing about $12 million worth of products.
The province also issues fines to illicit cannabis stores if they refuse to close after several warnings and/or seizures. So far, the CSU has issued at least 58 notices of administrative monetary penalty with proposed penalties totalling approximately $39.9 million, with only about $1.45 million of these penalties already collected.
Under BC’s Cannabis Control and Licensing Act, there are three types of orders issued by the Director of the Community Safety Unit (CSU) with respect to the issuance of administrative monetary penalties (AMPs); Concession Orders, Compliance Orders, and Reconsideration Orders.
Administrative penalties are generally twice the value assigned to the products seized.
If the Director proposes to impose a monetary penalty for a contravention of the CCLA, the Director must serve the person with an NAMP. Unless the person signs a waiver and admits to the contravention (Concession Order), the monetary penalty (AMP) is an amount equal to two times the retail value of the cannabis that the person, in contravention of the Act, sold, possessed for the purpose of sale, or produced. If they do sign the waiver (Compliance Order), their penalty is equal to the retail value of the cannabis sold, possessed or produced.
Cannabis sales continue to climb in Canada, with more than $460 million sold by the 3,600+ cannabis retailers nationwide.
Total retail sales of cannabis in August 2023 were over $464.2 million, up from about $390 million in August 2022. From July to August, sales increased in every province except for Manitoba, which saw a slight decline to pre-March 2023 levels. (This is possibly due to lower data quality for the Keystone Province’s figures for August, which Statistics Canada rates at a lower quality than those figures available for previous months.)
Like many retail sectors, cannabis sales have dipped in the months following the Christmas shopping seasons over the last three years before building again on an ongoing, upward trend.
The number of retail stores across Canada also continues to grow, although the pace has slowed considerably compared to the first four years of legalization. As of October 2023, there were 3,640 cannabis stores in Canada, excluding provincial online stores.
British Columbia: 508 public and private stores either open or “coming soon”
Every business has its fair share of paperwork, and in all sectors, complaints about the burden of regulation and reporting are common. Within Canada’s cannabis industry, however, the paperwork requirements are intense, with a significant burden on smaller cultivators and processors.
“Larger companies producing a more standardized product are able to streamline their data entry requirements,” says Kirk Tousaw, CEO of Great Gardener Farms. “They may have more paperwork in the aggregate, but they’ll also have more employee resources available. At small companies like ours – three total employees, including the two owners – it’s very hard to find extra time or person-power to do the work.”
The nature of the paperwork itself can be frustrating. In many instances, the requirements aren’t only time-consuming – they also seem illogical.
“Particularly onerous is the requirement that all inputs into the cultivation process be tracked,” says Tousaw. “This means that every time we add nutrients to our reservoirs, we’re required to create dozens of data points. This information is absolutely unnecessary to track, which makes spending time on it frustrating.”
Perhaps due to the fact that Canada’s legal cannabis industry is a relatively young sector, the government’s cautious approach has resulted in many redundancies. The bureaucracy associated with these requirements can, at times, seem absurd.
“The fact that Health Canada and the CRA require almost the same information in slightly different formats is ridiculous,” says Sarah Campbell from the Craft Cannabis Association of BC. “You’d think they could coordinate in some way to be more efficient for all involved.”
There are also differing paperwork challenges that are dependent on the number of strains grown, and the type of cultivator, with indoor and outdoor grows having unique burdens.
“If we grow one strain and one crop a year, the paperwork is quite easy, but if we grow three strains, it gets a bit more challenging,” says Katy Connelly, owner of Sea Dog Farm, a micro in Saanichton, BC. “The harvest paperwork is a bit of a pain because they want you to weigh every leaf that comes off the field, and every plant before it goes into the compost. As an outdoor grower, my plants are the size of a Christmas tree, so all this weighing is a bit ridiculous and time-consuming if it’s done ‘by the book’.”
Working for paper
The time required to do the paperwork can be less onerous than all the weighing and recording, which are necessary administrative steps before any form is filled out.
“It makes sense to report on the number and plants and the weight of the flower,” says Connelly. “However, weighing harvested plants or raking up all the fallen leaves so I can weigh them does absolutely nothing to ‘keep the public safe’. It is just a huge waste of my time. I think most people either make these numbers up, or weigh one and multiply.”
Connelly says that processors have their fair share of headaches, too.
“I have to count seeds and weigh plants, but my processor has to register every product at the provincial and federal levels, as well as deal with labelling and excise.”
Given that smaller companies have fewer resources to fill out all the paperwork, these added requirements for microprocessors can be extreme.
“Once you get into the world of extracts, and products created from extracts – such as topicals and edibles – the way that Health Canada and the CRA track things differs hugely, and staying on top of all the requirements for reporting becomes a nightmare,” says Sami Majadla, CEO of CertiCraft, a seed-to-sale compliance software solution. “Tiny microprocessors working with edibles and topicals probably have the worst burden, in my opinion.”
Making it right
The government could fix many of these problems by reducing or streamlining requirements and eliminating redundancies. Sadly, there is no set timeline for regulatory overhaul. The current review of the Cannabis Act is part of a much larger process unlikely to result in change any time soon.
That said, given that the legal cannabis market has made a significant dent in illicit activity and that the need for such rigorous reporting requirements is moot, for many now is the time to transition to a more rational approach.
“We should move toward treating cannabis more like, for example, wine in terms of reporting requirements,” says Tousaw from Great Gardener Farms. “Vineyards don’t have to track and report their fertilizer usage monthly. While valuable and age-restricted, their product isn’t treated as inherently criminogenic. Cannabis and those in the industry continue to be stigmatized with the perspective that this substance requires significant control and reporting burdens. It does not.”
It would seem inevitable that the paperwork requirements will change at some point. For many observers, a rational approach to the sheer inefficiency and nonsensical nature of today’s regimen could result in some easy fixes.
“First off, the CRA and Health Canada should completely harmonize their requirements,” says Majadla from CertiCraft. “Secondly, the actual amount of data being tracked can be greatly reduced. To share just one example: needing to keep records of all of your prunings that have been destroyed is such a waste of time. Who cares about leaves that have no value? Nobody benefits from tracking something like that.”
In a challenging domestic market with early-mover status – Canada was the first major industrialized country to legalize cannabis – the added administrative burden placed on industry, particularly small cultivators and processors, is significantly hindering a commercial sector that’s already struggling.
