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The Week in Weed – May 6, 2023

Written by Kieran Delamont on . Posted in British Columbia, Business, Cannabis News, Government, Manitoba, New Brunswick, Ontario, Provinces, Quebec, Saskatchewan.

This week on Stratcann we covered some questions from the Manitoba NDP’s finance critic, who wonders where all the legalization-related revenues went (as the government seems unable to tell him), shared our exclusive inside tour of the OCS DC, reported on Health Canada’s extension of some COVID-19 measures, as well as challenges producers are having selling into Alberta, news that the Victoria Cannabis Buyers’ Club will be suing the government, as is an Indigenous retail store owner, and BC’s search for a good weed photographer. Elsewhere in the Canadian cannabis industry world of weed…  

Cannabis bought in Madawaska First Nation will soon be subject to its own sovereign tax scheme, the band government announced this week. The move comes after the Blaine Higgs government pulled out of tax-sharing agreements with Wolastoqey First Nations groups in the province in 2021; in response, the band is levying its own taxes on tobacco and cannabis, which they say will be about half of what you’d pay off-reserve. Madawaska First Nation is currently home to at least a few retail stores, although one shared with StratCann on Facebook that they do not charge a sales tax. 

The first handful of applications for retail stores in Mississauga is starting to roll in, and as Global News reports, the first horse out of the gate is Pop’s Cannabis, who have applications in for two stores and are preparing a third. “I think we’re better now than where we were (in 2018),” said Pop’s president Ryan Dymond. We know how to sort of resonate with the communities; we understand the stigmas.”

Just down the highway, Brampton city councillors want a bit more control over retail in the city, reports the Brampton Guardian. Coun. Michael Palleschi said that the council’s decision to allow stores back in 2018 was made under the (slightly bizarre) assumption that cannabis legalization “wasn’t going to be a huge thing.” It’s the usual issues, of course: too many stores, too close to schools, et cetera, et cetera. 

Entourage Health, formerly WeedMD, reported a $123-million loss for 2022, and expressed concern that they may eventually run out of cash to burn, reports MJBiz Daily. Likely of significant concern are their revenue numbers: the company only sold $54.5 million in that year, substantially lower than its costs. 

An employee of a large illegal grow-op was handed a suspended sentence of two years probation and 240 hours of community service by a St. Catharines, ON judge, the St. Catharines Standard reports. The 54-year-old woman was charged after police seized around $16 million worth of cannabis and cash; her lawyer contends that she was a mere “gardener” in the operation, not one of the masterminds. 

A West Vancouver man was also given two years probation after police caught him acting as a delivery driver for Stöni, a black-market cannabis delivery operation operating in Vancouver and Winnipeg. He was represented by cannabis lawyer Jack Lloyd, who described him as a small player in a larger operation. “My guy is in a broken-down Toyota delivering stuff when he gets told to deliver it,” he said. The man has since started working as a delivery driver for a legal retailer. 

The BC government is seeking to have a Denman Island home they say was connected to illicit cannabis products to be forfeited as proceeds of crime.

Some attendees of the Vancouver 420 rally this year say they feel misled by event organizers, with many wanting their money back. 

In Quebec, La Presse reported on police frustration with illicit operators utilizing medical cannabis authorizations to sell into the black market. Six suspects are the subject of targeted warrants: police alleged that they used at least 22 certificates of authorization to produce cannabis for medical and personal purposes issued by Health Canada and used them to cultivate cannabis on a large scale for the purpose of exporting it to the United States. 

CBC Manitoba published a story this week including comments from several independent retailers in the Prairie province who say they are struggling under the weight of high fees and long delivery times. The article included comments from Mistik Cannabis Co. co-owner Melanie Bekevich, Jupiter Cannabis owner Tom Doran, and John Arbuthnot, CEO of Delta9, all of whom have areas they’d like to see provincial action on. 

The Mantioba NDP say they want to look at allowing public cannabis consumption in the province. The PC government says they would impose such a measure. “It might be normalized, but it’s still not legal in public places. So that will still be enforced. That’s not part of this,” said Saskatchewan Liquor and Gaming Minister Lori Carr. 

Retailers in Ontario continue to petition the province to ease up on their window display restrictions, with comments from Hempire House co-owner Sharlene Locha, Shane Clarke, owner of Smokey Daze, and a spokesperson for the AGCO.

Saskatchewan’s Weed Pool announced they have set up shop now in BC. The company will seek to be a third-party warehouse and distributor for cannabis growers and retailers in BC. 

A new study out of McGill University has provided more evidence of medical cannabis’ efficacy in treating cancer pain. Research led by Dr. Antonio Vigano found that patients using cannabis as part of their treatment tended to take fewer opioids and were better able to manage their pain. 

And finally: it’s not quite deep-fried butter at the State Fair, but it might be close. A Los Angeles restaurant, known for its experimentation with cannabis in the past, is now serving deep-fried cannabis leaves. Delish interviewed chef Michael Magliano about that dish, and others in the rapidly developing culinary cannabis world down stateside—an industry many would like to see up north, too. Happy snacking!

BC needs someone to take pictures of weed

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

The BC government’s Liquor Distribution Branch (LDB) is seeking bids from experienced and qualified photographers to take photos of cannabis products. 

In a recent tender, the LDB said they are looking for applicants who can create images on-site at licensed producer’s facilities, retail stores, or in-studio, with products sent to them by the LDB.