“If paperwork was the only thing troubling this industry, we would all be just fine,” says Connelly of Sea Dog Farms. “As it stands, paperwork is just one more straw added to the incredible challenge of trying to survive.”
This week on Stratcann, we covered a BC company that is asking the province to use part of its share of excise tax revenues to aid struggling cannabis businesses. We also covered an ongoing string of grievances between cannabis producers and processors, and touched on the continuing issue of Canadian pot firms that are sitting on massive stockpiles of dried cannabis flower.
We also looked at new developments in the ongoing plight of some cannabis producers to use a perceived loophole in the regulations to market orally ingested cannabis products as ‘extracts’ to circumvent dosage and packaging limitations imposed on edible cannabis products by Health Canada.
Also, one year into new farmgate rules in BC, only a handful of producers are even exploring the idea due to what some say are an ill-conceived set of rules surrounding the program’s implementation.
As large cannabis companies continue to suffer from the hubris of the early days of legalization, Sundial Cannabisannounced the closure of its flagship production facility in Olds, Alberta, a rural community of about ten thousand people.
The SQDC named former food services executive Suzanne Bergeron as its new president and CEO.
Aurora Cannabis announced that it has recently completed a confidential settlement with Willow Biosciences regarding patent infringement, where the latter is alleged to have used technology developed by former Aurora CSO Jonathan Page to biosynthesize cannabinoids. Aurora also announced that it will reveal its second-quarter earnings on November 9.
A group of researchers from the University of Bangkok, Thailand, found that CBD does not interfere with certain forms of cancer treatment, and a study out of California found that cannabis packaging that appeals to youth also appeals more to grown adults, emphasizing the importance of packaging requirements and warning labels.
Scientists also say they discovered cannabidiol, a compound in cannabis known as CBD, in a common Brazilian plant, opening potential new avenues to produce the increasingly popular substance.
Two European organizations say they have received the final approval from the Swiss Federal Office of Public Health (BAG) to conduct a cannabis pilot study in Basel-Landschaft (Baselland), following approval from the Ethics Committee Northwest and Central Switzerland (EKNZ) last year. The study, led by Prof. Dr. Michael Schaub, Scientific Director of the ISGF, will examine the regulated sale of cannabis for non-medical purposes.
Up to 3,950 healthy adults living in the canton of Basel-Landschaft will be able to participate in the study in the future. Unlike other Swiss projects, the dispensing of cannabis will not take place via pharmacies or clubs but via stores as a point of sale, initially in the municipality of Allschwil.
Leafie ran a piece looking at Canadian cannabis company TGOD’s products making their way to the UK.
Health Canada says it has again identified several edible cannabis products it deems as being incorrectly sold as cannabis extracts.
A spokesperson for Health Canada tells StratCann via email that the regulator is working with several cannabis producers to address the issue.
“Health Canada has identified edible cannabis products erroneously being classified and marketed as cannabis extract products. These non-compliant products do not meet the controls in the Cannabis Act and Cannabis Regulations, which serve to mitigate against public health and public safety risks associated with edible cannabis. These controls include, but are not limited to, a maximum limit of 10 mg of THC per container to help reduce the risk of accidental or overconsumption; limits on the use of certain ingredients; and requirements for preventive control plans to reduce the risk of food-borne illness.
“In cases of potential non-compliance, Health Canada’s preference is for regulated parties to voluntarily undertake actions to come into compliance.”
Health Canada notice
Health Canada is working with several licence holders to resolve any non-compliance.”
Earlier this year, Health Canada sent notice to several companies making similar so-called edible or ingestible extracts containing more than 10 mg THC per container that they would need to cease selling and distributing those products. Health Canada also warned the public about consuming these products.
Since that time, several other similar products have also been released on the market that advertise themselves as cannabis extracts rather than edibles, despite being intended for oral ingestion.
Cannabis producers selling these products maintain that these products were not, and are not edibles, but the federal regulator disagreed.
The federal health authority also issued an online document earlier this year providing clarity on the issue of the classification of edible cannabis. The document, in part, notes that a cannabis edible is defined as any article manufactured, sold or represented for use as food or drink for human beings, chewing gum, or any ingredient that may be mixed with food for any purpose.
“The OCS is re-engaging with all its cannabis extracts suppliers to remind them of their ongoing obligation to ensure that product complies with applicable laws, including the Cannabis Act and Regulations.”
One cannabis producer selling such products is challenging Health Canada’s ruling in court. Organigram had to stop selling its ingestible extract product and had its application for judicial review approved in August. Organigram and others who have made these products maintain that they are compliant with all applicable regulations. The court case is now pending.
In instances of non-compliance, the same media representative for Health Canada says it takes a gradual approach to encouraging compliance with its regulations, and points out that they do not formally approve products for sale. Instead, they highlight that it is the responsibility of the licence holder to ensure that their cannabis products are compliant with the Cannabis Act and its regulations.
“In cases of potential non-compliance, Health Canada’s preference is for regulated parties to voluntarily undertake actions to come into compliance. As outlined in Health Canada’s Compliance and Enforcement Policy for the Cannabis Act, the Act contains a number of enforcement tools that may be considered in determining the appropriate actions to prevent or address non-compliance based on a review of the situation and all relevant information, including the public health or public safety risk and the compliance history of the individual or corporation.
“These include measures ranging from compliance promotion and awareness, which are intended to educate and prevent non-compliance, up to measures intended to correct non-compliance or address a public health or safety risk, such as the issuance of a warning letter, suspension or cancellation of a federal licence, the issuance of a ministerial order, or the issuance of administrative monetary penalties.”
The Ontario Cannabis Store (OCS), which manages distribution and sales in the province, has recently sent a memo to relevant licence holders reminding them of their responsibility to ensure products they submit to the OCS are compliant with all applicable regulations.
A spokesperson with OCS expands on this, saying the provincial organization will continue to work with its suppliers to ensure all products sold into Ontario’s legal market remain compliant.
“In response to Health Canada’s compliance statement, OCS engaged with its suppliers in March 2023, reminding them of their obligations to comply with applicable law and requesting they identify any affected products. On May 31, 2023, OCS stopped replenishing and accepting deliveries of all products that suppliers identified to OCS as being affected by the compliance statement.
“The OCS is re-engaging with all its cannabis extracts suppliers to remind them of their ongoing obligation to ensure that product complies with applicable laws, including the Cannabis Act and Regulations, and requiring attestation as to whether they have heard from Health Canada about any product(s) that may be affected by the compliance statement.”
Nearly one year into the launch of BC’s cannabis farmgate program, some growers say the current cost to participate is too high for them.
The program, launched in late 2022, has only seen three companies apply so far—one in the interior, one on Vancouver Island, and one in the Greater Vancouver area or Sunshine Coast, these few out of more than 100 eligible growers in the province.
Only one of those has been licensed so far, ShuCanna in Salmon Arm, while another on Vancouver Island, the Victoria Cannabis Co, is in the final stages of licensing as it awaits final approval from the city. A third, identified by BC only as being in either the Vancouver region or Sunshine Coast, only recently applied and is still making its way through the approval process.
BC’s official name for a farmgate licence is a Producer Retail Store (PRS). The province previously licensed two other farmgate stores through special arrangements with two First Nations-owned cannabis producers, both approved in 2022, although these are not listed by the province as a PRS.
This low number of applicants indicates a policy failure, say some growers in the province. The licence category is impractical for their location or business model, especially with the high costs involved, including application fees and adhering to all the building and security requirements.
In addition to the nearly $10,000 in provincial application fees for the farmgate licence, Alannah Davis at Dabble Cannabis on Vancouver Island says another hurdle is the need to spend significantly more to build a full-time store that would adhere to provincial rules.
“We really want Farmgate,” says Davis. “So the low number of applications, in my opinion, is not indicative of the number of farmers wanting to sell directly to customers. That’s the dream.
Alannah Davis, Dabble Cannabis Co.
Dabble Cannabis is a federally licensed cannabis cultivator and processor with its own highly secured storage areas, something she says should more than satisfy provincial concerns around security rather than building a new store.
While the provincial regulations require a Farmgate store to essentially operate as a full-time retail store, she sees the model making more sense on a seasonal and case-by-case basis.
Instead of running a full-time retail cannabis store on her farm, Davis wants the province to allow her to get a more scaled-down licence that would enable her to sell products to visitors at her farm.
“We really want Farmgate,” says Davis. “So the low number of applications, in my opinion, is not indicative of the number of farmers wanting to sell directly to customers. That’s the dream.
“We definitely want to, but the way it is now, it has the same requirements as a cannabis retail establishment, which means that the cost of creating an entirely new full-fledged retail environment, at this point in time, I don’t believe we’ll see a return on the investment that is required.”
“The cost to get there is too prohibitive right now,” she continues. “I want an interim fulfilment step, either via mail or in-person click-and-collect, using my existing infrastructure. Then that allows for any producer with a secure storage area to complete a transaction online and deliver it to that person. It is really an over-engineering of the policy to prohibit producers from selling direct to customers.”
“People love the product, they keep coming back. They love how fresh it is. But now it’s a matter of letting more people know we are here. There’s so many restrictions on advertising that it’s hard to get the message out.”
Terry Robinson, ShuCanna
ShuCanna’s farmgate store located at 2321 Trans-Canada Hwy, Salmon Arm.
Katy Connelly, the co-owner of Seadog Farm, another outdoor cannabis grower on Vancouver Island, echoes Davis’ concerns, especially regarding the costs of building a store.
If there were a more affordable and streamlined program, she says she might consider taking part—her business already operates a small farmgate stand for other products from her farm, such as fresh seasonal produce. But as it stands, the process is too costly and onerous. Instead, she says she would rather focus on good relationships with those who already have retail.
“I would need three licences, and each licence is $2,500 a year. I would have to report on each of these licences,” she says. “I would also need at least a million in excise bonds and a special business licence from the BC government. I would have to build a store to sell cannabis from; I would have to hire an employee to sell the cannabis. I only have one thing to sell; I don’t have a huge storefront.”
“It’s not worth the paperwork, and there’s a system already in place to sell my product,” adds Connelly. “There are processors who will process my cannabis into pre-rolls, so why would I want to do that myself? And there are stores that are looking for products and enthusiastic about selling our product. So why would I not sell through them?
Connelly says she’s explained these issues to the government and does think they are hearing and understanding them but hasn’t seen any policy changes yet. Instead, she thinks they are listening to those who want a system that won’t ever be viable for a regulated product like cannabis.
“I think the people who are advocating for Farmgate want to sell like they used to sell in the old days and not have to do all the paperwork and insurance and all of that. They just want to put their cannabis in jars and sell like they used to, but that is not the way of the world.”
Back at Dabble, Davis says the ideal model is something more resembling the seasonal tourism of wineries.
“It really comes down to an ROI and the upfront cost. The running of the entire retail operation has tons of costs associated with getting it up and operational. “
Like Connelly, she has engaged with the government’s policymakers on the issue but has been told their focus now is on event licensing and consumption spaces, not refining Farmgate. While these could tie into her vision of Farmgate, until the province makes it more viable and practical for smaller growers like herself, she says she expects there won’t be more applying.
“Three licence holders out of a hundred plus, that’s an obvious failure in the policy, and I think that given the taxpayer funds already spent on this program, I think it is their responsibility to take the feedback of those who actually want to do it and work together to make the changes to make it attractive for us. Otherwise, who is this for? It is a failure. It was designed for farms like us, and if we don’t want to do it, who will?
Sugar Cane Cannabis’s farmgate store in Williams Lake, which includes an in-store window into their grow room. Image via William’s Lake First Nation.
BC’s first official farmgate store licensed in BC, ShuCanna, located on the Trans Canada Highway in Salmon Arm, opened recently. Terry Robinson, owner of the facility, says he was eager to apply as soon as BC announced its licensing program in late 2022. While it was a lengthy and pricy process, including the nearly $10,000 in provincial fees—not to mention municipal licensing fees and the cost of renovating and then stocking and staffing the store—Robinson says it was fairly easy.
The challenge he says he faces now is getting the word out about their store. ShuCanna currently carries their own dried flower and pre-rolls, as well as an array of products from the LDB, such as concentrates vape pens, accessories, and more.
“People love the product; they keep coming back,” says Robinson. “They love how fresh it is. But now it’s a matter of letting more people know we are here. There are so many restrictions on advertising that it’s hard to get the message out.”
Although their “soft launch” was in late August, ShuCanna’s grand opening will be Friday, October 27.