The agency will be accepting bids until May 24, 2023. The final date for the receipt of questions from proponents is May 8, 2023. Questions received after May 8, 2023, may not be answered.

The images will be used by the LDB’s cannabis marketing department for BC Cannabis Stores, BC Wholesale and the LDB’s websites and newsletters, in-store marketing, including signage, digital displays, brochures and postcards, social media platforms, and other marketing collateral as needed for cannabis operations, such as brochures, location shots, portrait shots, and magazine publications.

Photographers would need to be familiar with all applicable federal and provincial cannabis marketing rules and restrictions and will need to supply their own equipment. An LDB representative may also attend site visits at production facilities or BC Cannabis stores. 

The LDB also notes that it may ship products to the contractor that can be bulky and costly to ship. The contractor will need a safe and secure location to receive these shipments and the ability to return them to the LDB in a rapid and safe manner. 

The Contractor must provide the LDB with finished images within three days of receipt of any product, including completing any necessary proofing and editing, unless otherwise directed by the LDB. The LDB will own the property rights, including intellectual property rights, of all materials produced by the contractor for the LDB.

Application information can be found here.

Several other RFPs for other public cannabis agencies are available at the moment. 

The Ontario Cannabis Store (OCS) is seeking a supplier(s) to help the provincial agency deliver approved promotional items to the general public, stakeholders, and employees. The closing date is May 18 for bids. 

The Insurance Corporation of British Columbia (ICBC) recently shared its intention to directly award an extension of contract to Precision Medical Monitoring Limited to provide medical review and advice regarding cannabis claims for one additional year. 

The Société québécoise du Cannabis (SQDC) is seeking bids for the supply of an “integrated human resources and payroll management solution in cloud computing mode, professional services for the integration of the proposed Solution as well as outsourcing of payroll.”

The LDB also recently closed an RFP for providing Digital Radio for LDB Liquor and Cannabis Stores.

Cannabis NB is expected to begin releasing information on private retail store locations in New Brunswick, announced through a public application process in 2022.

Inside the world’s largest legal cannabis distribution centre

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

The cannabis you buy online or at a private retail store in Ontario has reached the end of a long journey that saw it pass through numerous hands, trucks, pallets, and conveyor belts before making its way into your hands. 

This entire process is overseen by an enormous team working around the clock to keep the world’s largest cannabis warehouse moving efficiently and effectively.

With 220,000 square feet of space, the discreetly-located warehouse processes the equivalent of approximately 1,100 kg of dried cannabis every day from more than 250 of Canada’s federally licensed cannabis producers. A team of about 400 employees operates the facility 24 hours a day, connecting almost 1,700 privately owned retail stores across Ontario with more than 3,000 products. 

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

Weekly, the OCS also ships roughly the same amount of product; 1,100 kilograms of cannabis is transported to Ontario’s retailers every single day. 

OCS President and CEO David Lobo says the provincial agency is confident in its ability to adapt and evolve to continue enabling the growth of Ontario’s cannabis marketplace. Although it still has challenges it is working through, Lobo points to improvements in the product call process, a revised pricing structure, changes to insurance requirements, and transforming the retailer ordering process to ensure fewer short shipments. 

“Our strategy is laser-focused on building best-in-class wholesale capabilities and providing a seamless, “user-friendly” experience for both LPs and retailers. We see ourselves as the conduit between high-quality, tested and traceable cannabis products from Canadian LPs and the dynamic and varied retail experiences being offered across the province,” he explains.

“We know that more than 96 percent of all legal cannabis purchased in Ontario is purchased through private retail stores. As Ontario’s sole legal cannabis wholesaler, we are committed to being the best business partner we can be for retailers and producers by listening to feedback, reducing friction in our processes and making investments in the industry.”

The entire process—from receiving a shipment from a producer, storing it in the sprawling warehouse, and sending it out to retailers and directly to consumers—is highly complex and choreographed. The distribution centre currently handles more than 3,000 SKUs at any given time, with about 800 new SKUs per quarter, an increase from about 200 per quarter in the early days of its operation. 

The path all packages take when entering the highly-secured facility is similar to other distribution centres, with pallets being carefully reviewed and checked in. Packages then make their way through a complex, partially-automated system that follows them along conveyor belts and in elevators to see them stored before being packaged for shipment to retailers and, in some cases, consumers who purchased through the OCS’s online retail platform. 

Domain Logistics manages the distribution centre for the OCS. In the early days at the first warehouse in Oakville, they processed all orders manually. They have since moved to automate much of the process, increasing efficiency and ensuring products make it to retail clients and direct-to-consumer through their online platform.

Products are stored and processed on racks that are several levels high. They are manually and digitally checked for each order before they’re placed on another pallet and truck to make their way across the province.  

Each package gets checked, double-checked, and triple-checked before distribution to retailers and consumers through various delivery services. All for you to roll up, light up, and smoke! (or however you responsibly choose to consume).

Flow-Through

In addition to its standard wholesale and consumer shipments, the OCS distribution centre also manages a growing portfolio of Flow-Through products—around 350 as of publication—which allows retailers to select specific products not already stored in the warehouse. 

Flow-Through gives retailers a chance to stock unique and seasonal innovations that can help them distinguish themselves from their competitors. 