Cannabis Farmgate across Canada
Ontario and New Brunswick are the only other provinces with any formal Farmgate program in place, both launched in 2021. Five locations are currently open in Ontario and six in New Brunswick.
Data presented by Health Canada indicate that cannabis exports may continue to increase significantly, with more than a thousand applications already submitted as of September 12, 2023.
The federal regulator has already received 1,211 applications from Canadian companies seeking to export cannabis since the beginning of the fiscal year on April 1, 2023, and has approved 1,147. In a presentation made online on Tuesday, October 24, a representative with Health Canada said they expect these numbers to continue to increase.
The number of applications and permits issued has been increasing on an annual basis, with 1,805 permits issued in 2022-2023, 1,421 in the previous year, 1,267 in 2020-21, 1,213 in 2019-20, and 272 in 2018-19.
The top countries for Canadian companies to export cannabis to are, in order, Australia, Germany, Israel, Argentina, the UK, and the US.
Canada’s Cannabis Regulations allow for the export of cannabis to countries with a recognized legal medical cannabis framework. Currently, exports are only allowed to countries with a medical cannabis framework, often helping to address supply gaps in various countries that have recently legalized.
Canada also allows imports of cannabis on a very limited basis, such as importing starting materials (e.g., seeds, plants) for a new licence holder, or for small quantities of cannabis for research purposes.
As of March 2023, the most recent data from Statistics Canada shows that 125,981.76 kg of dried cannabis had been permitted to be exported from Canada, and 98,260.18 litres of cannabis oil. Only 28.05 kilograms of dried cannabis and 65.88 litres of oil were imported into Canada.
Nova Scotia saw an 8.7 percent increase in cannabis sales in its second quarter of 2023, to $31.4 million.
Retail customer transactions for cannabis also increased by 13.8 percent, while the average dollar value of each transaction decreased by 4.4 percent to $37.04. The average price per gram for cannabis also decreased by 3.5 percent to $6.03, one of the lowest average prices in Canada.
As in the previous quarter, growth in cannabis sales was led by a significant increase in sales of local cannabis products, for a total of $10.3 million in Q2. This brings the sale of locally-grown and produced cannabis products in Nova Scotia to nearly one-third of all cannabis sales.
The same time period saw alcohol sales increase by only 0.1 percent, although the total sales still significantly surpassed cannabis, at $210.7 million.
Sales increases for cannabis are potentially related to the opening of a new retail cannabis store in Halifax by adding cannabis to an existing liquor store location on Young Street. Nova Scotia is one of the few provinces that allows the co-location of cannabis and alcohol.
“Over the past five years, we have worked hard to increase the opportunity for our customers to access cannabis safely,” explains Greg Hughes, President & CEO of the Nova Scotia Liquor Corporation (NSLC). “We started with 12 cannabis locations, and now we’re up to 49 stores across the province.”
Become one of the only privately held EU–GMP facilities in Canada.
Did you know that the 23 registered EU-GMP Canadian cannabis facilities are all owned by public companies (data sourced from “EudraGMDP” European Medicines Agency)? There are currently no privately owned Canadian companies with spare capacity available for your use to export product.
Canadian exports surged in the 2022-23 fiscal year when Canada exported CAD$160m, a 50% increase from 2021-2022. It is estimated that the world cannabis market will reach $62B in 2026, comprised of around 50% in the US. If/when federal prohibition is removed in the US, American exports will dwarf Canadian exports.
With Canadian exports surging due to international recognition of consistent quality, it’s a great time for potential Canadian exporters to seize the moment.
The most significant advantages of exports are increased gross margins (2.5x) over domestic prices, with insured receivables (Export Development Canada), and no payment delays or holdbacks experienced with provincial liquor and cannabis regulation branches.
Australia and other importing countries are increasingly leaning towards stricter import regulatory criteria similar to or the same as the EU. This creates an opportunity to expand beyond the domestic market, unlock exciting export opportunities in international cannabis markets, and become one of the first private EU-GMP cannabis facilities in Canada.
However, in the burgeoning export markets, exercise caveat emptor—buyer beware—in purchasing GMP certification. Prices range from CAD$200k to CAD$600k with different lag times and significant upfront fees.
Embark on a journey with Pharmaceutical Consultancy Services (PCS)—the EU-recommended service provider based in the Netherlands—to attain GACP and EU-GMP* certifications. As a pharmaceutical consultancy firm, PCS was the first firm, in cooperation with the Dutch inspectorate, to bring a cannabis facility to GMP level. (*Please note that the here-mentioned “EU-GMP certification” is proof of compliance level. A formal EU-GMP certificate can only be provided by a governmental institute).
The PCS team—headed by Dr. Jaap Koster, educated, trained, and experienced in pharmaceutical manufacturing—has also assisted customers in reaching their GACP/GMP or GMP objectives. PCS has performed over 2,000 GMP audits globally for small and large companies, mainly as lead auditors.
By capitalizing on this window of opportunity, your business could command higher prices for your products in the global market. Additionally, with the receivables insured by the Canadian federal government, you would be well-equipped to navigate the challenges that come with international trade. The advantage of working with PCS is that it offers a reasonable payment plan. In addition, for the first three Canadian client projects, there is a 40% discount on the PCS listed price for GACP, EU-GMP certification. This certification will also cover other countries’ principle GACP/GMP requirements for the same price with the same payment plan.
PCS works in conjunction with Nigel Boast (BSc., LLB MBA), principal of Growth West Finance in BC, who will facilitate the onboarding and, if required, will assist with funding facilitation for consulting fees, and also the facility retrofit (provided applicant qualifies for such funding). Although PCS does not assist in product export, Growth West Finance will also, if appropriate, assist the Client in export marketing plan(s) separate to the GMP certification process upon request.
Unlock the world of export opportunities, find out if your facility will qualify for GMP certification, and take advantage of early price discounting (40% of regular price).
Contact Nigel Boast, principal of Growth West Finance Ltd. in Canada for an appointment, or Dr. Jaap Koster principal of PCS in the Netherlands.
Carleen Roth, the COO at CannGroup, a cannabis processor in north Okanagan, is launching a petition calling on the provincial government to provide relief to cannabis growers and processors struggling to survive.
CannGroup, she says, paid more than $1 million in excise taxes last year, noting that most of that—three-quarters of every dollar—goes back to the provincial governments, including BC.
Not only are they taxed at a high rate on any cannabis products they sell, but they also face steep increases in their property taxes (from $1,200 a year to $49,000) and have even had to refinance their mortgage to a high-interest private lender because of their connection to the legal, regulated industry.
“We just want to run a business. If we can’t survive, then the government doesn’t get anything from us.”
With the BC government bringing in more than $225 million in their share of federal excise taxes since legalization (as of September 1, 2023), she says she would like to see the province use a portion of that revenue to help the local cannabis industry which the province says it likes to support.
“I’d love it if they could even take ten percent, 26 million from the last three years and grant that to producers to assist with their business development. That would help.”
“Some things they could do is they could rebate some of the tax to us so we can buy our packaging, machinery and materials,” she adds. “That’s something they do for other industries. They could give us low-interest loans to purchase equipment or hire people. They do that for farmers. They could treat us like farmers, which we are, or like other similar industries.”
“We’re not asking for much,” continues Roth. “We just want to run a business. If we can’t survive, then the government doesn’t get anything from us.”
In addition to the federal excise tax, which amounts to $1 for every gram sold (where wholesale prices can be as low as $1-3 a gram or less) and typically $8 per vape pen or gram of concentrate, she notes that producers operating in BC have seen their property taxes increase several hundred or even thousands, plus the BC government takes an additional 15 percent fee for any products sold into the provincial system, even if producers deliver it directly to retailers themselves.
Roth says her hope with the petition is to try and rally more producers in the province to lobby not only the federal government to address the issue of the federal excise tax but also her own provincial government to acknowledge how much they are receiving from that tax.
“We’re just a small company, and we’re paying more than a million dollars a year in taxes to the government. This can’t continue, or we’re going to see a lot of businesses fail. And then no one wins, and the government loses out on all that money, forever.”
StratCann also held our fourth Growing Relationships networking event on October 16, this time in Winnipeg. Martin Cash of the Winnipeg Free Press came out and spoke with attendees about the event, including Graham Taylor of Lineage Distribution, Sharon Clark, of Big Buds Cannabis Sales and the new Retailer Cannabis Council of Manitoba, and Delta9’s John Arbuthnot.
With the fifth anniversary of legalization, there was, of course, an avalanche of media coverage, mostly providing the typical, superficial overview we’ve come to expect on cannabis from mainstream news outlets, equating the decline of a handful of large pubcos with the state of the entire industry. We’ve skipped some of those this week to make sure we have room for some of the more informative and interesting coverage below.
CTV ran a 5-year retrospective with comments from several researchers like Robert Schwartz, a professor at the University of Toronto’s Dalla Lana School of Public Health, and Dr. M-J Milloy, a research scientist at the British Columbia Centre on Substance Use and an assistant professor in the University of British Columbia’s medical department.
Three researchers in Quebec took an in-depth look at the SQDC, cannabis regulations, and policies in La Belle Province, while a survey showed that the number of those who admit to using cannabis since legalization has increased, from about 17% to about 24%.
Le Devoir says that the sky has not fallen in the five years since Canada legalized the weed.
Radio Canada interviewed Cannabis NB’s Lori Stickels, who says the province is looking at in-store consumption and samples
Also, a Canadian comic book creator has priority usage of a “Captain Cannabis” mark, the US Federal Circuit ruled Thursday, concluding that the Trademark Trial and Appeal Board hadn’t abused its discretion in ruling in the creator’s favour.
SNDL Inc. will be consolidating all cultivation activities at its Atholville, New Brunswick Facility following the centralization of SNDL’s manufacturing, processing and production operations to Kelowna, British Columbia.
CBC ran an interesting, in-depth piece on the issue of jurisdictional authority for Indigenous–owned cannabis businesses, speaking with Cecil (Junior) Shawana of Northern Superior Cannabis in Michipicoten First Nation, Curtis Avery of Kana Leaf in Nipissing First Nation, Matthew Esquimaux, from Buddies Smoke Shop on Manitoulin Island, Paul Corbiere of Creekside Cannabis in Mississauga First Nation, and lawyer Michael Swinwood.
Rolling Stone ran a piece on cannabis beverages, inducing a look at the Canadian market.
Global News looked at five years of legalization in Saskatchewan, speaking with the owner of Living Skies Cannabis, with news outlet CKOM adding to the story, as well.
STORZ & BICKEL GmbH, a subsidiary of Canopy Growth, announced the launch of their new dry herb vape, the VENTY. And finally, Western Wheel spoke with Dale Nally, Minister of Service Alberta. Red Tape Reduction, and several cannabis retailers and marketers about the state of the industry in Alberta.
The BC government is providing funding to support the creation of a tool to monitor THC and CBD in commercial cannabis.
To the tune of $77,411, the funding comes from the provincial government’s BC Knowledge Development Fund (BCKDF), part of $2.5 million allocated to support infrastructure for 16 research projects at five universities in BC.
Thompson Rivers University in Kamloops is the recipient of the grant related to cannabis research for Capillary Electrophoresis for Characterization of Pharmacologically Relevant Compounds in the Cannabinoid Industry, led by researcher Kingsley Donkor.
StratCann spoke with Donkor about the project, which he says is about providing another tool for the industry to test levels of cannabinoids and terpenes. While the industry generally uses High Performance Liquid Chromatography (HPLC), Donkor says capillary electrophoresis offers some benefits, such as a high level of accuracy with smaller sample sizes than HPLC.
A recent announcement from the BC government explains the project will provide an analytical tool that regulatory agencies and cannabis companies can use to monitor the content constituents “in commercial and advanced cannabis formulations” using specialized Capillary Electrophoresis methods.
Shannon Wagner, Vice President of Research at Thompson Rivers University, says the goal of the research is to help create a better-regulated cannabis industry.
“Thompson Rivers University is proud to lead the way in cannabis research thanks to the support of provincial government funding,” says Wagner. “Our groundbreaking Capillary Electrophoresis project promises safer and more responsible cannabis use in B.C. by providing regulatory agencies and companies with precise tools to monitor cannabinoid content. Together, we’re shaping a safer and more informed cannabis industry.”
Federal and provincial governments have been looking more into the issue of cannabis testing, especially with concerns about the accuracy of product labels in the legal and illegal markets.
Several provinces have released testing results of illicit products shared via law enforcement actions, and more recently, provincial governments have begun looking at the THC testing of legal, off-the-shelf products.