“For licensed producers, Flow-Though is an opportunity to introduce greater innovation, including small-batch, niche, short life cycle and seasonal products,” says Lobo. By enabling LPs to determine how much inventory to make available for retailers, Flow-Through is helping producers drive inventory allocation and availability, while gaining a better understanding of market demand for a product.”

Lobo also says once the Flow-Through program is operating at 100% capacity, the agency will begin looking at other changes to further streamline distribution and offer pathways for more unique products. 

So the next time you find yourself enjoying cannabis in Ontario, pause between hits to contemplate the work it takes to help it find its way to you!

BC announces more changes for cannabis retailers

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

The BC government will be looking to make some changes to its cannabis regulations, especially around the rules for cannabis retailers.

The provincial government says they will be looking into lifting the cap on how many stores one company can own, currently limited to eight locations, and making changes to their tied house policies. 

The province has also committed to reviewing the direct delivery program that allows producers to send directly to retailers and the 15% service fee that applies to products sold through the program. 

In an announcement at a cannabis industry event in Kelowna, BC on April 22, 2023, Solicitor General Minister Farnworth told the assembled group of stakeholders that the province was looking at implementing these changes in the coming weeks and months in collaboration with industry. 

The eight-store retailer cap, explained Farnworth, was originally put in place to prevent large cannabis chain stores from embedding themselves in the province, but as the industry is evolving, he noted this is not as much of a concern. Other provinces, like Ontario and Alberta, have seen a handful of chains taking up a significant portion of their retail locations. 

The tied house rule is a similar rule that was put in place to prevent licensed producers from owning stores. Several other provinces have allowed this type of relationship, with a handful of cannabis producers running retail stores under the same name or through an affiliated company. 

“These controls were put in place to help prevent big companies from taking over BC’s legal market in the early years of legalization. It’s important to periodically evaluate those decisions as the market continues to mature.” 

The province will be seeking feedback from the industry “in the very near future.” 

Omar Khan, Chief Communications and Public Affairs Officer at High Tide Inc., which operates seven retail locations in BC under the Canna Cabana banner, say they are excited by the proposed changes. 

“We welcome Minister Farnworth’s commitment to modernize BC’s retail cannabis framework by looking at allowing street visibility into legal cannabis stores as well as phased expansion of the current store cap, and committing to a review of the current 15% wholesale markup and other elements of the direct delivery program. 

“All these measures will help legal cannabis retailers take sales away from an entrenched illicit market.  Experience shows that when customer-friendly legal cannabis stores are available in convenient locations with competitive prices, most cannabis consumers will leave the illicit market.”

Provincial representatives also shared that they have no current plans to establish more BC Cannabis stores beyond the 39th store in Delta’s Scottsdale Mall, scheduled to open soon. 

The windows remained covered at Evergreen Cannabis in Vancouver

The Minister, who is the province’s lead on the cannabis file, also mentioned recent changes by the BC LDB to reduce several regulatory burdens, such as eliminating the requirement for producers to maintain mandatory recall insurance, temporarily amending supplier payment terms from 30 to 14 days for a period of six months, and permanently reducing the reporting frequency for licensed producers participating in the direct delivery program from weekly to bi-weekly.

The agency has also committed to reviewing the province’s direct delivery program. The industry has been frustrated by the inclusion of a 15% fee the province collects from producers using the program, despite the fact that the product never passes through the LDB warehouse, instead moving directly from producer to retailer. 

Farnworth also told the audience that the province is planning on taking action on the issue of the federal regulation that prevents cannabis products or branding inside a cannabis store from being visible from the outside. 

The province previously removed its rule requiring retailers to use blackout screens in 2020. More recently, Alberta’s cannabis regulator went further, removing any mention of any rules that prevent cannabis from being visible from outside the store, a move BC appears to be looking into as well. 

This would require a legislative change that Farnworth says he will take to cabinet for discussion. 

“From a public safety issue, it makes total sense,” Farnworth said.

“The old rule that you could see in but couldn’t see any product was impossible for a store like ours. It was simply out of the question because of the size of our store. There’s no way we could take the coverings down. So changing this would mean we can just rip it all down, which would be great.” 

Mike Babins, Evergreen Cannabis

Mike Babins, the co-owner of Evergreen Cannabis, the first licensed non-medical cannabis retailer in Vancouver, says this rule change is needed because they have had to keep their window coverings up despite the previous provincial rule change. 

“This is good for so many reasons,” he tells StratCann. “The old rule that you could see in but couldn’t see any product was impossible for a store like ours. It was simply out of the question because of the size of our store. There’s no way we could take the coverings down. So changing this would mean we can just rip it all down, which would be great.” 

Babins also noted that removing, or at least lowering, the 15 percent direct delivery fee would likely allow him to charge much less for those kinds of products, which would increase sales for those small producers working with the program. He says about 80 percent of the cannabis flower he carries is purchased directly from retailers through the program. 

“That 15 percent adds a lot of cost, which makes it harder to compete with some of the bigger companies as well as the black market.”

In his speech, Farnworth noted that there’s much interest in cannabis hospitality and tourism and that the province is moving forward on these issues as well. In the short term, he said the province is looking at changing some of the prohibitions around cannabis consumption spaces, such as how consumers can purchase cannabis at a farmgate store and consume it on-site. 

In the long term, he says the province is also looking at authorizing special cannabis events that could encourage more tourism opportunities for the industry. 