In 2022, Ontario shared a study that showed illicit edibles have significantly less THC than advertised and high levels of pesticides. New Brunswick and British Columbia have also released similar testing results from unregulated products.
Health Canada announced changes to the process of adding sale authorization of cannabis products to processing licences.
As of October 1, 2023, the federal health agency will phase out inspections for authorized activities change requests from processors to add the activity of sale of extract, edible, and topical cannabis products. This change applies to all processing licence holders, micro or standard.
While Health Canada made changes in 2022 to begin granting dried fresh sales licences to all processors, the application process for these sales licence amendments for extract, edible, and topical are still required to be filed through the CTLS.
However, the newly implemented changes do mean that processors will no longer need to request changes to inner and outer labels, no longer need to provide photos of the entire lot, or provide completed packaging records, a master list of SOPs, evidence that packaging meets the child resistance requirements, or proof that each lot or batch has been tested using validated test methods including evidence that test methods have been validated for the appropriate class of cannabis, such as method validation reports.
Despite no longer needing to provide this information as part of the authorized activities change request, processors will still need to adhere to these requirements, which can be verified by Health Canada inspection. Inspections will be organized by using a risk-based approach.
The federal regulator will also no longer provide an in-person compliance promotion session to processors seeking a sales licence, replacing it with compliance promotion material that will be accessible online.
Licence holders will still be required to submit their Notification of New Cannabis Product (NNCP) 60 days prior to selling extract, edible and topical cannabis products to provincially and territorially authorized retailers and sale for medical purposes licence holders once their licence has been amended.
The Cannabis Council of Canada (C3) is calling the cannabis community to Ottawa to commemorate the fifth anniversary of cannabis legalization in Canada and appeal to the Government of Canada to fulfill the promise of legalization by responding to the mounting evidence of challenges faced by the nascent industry.
A recent C3 survey of Licensed Producers (LPs) from coast to coast underscored the urgent need for government reforms to rejuvenate the sector, ensuring its continued growth and contribution to the Cannabis Act’s public policy objectives. The survey, compiling responses from 122 LPs across the country, identified the major financial challenges facing the Canadian cannabis industry:
71% of respondents reported a surge in excise tax payments from 2021 to 2022, reflecting the adverse financial impact of escalating excise taxes due to price compression and burdensome regulatory fees.
83% of LPs reported negative net income in 2022. This significant increase in the excise tax burden has placed an unsustainable strain on LPs, impeding their capacity to invest in growth and innovation.
C3’s Key Recommendations to Government:
The Cannabis Council of Canada, recognizing the importance of the cannabis sector’s contributions to the success of the Cannabis Act, has released a position paper outlining three urgent recommendations:
Reform the Excise Duty Framework: C3 advocates for a fairer taxation system, proposing the reduction of excise tax to a fixed rate of 10% of sales and structural changes to the operation of the program that are costly and inefficient. These changes would ensure that the diverse cannabis industry is sustainable and can compete with the illicit cannabis industry.
Eliminate Excessive Regulatory Fees: Overbearing regulatory fees, which do not exist in other sectors such as alcohol and tobacco, have hampered the growth and profitability of LPs. C3 urges the government to eliminate these unfair fees.
Reform the Edibles Product Category: C3 calls for an increase in the allowable THC limit in edibles to 100 mg, aligning regulations with consumer protection and winning this category back from the illicit market.
“After five years of legalization, the regulated cannabis industry is struggling due to high taxes, excessive regulation, and unbridled competition from the illicit market. To fulfill the potential of legalization, the sector needs reform urgently. We’ve identified the top areas the government can change today to allow us to collectively grow the pie,” said George Smitherman, President & CEO of the Cannabis Council of Canada.
“Growing the pie means more revenue for the cannabis sector and governments, and it means extending the protection of the regulated sector to more Canadian cannabis consumers.”
Mike Schilling, President & CEO of Community Savings, stressed the economic benefits that a thriving cannabis sector can bring to Canada. He stated, “A revitalized cannabis industry can serve as a valuable source of tax revenue and employment opportunities, especially in challenging economic times. Between 2018 and 2021, the legal cannabis industry generated $11B in sales, $29B in investments, 98,000 jobs, and added $43.5B to Canada’s GDP. It’s time for the government to support the economic potential of Canada’s nascent cannabis industry.”
On this landmark fifth anniversary of cannabis legalization in Canada, the Cannabis Council of Canada urges the government to take action promptly to implement these critical reforms and support an industry that has the potential to contribute significantly to the Canadian economy. The cannabis sector stands at a crossroads, and the government’s support is pivotal in ensuring its success.
On October 17, Cannabis NB celebrates its five-year anniversary and five years of cannabis legalization in Canada. This is a pretty big milestone for our new industry, and it’s almost hard to believe we’re here already. The day has us reflecting on what this milestone means to our customers, how far the business has come, and the successes we’ve had. It also has us looking forward to what is sure to be an exciting future.
There was a lot of anticipation for cannabis legalization in 2018. The Provincial Government made Cannabis NB responsible for legal cannabis distribution in New Brunswick, and the team was tasked with a unique challenge: open an entire network of stores across an entire province, operated by a brand new team, in a brand new industry. There was no precedent for this, but the challenge was accepted and the team set out to have an e-commerce website and the first 20 stores ready to open their doors on October 17, 2018.
A lot of assumptions had to be made about product, customers, and operations. We knew there would be challenges and flexibility would be key. The lead-up to legalization was fast, with lots to do, but in the end we were ready to take our first online order at midnight on October 17, and our brand new, highly trained team was ready to open 20 store doors across the province that morning in sync, and welcome customers of every type for their first legal cannabis retail experience. That first day was filled with excitement, learning, and connections.
As with any new business in a newly legal industry, challenges were to be expected. Across the country, Cannabis retailers faced supply issues, illicit market confusion, and diverse customer needs. The first year of legalization was very much focused on learning and stabilizing the new business. Despite the challenges, the CNB team continued to focus on providing customer service and education and shifting consumers to the legal market.
Despite a rocky start, by December 2019, very early in its operations, CNB became profitable, and shortly afterwards, in February 2022, it returned all the money used for its startup and began delivering net income back to the Province of New Brunswick.
Celebrating Success
After spending the first few years strengthening the foundation of the business, CNB advanced its model evolution strategy.