BC launched its farmgate program in late 2022 but has only seen two companies apply to take part so far. The BC government in the past has emphasized that they see cannabis farmgate tying into the farmgate model, similar to how wineries currently operate. 

The province also announced more funding for First Nations looking to enter the cannabis space and continuing conversations around jurisdiction, reconciliation, and self-determination for Indigenous peoples and communities in BC.   

Farnworth also told the crowd he and the provincial government are pushing for changes to federal regulations, such as: increasing the 10mg THC cap on edibles, the 30-gram public possession limit, federal consumer packaging requirements, and the federal excise tax, especially for small cannabis businesses. The Minister said he is calling for an expedited review of the federal tax program. 

During a brief Q&A period after his speech, one audience member asked Farnworth if the province would be committed to no longer collecting its 75 percent share of the federal excise tax, or potentially giving BC producers a rebate for the excise tax they have paid.

The Minister said he would discuss the issue with the provincial finance minister. 

New Brunswick’s first privately-owned cannabis stores could open this summer

Written by Staff on . Posted in Business, Cannabis News, Government, New Brunswick, Provinces, Retail.

Some of New Brunswick’s smaller communities could see privately-owned cannabis stores opening as early as June, with additional stores opening throughout the summer.

The provincial government, which first announced its plans for around a dozen new stores in 2021, began the vetting process for ten new private cannabis stores following a tender process that ended in October 2022.

The goal was to bring cannabis to smaller, under-served communities. Tenders were accepted for Blackville, Bouctouche, Caraquet, Chipman, Dalhousie, Grand Bay, Hampton, Saint Andrews, Saint-Quentin, and Salisbury.

The goal of having private retail locations is to combat the illicit market by providing better access to safe, regulated cannabis products in underserved areas of the province.

Lori Sickles, CEO of Cannabis NB

A representative for Cannabis NB, the agency that oversees cannabis distribution and sales in the province, told StratCann that barring any unexpected delays, the agency hopes to see the first private stores opening in June, with additional locations opening over the summer. 

The timeline still depends on several factors, such as the retailers’ ability to get their stores ready to open, including all applicable licensing, and a final review of each site to ensure they are fully compliant with provincial regulations.

“We are looking forward to expanding our offering to include private retail in New Brunswick,” Lori Stickles, CEO of Cannabis NB, said in 2022. “The goal of having private retail locations is to combat the illicit market by providing better access to safe, regulated cannabis products in underserved areas of the province.”

Cannabis NB is currently the only legal retailer in the province, with 25 locations. Most of these locations are in or near cities like Moncton, Saint John, and Fredericton. All ten new private retail locations are in towns with fewer than 10,000 residents, most with just a few thousand or less.

The move to allow new private stores came after the provincial government initially tried to do away entirely with the public retail system. After long delays, and facing public pressure, that plan was scrapped in March 2021.

The reasoning given by the new PC government was that Cannabis NB was losing money. However, since then, the crown corporation has shown increasing profits as sales increased, and has recouped initial startup costs. The public retail and distribution system had been initially put in place by the previous Liberal government. 

In the agency’s most recent quarterly report in January, total sales were $21.6 million, an increase of 5 percent compared to the same period last year. Net income for the quarter was $4.8 million, 21.5 percent above the previous year’s third-quarter net income of $3.9 million.

New Brunswick has taken some relatively unique approaches to cannabis retail since opening its public-only model in 2018. In addition to being one of only two provinces with a mixed public and private retail mode (BC is the other), it is one of only three provinces (along with Ontario and BC) to have a formal farmgate retail licensing system in place. There are currently five cannabis producers in New Brunswick now licenced to allow on-site sales direct to consumers, including the recent addition of a cannabis nursery. Just in time to start your garden!

It has also operated several pop-up Cannabis NB locations, and the agency is currently holding its third annual Cannabis NB Cup, featuring products from 13 growers across Canada.

“We are very excited to launch this year’s Cannabis NB Cup competition,” said Lara Wood, Cannabis NB’s VP of  Operations. “It provides a great opportunity for our partners to show off their best and connect directly with their audience, and is one of the only programs nationally to offer producers real-time, quantitative feedback from consumers who are trying these products.”  

Stay tuned to StratCann for more information on Cannabis NB’s first privately owned cannabis stores and other New Brunswick cannabis news as it emerges.

Organigram asks court to overrule Health Canada on edibles extract restrictions

Written by David Brown on . Posted in Business, Cannabis News, Government, New Brunswick, Producers, Provinces.

New Brunswick cannabis producer Organigram has filed for a judicial review of Health Canada’s recent decision to require an end to sales of “edible extracts” that exceed the federal 10mg THC packaging limit. 

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

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

Note: A representative for Organigram insists that Organigram does not compete in the so-called “edible extracts” category and only produce “ingestible extracts”.

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

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

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

Organigram, which has been selling their Edison Jolts products as cannabis-infused lozenges sold in packaging exceeding 10mg THC, said in March that it has paused production. It maintained that the products were compliant with federal regulations.

“The company remains of the view that the patent-pending products are properly classified as cannabis extracts and compliant with the cannabis regulations, and is assessing its options with its legal advisors. At present, the company has paused production of the products in the current packaging format, pending resolution of the matter.”