This began in 2021 with the launch of our FarmGate program, allowing licensed producers based in New Brunswick to sell their products at their own retail stores on-site at their facilities. In 2022, we expanded our store network, opening new formats and more streamlined stores in underserviced areas of the province.
In the current phase of its model evolution, Cannabis NB launched a private retail channel. These stores are owned and operated under private retailers’ own brands. They are legal and licensed to sell cannabis in New Brunswick, and offer a full portfolio of legal, regulated products across all categories, sourced from Cannabis NB.
We now boast 25 corporate stores, 5 Farmgate partners, and 9 private retail partners (6 open) with a goal of improving visibility and access to safe legal products. We employ over 230 New Brunswickers across the province.
Additionally, over the past five years, CNB has been an industry leader when it comes to cannabis innovation. We have been lucky to drive several firsts like:
Being recognized by the Retail Council of Canada for our training program with an Excellence in Retail Award nomination
Through its growth and innovation, CNB has focused on promoting safe practices around cannabis consumption, with the core focus of its retail model being youth protection, reducing the illicit market, education, and safety.
Looking to the Future
We hope to continue evolving our model by continuing to expand our private retail channel. We want to provide increased opportunities for private sector participation in the legal cannabis market in NB. We also plan to pursue all available avenues for providing consumers with safe, responsible, on-site consumption opportunities that increase legal access and meet the needs of customers.
As Cannabis NB continues to evolve, it remains committed to ensuring the thriving cannabis industry that develops in New Brunswick is safe and responsible, all while providing the best possible experience for our customers every time.
Cannabis NB’s five-year milestone is a huge accomplishment, and I am so proud of the people who have been a part of this journey. I want to thank the incredible CNB team, our partners, and our customers. We would not be celebrating the success of the past five years if it weren’t for their dedication and support.
Five years into legalizing cannabis in Canada, the industry appears to be beginning to reach a saturation point.
New statistics shared by the Government of Canada show that the number of cannabis stores in Canada is beginning to stabilize at about 3,300 locations across the country.
Overall, Canada’s cannabis sector grew significantly from October 2018 to December 2022 but showed signs of decline in 2023. The GDP for the cannabis sector in Canada in late 2018, at the beginning of legalization, was around $6.4 billion. That number appears to have reached a high-water mark at around $11.6 billion by the end of 2022, before declining to $10.8 billion by June 2023.
Despite this growth, overall cannabis use in Canada appears to have only increased slightly compared to ongoing trends prior to legalization. From 2018-2020, cannabis use rates in most provinces saw little to no increase in reported rates of cannabis use, and use among 15-to 17-year-olds has not increased with legalization. Cannabis use is most common among 18-to 24-year-olds, followed by those 25 to 44.
The number of Canadians accessing cannabis legally has also continued to increase. By the first half of 2023, more than 70 percent of the non-medical cannabis consumed in Canada came from a legal source. This is up significantly from the 22 percent who reported doing so at the beginning of legalization in late 2018.
Unsurprisingly, the number of cannabis-related drug offences declined significantly following legalization. Although cannabis is now legal to buy, possess, consume and, in most provinces, grow, possession limits are still enforced, as are criminal laws around production and distribution.
While most (81 percent) of the cannabis-related charges in Canada prior to legalization were for possession, as of 2022, most (67 percent) were for illegal import or export. Cannabis possession charges were just 12 percent of all cannabis charges.
Also, Tether’s Holiday Showcase takes place at Millworks Creative Studios in Dundas, ON, on November 1.
In other cannabis news this past week…
Several major media outlets also covered the What We Heard Report, including the Canadian Press, which ran a story on the five-year anniversary of legalization, with a focus on the winding down of the stock market bubble, with comments from Abi Roach, Vivien Azer, a managing director and senior research analyst at TD Cowen, and Canopy CEO David Klein.
CTV carried a similar story on the persistence of stigma with comments from Kate Grimmell from Greentown Cannabis in Ontario.
The Canadian Medical Association Journal also released a report on the five-year anniversary of cannabis legalization. The key takeaways are that cannabis use and its associated harms have remained steady or slightly increased (but more data is required), and there have been substantial reductions in criminal arrests and charges related to cannabis use.
Researchers from the University of Quebec at Trois-Rivières (UQTR) are launching a survey with the goal of “a better portrait of cannabis consumption among parents” of children under 12 years old. This would be one of the first studies of its kind to be carried out in Quebec.
A would-be Whitehorse cannabis shop has again lost its bid to get a retail licence—this time, in front of the courts. Community Cannabis Inc. applied for the licence last year after signing a lease and beginning renovations at a space on Second Avenue in downtown Whitehorse. The board held a public hearing on the application before denying it in February.
Some residents in Drummondville, Quebec, have launched a petition complaining about what they say is the smell of cannabis from nearby indoor and outdoor producer Canna-Culture.
Radio Canada ran a story on Quebec producer Sumo, whose first batch of products will be available in the SQDC in November.
Joi Botanicals and Freedom Cannabisannounced that Freedom will be taking on processing and distribution for Joi.
Greenway Greenhouse Cannabis Corporation announced it was engaging cannabis distributor Green Hedge to act as an outside sales force, providing coverage to licensed cannabis retailers and provincial wholesalers across Canada.
Eurofins CDMO Alphora Inc. announced that it had received its Health Canada Cannabis Drug License for its Oakville, Ontario operations in September 2023. This complements the Institutional Research License obtained through Health Canada in June 2021 for its Mississauga development site, and a Standard Processing License obtained for the Oakville manufacturing operation in May 2022.
The Laval Police Department in Quebec carried out three searches and three arrests on October 3 in connection with the production, processing, distribution and sale of cannabis, seizing 1,453 plants as well as dried cannabis.
A First Nations-owned cannabis producer and retailer is now taking what they say is a “hybrid approach” to cannabis sales on their reserve lands.
Williams Lake First Nation (WLFN) is the signatory of the first government-to-government agreement with the Province of British Columbia under section 119 of BC’s Cannabis Control and Licensing Act and owns and operates cannabis retailer Unity Cannabis as well as the cannabis producer and brand Sugar Cane Cannabis on WLFN reserve land on a large lot just south of downtown Williams Lake. The two businesses share a large parking lot.