Each Lozenge contains 10 milligrams of THC, for a total of 100 mg THC per container of Jolts. The Jolts are available in three flavours – mint, electric lemon, and arctic cherry.

Organigram’s argument to the court contends that the Jolts Lozenges do not contain any sugars, sweetening agents, or sweeteners, although they do utilize an ingredient called Oligofructose, a “non-digestible dietary fibre” Organigram maintains is only used as a carrier and bulking agent.

The filing also notes that the products were first submitted through Health Canada’s Notice of New Cannabis Product (NNCRP) process for each flavour of Jolts at different times in 2021, and that they had submitted their first NNCP for cannabis extract lozenge products as early as August 21, 2020.

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

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

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

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

In an email to StratCann on Monday, March 6, a representative for the federal health authority confirmed they are sending out notices to companies making these “non-compliant” products.

“Federal licence holders that have non-compliant edible cannabis products have or will receive a Non-Compliance Determination Letter. This letter indicates the actions and the associated timelines that licence holders are expected to take to come back to compliance. Provincial and territorial distributors have been and will continue to be made aware in order to adjust their operations accordingly.”

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

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

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

One national private-sector advocate for compliance and quality in the Canadian Cannabis sector, the C-45 Quality Association, says they are drafting a letter to Health Canada discussing their concerns with this recent decision.

Updated: Health Canada issues recalls for two unauthorized cannabis products sold without market authorization (DIN) in Canada

Written by David Brown on . Posted in Business, Cannabis News, Ontario, Products, Provinces.

The Ontario Cannabis Store (OCS) has posted a recall for a cannabis product they say is an unapproved prescription drug.

In a notice posted online on April 18, the OCS says that the product “Goodnight Dream Caps” from Taima Extracts Inc. is being recalled due to a “risk calculation associated with this product” as a Type II recall.

A Type II (2) recall refers to a product that can cause temporary adverse health consequences or where the probability of serious adverse health consequences is remote.

There are generally three types of product recall designations in Canada, Type (or class) I, II, and III, with Type I representing the highest risk and Type III representing the lowest risk to public health. 

Most recalls for cannabis products in Canada have been Type III recalls, generally related to inaccurate labelling. 

This notice affects all lots and packaging dates of the product that was sold in Ontario. 

On April 20, Health Canada also issued their own recall notice for the product, stating it was an unauthorized product sold without market authorization (DIN) in Canada.

Although the product has now been removed, the soft gels were previously listed on the OCS website as each containing 20 mg of CBD, zero THC, as well as 10 mg of melatonin, and chamomile oil. 

The previous product listing on the OCS noted the producer was Voyage Cannabis, while the recall notice attributes the product to Taima. Voyage Cannabis was acquired by Heritage cannabis in 2022. The recall notice is not associated with Heritage Cannabis or Voyage Cannabis.

The OCS notice does not make it clear what caused the product to be considered an unapproved prescription drug.

Health Canada regulates melatonin under the Natural Health Products Regulations. It’s commonly advertised as an effective sleep aid; however, some medical experts warn that it can cause side effects such as dizziness, nausea, headaches, and muscle aches if used in high doses.

Health Canada recently issued a product recall for a CBD product on April 4 that contained 20mg of CBD and 3mg of Melatonin, calling it an “unauthorized product.” The notice said it was a product sold without market authorization (DIN) in Canada. A DIN is a Drug Identification Number.

Taima and the OCS were not immediately available for comment.

Any new cannabis product that enters the market must first provide Health Canada with a Notice of New Cannabis Product (NNCP) at least 60 calendar days before making the new cannabis product available for sale.

This article will be updated as new information becomes available. 

This article has been updated to note Health Canada issued a recall notice for the Goodnight Dream Caps in April 20.

Mississauga to allow cannabis stores

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

Mississauga City Council voted today to approve a motion to lift its prohibition on cannabis retail stores and permit them to be located in the second-largest city in Ontario.

The motion was approved in an eight-to-four vote. A motion to defer the amendment was rejected in an eighty-to-four vote.

Some councillors who sought to defer the motion, such as Councillor Chris Fonseca, cited concerns from residents, especially around issues of clustering and a lack of control of where stores would be located. Councillor Fonseca, as well as councillors John Kovac, Stephen Dasko, and Carolyn Parrish, were the four votes against the motion.

However, other councillors disagreed, noting that cities and towns in Ontario do have a chance to provide input on any cannabis retail licence applications within their boundaries. 

With over 800,000 residents Mississauga is the second-largest city in the Greater Toronto Area and the third-largest in Ontario. It was one of more than 60 municipalities in Ontario that initially opted out of allowing cannabis stores within city limits. 

Ontario allows municipalities to opt out of allowing cannabis stores, but if they do opt in at any point they can not later reverse the decision. If passed by Council on April 19, the resolution would need to be made available to the Alcohol and Gaming Commission of Ontario (AGCO) within three business days of its enactment.

A city staff report from March notes that the ban means Mississauga residents “continue to be disproportionately served by the illegal cannabis market compared to municipalities that have opted in.”

It also highlights that Mississauga is missing out on much of the revenue from the provincial government, which has shared around $44 million of the provincial share of federal excise taxes with cities that allowed cannabis stores. That money is now distributed and will not be available to Mississauga or any other city that opts in in the future.

David Lobo, the President & CEO of the Ontario Cannabis Store (OCS), says the vote represents significant progress for the entire province. 

“The OCS supports this decision, which will provide residents of Ontario’s third-largest city with legal access to tested, traceable, safer cannabis products while displacing the illegal market.”  

“This marks a major step forward as the cannabis industry continues to evolve within the legal framework.”

Omar Khan, Chief Communications and Public Affairs Officer at High Tide, which operates numerous cannabis stores across Canada, said he is excited by the change of heart by several councillors and the Mayor who had originally voted against allowing cannabis stores in the city in 2018.

“Today’s vote is a victory for everyone who wants to drive out the sale of illegal, untested and non-age-gated cannabis within Mississauga and paves the way for new jobs and investment to come into the city,” said Khan. “Mayor Crombie and Ward 7 Councilor Deepika Damerla deserve special credit for leading the charge to bring Mississauga into the provincial retail cannabis framework. Hopefully, Mississauga’s decision will serve as a beacon for other municipal holdouts in Ontario. As Mississauga’s experience shows, where legal and regulated cannabis sales are prohibited, unregulated, criminal elements will fill the void.”

Jennawae Cavion, the founder at Calyx + Trichomes in Kingston and the Executive Director at NORML Canada, notes that the move is good in general, but could be a difficult one for those operating stores just outside the boundaries of the city.

“Congratulations to Mississauga for finally realizing the harm they have done in their municipality over the last four years by opting out of cannabis sales. They not only allowed the unregulated market to flourish, they also created a false bubble in border cities where their residents would drive to. 

“There is going to be carnage in those border towns and crazy saturation beginning today as hundreds of retailers sign leases. If you thought Queen St was bad wait until you see Mississauga. The province should never have allowed municipalities to opt in or out. Great news for Mississauga residents, but it will be a huge battle for retailers as the gap is quickly filled over the next couple months.”

The City Clerk for Mississauga now has three days to provide the Registrar of the Alcohol and Gaming Commission of Ontario (AGCO) with written notice of the resolution.

Note: This article has been edited to add quotes from David Lobo, Omar Khan, and Jennawae Cavion.

Inflated THC levels undermine cannabis industry

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

A new study in the US argues that inflated THC levels on cannabis products undermine industry credibility.

Researchers tested 23 samples of cannabis from 10 Colorado stores, comparing those results against the label. They found that, on average, the products were 23 percent lower in THC than advertised. 

Although consumer choices continue to be driven by a desire for higher-THC products, the average observed THC levels were just under 15 percent from all samples tested. 

Inflation of THC levels isn’t new. Research in Canada and the US has highlighted the issue for years. In Canada, the industry has been calling for more oversight of labs and testing standards. 

Nearly two-thirds of the samples tested 15 percent lower than advertised, while three samples were half as low as claimed on the label.

Colorado’s testing standards require a producer to report THC levels as a range based on the highest and lowest percentages from the test batch. However, not all products were labelled in a range.

The samples used were one to two grams in size, looking at 12 different dried cannabis varieties. Researchers also included a handful of results from other studies.

Eighteen of those 23 samples showed THC levels below the labelled testing results. Only one of the products tested showed a higher THC level than the lowest from the range on the product label. 

Although THC can degrade over time, the paper contends that this was not a factor given the lack of excessive levels of CBN, a byproduct of THC degradation. 

To help address these issues, researchers in this study argue that regulators in Colorado need to do more to ensure that growers are using a representative sample rather than selecting the most potent flowers, as well as enforcing more strict product reporting rules.

Hubert Marceau, the director of development at Laboratoire PhytoChemia—an analytical testing lab in Quebec that tests cannabis products in the Canadian market—says the results once again highlight that most cannabis on the market does not have nearly as much THC as consumers might think.

“What is striking is that even with the samples that reported a range, most of the time the measured value is outside by a large margin,” says Marceau. “This should be the exception. Another interesting thing is that none of the samples cross the famed 20 percent threshold.”

“The fact the standard deviation of the observed values are about half as the reported ones, this means that all samples, regardless of the strain, would have a very similar THC content, even though it seems that there is more diversity on the market.”

Marceau says consumers should look at these results as a good example of why they should not be basing purchasing decisions solely on advertised THC levels.

BC announces cannabis policy changes aimed at helping industry

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

British Columbia’s cannabis distribution branch is announcing several new policy changes for the cannabis sector.

In a memo sent out to industry stakeholders, the BC Liquor Distribution Branch (LDB) says it will be implementing several policy changes aimed at supporting the cannabis industry. It will also be conducting a review of its direct delivery program, which was first launched in 2022.

The three new policy changes include:

  • Permanently eliminating the requirement for licensed producers to maintain mandatory recall insurance, which the LDB says will help cannabis companies become more financially viable. 
  • Temporarily amending supplier payment terms, from 30 to 14 days, for a period of six months. Beginning April 30, 2023, and extending until October 31, the LDB will temporarily change the payment terms for licensed producers using the provincial system for distribution from 30 days to 14 days. 
  • Permanently reducing the reporting frequency for licensed producers participating in the direct delivery program from weekly to bi-weekly. Beginning April 30, 2023, the LDB will reduce the required reporting frequency from weekly to every two weeks. 

The LDB also says they will be undertaking a review of the direct delivery program in partnership with the provincial Cannabis Secretariat.

The review of the program, which was first launched in August 2022, will be looking to see if the program is working to assist small cannabis producers in the province. The results of the review will be posted at a later date.