The First Nation also recently opened a new retail store in that same parking lot that sells edibles that are otherwise not available through the BC LDB’s supply chains. Kirk Dressler, the Director of Legal and Corporate Services with the Williams Lake First Nation and the CEO of Unity Cannabis and Sugar Cane Cannabis, says the new “hybrid” retail model is one born of both economic necessity, and as a response to a recent BC court ruling.
According to Dressler, the new store will initially carry a limited selection of edibles that have demand in the WLFN community and in other indigenous communities. He also decries the amount of plastics and other packaging required for edibles under federal regulations, saying that the products sold at the WLFN sovereign store seek to address the issue.
From an economic standpoint, Dressler says both Sugar Cane and Unity Cannabis are facing challenges, with slim profit margins and increasing price compression, making it difficult to compete. WLFN has engaged the province on the issue multiple times to address the issue, and to push the government on the Cannabis-related commitments in its DRIPA Action Plan, but Dressler says the response from the government has not been satisfactory.
Since the province has in the past said they are not seeking to actively enforce their own provincial retail rules on First Nations land, WLFN is utilizing this new “hybrid” retail space to exercise what they say is their sovereign right to sell cannabis on their own land without provincial oversight.
“WLFN is in a position where it might be one of those that is forced to exit [the industry],” Dressler explains. “That is not acceptable. We’ve invited the province to look at fair and reasonable solutions. The province has refused to collaborate in any meaningful way, despite the fact the province has an obligation under DRIPA to do so and has agreed that it must do so. We’ve advised them that this leaves us with no option but to contemplate what steps we can take to utilize our jurisdiction to make our operation more viable. The province has nodded their head and acknowledged that that seems to be a reasonable response. That’s the inference we’ve drawn. So, we are in fact proceeding to do so.”
He says WLFN is taking steps to ensure they are still adhering to the rules of their Section 119 agreement, and the Unity Cannabis and Sugar Cane Cannabis operations are entirely unaffected by the establishment of the new store.
“What we are contemplating at this point is a hybrid system that would continue to respect the commitments we have in our 119 agreement, but it would also allow Williams Lake First Nation to utilize its jurisdiction to develop a cannabis-related enterprise that might generate revenue sufficient to sustain our global cannabis operation.”
The store bills itself as an “edibles store” and promises the “cheapest edibles in town.” Dressler says all products sold within the store will come with COAs.
Grow Up’s second Victoria trade show received some media coverage, with local mediaspeaking to Grow Up’s Randy Rowe, Marshall Anselmo of Nature’s Gate (a micro on the island), Terra Maibach of cannabis store Violet Wild Cannabis Co, and Paul Dhillon from Adastra. (Oh, and StratCann won Grow Up’s award for Online Cannabis News Source. Thanks to everyone who voted for us!)
The Municipality of Powassan, ON, has finally decided to let cannabis stores operate in its community of 3,200 people. The town council recently voted 4-1 to allow the cannabis outlets into town, a reversal of the 2018 vote when council members voted 3-2 to block their entry.
The OCS launched its educational campaign, Trailblazers, featuring licensed producers and authorized retailers. Trailblazers runs in two flights, beginning in October and again in February 2024, and includes placements across broadcast, social, and digital out-of-home channels.
The first featured Trailblazers are Andrew Ross – Ministry of Sativa, Raju Saini – Piffingtons, Niko Sosiak – Cannara BioTech, and Chris and Marty Johnston – Lune Rise Farms.
‘The locals blame the feds, the feds blame the locals. It’s just kickball, said neighbour Bill Wallace regarding a dispute over the warm smell of colitas at Carmel Cannabis in Ontario.
Canopy completed the previously announced sale of its Hershey Drive facility in Smiths Falls, Ontario, to Hershey Canada Inc., receiving about $53 million in cash.
Politico and other media outlets covered a recent study showing an increase in ER visits related in Canada to cannabis use, which concludes that the launch of products like concentrates and edibles were the main factor. The study correlates an increase in these visits beginning in January 2020, which became legal in October 2019. However, the researchers seem unaware that these products were not widespread until much later.
Tilray’sQ1 2024 financial results showed adjusted gross profits from cannabis sales were over USD$24 million in the three months ending August 31, 2023, down from just under $30 million in the same quarter in 2022.
Tilray says it is #1 in cannabis flower, oils, concentrates and THC Beverages, #2 in pre-rolls, #4 in vape, and in the top 10 in all other categories in Canada.
International
MJBiz reports that Australia’smedical cannabis program has been growing significantly in the last six months. Medical cannabis approvals through an Authorised Prescriber (AP) reached approximately 304,000 in the first half of 2023, up more than 120% over the same period last year when there were 137,000 AP approvals. This is due in part to the increasing number of authorized prescribers.
The number of regulations that impose administrative burdens on cannabis businesses increased in 2023 after remaining steady for several years.
As part of an annual report from Health Canada, the Administrative Burden Baseline, the government tracks all federal regulations that are administered by Health Canada and imposes an administrative burden on all types of businesses.
The total amount of these regulations (21,034) increased by about 2 percent from 2022, while the total affecting cannabis increased by about 1.5 percent. Cannabis is included in about 12 percent of all these types of Health Canada regulations.
From 2020to2022, there were 3,406 of these regulations identified as relating to cannabis, increasing to 3,460 in 2023. The majority of these (2,577) were within the Cannabis Tracking System Order, which actually decreased slightly from 2022 (2,580).
The total amount of these types of federal regulations jumped from 16,495 in 2019 to 20,058 in 2020, largely due to the legalization and regulation of new classes of cannabis products like extracts, edibles, and topicals, as well as the addition of new reporting requirements as part of the Cannabis Tracking System Order.
An overall increase in regulations was attributed to new cannabis regulations in 2019.
On September 22, 2023, Harris & Partners Advisory was appointed as the receiver (the “Receiver”) of all the assets, undertaking and properties of Wabi Sabi Brands Ltd. (“Wabi Sabi”) pursuant to an appointment of the secured creditors.
Wabi Sabi operated a premier, artisanal, chocolate cannabis edibles production facility in Calgary, AB. The facility boasts several pieces of manufacturing equipment of recent age and in very good condition, including a complete processing line, x-ray machine, lab and packaging and labelling equipment.
On October 3, 2023, 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/wabisabi.
Interested parties who wish to pursue a potential acquisition are required to execute a Confidentiality Agreement to receive access to the data room.
Per the Sales Process, bids must be submitted by no later than 12:00 pm (Calgary Time) on October 27, 2023.
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