As a result of these changes, the LDB has also updated its supply agreement. A notice of amendment will be provided to all licensed producers via email in the coming days. The updated supplier agreement will also be published on the central delivery and direct delivery supplier websites.

Timothy Deighton, one of the owners of Sweetgrass Cannabis, a micro producer in the Kootenays, says he sees the changes as positive, noting the changes for recall insurance could save micros thousands or even tens of thousands of dollars a year when doing business in BC.

Although Sweetgrass doesn’t currently participate in the direct delivery program, Deighton also says he’s happy to see they are reviewing it, noting the 15 percent fee the LDB still charges producers to use the program has made it too costly for his company.  

“Those are great changes, and I’m really happy to hear about this. I’m also happy to see they are reviewing the direct delivery program, and I hope they can look at the 15 percent fee. It costs companies more to do direct delivery than just by sending to the BCLDB.”

Janeen Davis, VP of sales at Joint Venture Craft Cannabis Inc (JVCC), which helps bring numerous BC micro and other craft growers to market, including through the direct delivery program, says she expected the announcement and is happy to see the province responding to industry concerns. 

“This comes as no surprise to those of us who have engaged in good faith with the BCLDB and Cannabis Secretariat’s office. They care deeply about the success of our industry and have advocated for changes on our behalf.”

Kirk Tousaw, the CEO of Great Gardener Farms, a micro producer on Vancouver Island, says the removal of the requirement for recall insurance will allow them to take more ownership over their supply chain.

“For a small craft producer like Great Gardener Farms, dropping the recall insurance requirement means we can actually pursue getting a processing license so that we can package and sell our flower directly to retailers. We also welcome any efficiencies that can be built into the direct delivery system.”

Note: This article has been updated to add comments from Deighton, Davis and Tousaw.

Week in Weed – April 8 , 2023

Written by Kieran Delamont on . Posted in Business, Cannabis News.

This week at Stratcann we covered a new report outlining some of the ways that Canada’s medical cannabis system is struggling, ranging from access issues to high costs to a lack of insurance coverage—issues that are pushing many medical patients into the recreational system instead.

We also covered new stats looking at how different generations are positioned in the legal market, a piece from Stratcann’s Tim Wilson on the tepid start to 2023 for the industry, and new rules BC is implementing to target illicit cannabis growers. 

In other industry news, a new study from researchers at the University of Toronto looked at second-hand THC inhalation, finding that indoor second-hand cannabis smoke can lead to THC levels in the body that temporarily exceed the federal legal limits for driving. The researchers also claim to have developed more accurate modeling to help predict how THC molecules behave in an indoor setting. 

Police in London, ON have had to call in reinforcements to help them probe and dismantle an illegal cannabis extraction lab found in a “posh south London home” this week. Police are describing the facility as “complex,” and were still working on dismantling the operation days after arresting one man in connection with it. 

Two Canadian cannabis companies, SNDL and Nova, are amending a deal (announced in December) that would originally see SNDL transfer 26 retail stores to Nova Cannabis. The agreement will now include 31 stores being acquired by Nova, and also restructured certain financial aspects of the transaction. 

Nova Cannabis announced its upcoming launch of Firesale Cannabis, a discount retail chain concept. Discount retail brands are nothing new, but interestingly, the company is describing the concept as a way to deal with “excess inventories” within the cannabis supply chain, sold at “outrageous discounts”—something resembling a factory liquidation store, but for Canadian cannabis products. The first store opened in Calgary this week, and the company says they have plans to expand into Ontario as well.

After industry stakeholders gathered last week to discuss the possibility of introducing cannabis retail to Surrey, BC, mayor Brenda Locke told the CBC that city staff were drawing up a proposal for council’s consideration—an announcement applauded by a few retail stakeholders. Lock shared similar comments with StratCann last month. 

On the other side of the country, a similar push to get Mississauga, ON to finally allow cannabis stores is tantalizingly close to the finish line, with a vote on lifting the ban heading to council on April 12. 

British Columbia recently announced a carbon tax rebate program for greenhouse operators—but cannabis companies are being excluded from the rebate, the province says.  

Canadabis Capital, who own the Stigma Grow brand as well as the processor Full Spectrum Labs, the retail store INDICAtive Collection, and 95 percent of Goldstream Cannabis, reported a 373 percent growth in income for Q2 ‘23. Their net income reported was $1.3 million on $9.6 million in quarterly revenue. 

An article in The Hill Times looked into the issue of federal cannabis excise taxes, speaking with Mercari’s Lisa Campbell, as well as Mercari clients like BC’s Weathered Islands Craft Cannabis and Newfoundland’s Atlantic Cultivation.

In international news, the German push to legalize recreational cannabis already seems to be pivoting a bit. Reports came out this week that the country was considering a smaller, more localized pilot project for legal weed rather than the full national legalization scheme in order to avoid potential conflicts with European lawmakers. 

And finally, your favourite NBA players might finally be allowed to spark up. A report from The Athletic suggested that cannabis will be removed from the drug testing rules in the collective bargaining agreement. 

More lucratively for those players, it also appears set to allow them to strike endorsement deals with cannabis and sports betting companies. Pro sports leagues have been dragging their feet for some time on cannabis legalization, with many players and fans critical of the leagues’ conservative attitudes toward cannabis, so it’s good to finally see some progress being made.

2023’s tough year in cannabis

Written by Tim Wilson on . Posted in Business, Government, Insight.

So far, 2023 has been a difficult year for Canada’s regulated cannabis industry. It probably won’t get better anytime soon.

In February, Canopy Growth, one of Canada’s largest LPs, closed its flagship facility in Smiths Falls, ON, laying off 800 workers. Other large LPs, such as Hexo Corp, are experiencing a serious decline in revenues. Many micros are also struggling, even as micro licences continue to be the most popular.

Additionally, the industry was dealt a blow when the federal budget failed to implement significant tax reforms, a major issue that a number of key players in the industry have vocally addressed. 

“I am disappointed by the reality that this Liberal administration stood this industry up as a key election issue, and has since abandoned its small business participants politically, economically, and practically,” says Dan Sutton, founder and CEO at Tantalus Labs in Vancouver, and a vocal advocate of tax reform. 

I expect to see the number of LPs throwing in the towel in Canada increase throughout 2023 and into 2024, before levelling off and stabilizing.

David Hyde, CEO at Hyde Advisory & Investment Inc

“It is my view that over 80% of the small businesses engaged in cultivation and processing across the legal Canadian cannabis industry are at material risk of insolvency in 2023.”

Clearly, the current excise tax regimen and costs associated with rigorous oversight by the government are taking their toll. Unfortunately, these challenges are expected to remain in place for some time.

“We are definitely seeing the number of cannabis filings increase,” says Dina Milivojevic, editor-in-chief at Insolvency Insider, which reports on the more high-profile insolvencies in Canada. “In 2019, we reported five insolvencies in the cannabis sector; in 2022 that rose to 28. Most other sectors, with the exception of real estate, seem to be faring better than cannabis.”

Other industry observers confirm Milivojevic’s observations.

“Insolvency filings in the cannabis space have been pretty active since 2019 – although 2020 and 2022 certainly saw a higher number of filings, with 2022 trending slightly higher than 2020,” says Natasha MacParland, a partner with Davies Ward Phillips and Vineberg, LLP. (Data for 2021 was not available).

“Anecdotally, it seems that there are higher numbers of filings of licensed producers, which makes sense because they are larger and have higher debt loads.”

David Hyde, Chief Executive Officer at Hyde Advisory & Investment Inc., which provides advisory services to the global cannabis industry, expects to see a resurgent medicinal cannabis marketplace in Canada, with more LPs focusing on the inherent higher margins and simplified supply chain.

Hyde’s team runs a website that lists numerous companies looking to sell their facilities, from large LPs to micros.

He also notes, however, that medical cannabis LPs face unique challenges – as evidenced by Shoppers Drug Mart’s recent decision to exit the medical cannabis market.

Labs are not testing representative samples. You could never get away with that for Aspirin, so I don’t know why it’s okay in the cannabis industry.

Gord Nichol, North 40 Cannabis

Overall, the absence of equity and debt financing will continue to pose a significant challenge to Canadian LPs in 2023. 

“Some LPs will face the difficult choice of borrowing at near-predatory interest rates or entering into a restructuring,” says Hyde.  “I do expect to see some minor relief for LPs in the form of intervention by the Federal and Provincial Governments, especially later in 2023.” 

This could include some combination of excise tax relief, lifting of certain regulatory burdens or fees, and the right-sizing of provincial cannabis distributor mark-ups. However, these measures may be too late for many companies.

“I expect to see the number of LPs throwing in the towel in Canada increase throughout 2023 and into 2024, before levelling off and stabilizing,” says Hyde. “Many micros will struggle to compete as business-to-business pricing will remain relatively flat.”

On the positive side, Hyde says that micros will continue to benefit from banding together and operating under a unified umbrella for optimal sales and distribution. 

However, for the next year, the result will likely be more market consolidation among LPs, micros, brands, and retail. Who will fare best, and who will experience the most pain, is uncertain.

As of the end of 2022, there were 113 cannabis production licences revoked by the licence holder, three revoked by Health Canada, and 13 expired, for a total of 129 inactivated licences since the beginning of legalization in late 2018. StratCann notes another 23 licences have been revoked at the request of the licence holder, and four expired from January 1 to March 31, 2023. 

“Right now, it’s looking pretty grim, to be honest,” says Gord Nichol, president and co-owner of  North 40 Cannabis in Nipawin, Saskatchewan, which Nichol says was the first micro to be licensed in Canada back in 2019. “The price of the product keeps going down, and as a small producer, our costs are high. Before, it didn’t matter, but now with inflated THC levels, we risk getting lost in the shuffle.”

The lack of transparency in THC testing creates ongoing challenges across the supply chain. According to one lab’s results, most cannabis is in the 18-24% range, yet the market demands percentages above 30%. Though Health Canada has taken to sending warning letters to producers claiming non-infused THC levels in dried flower of 35% and above, the problem will likely continue to distort the market throughout 2023.

“It is blatant, and making a mockery of the system,” says Nichol. “Labs are not testing representative samples. You could never get away with that for Aspirin, so I don’t know why it’s okay in the cannabis industry.”

As producers struggle, retail is also expected to have a rough go of it in 2023.

“I have noticed that we have seen more producers than retail stores go under,” says Milivojevic from Insolvency Insider. “That is a little surprising – I would expect to see more retail filings in the next few years.” 

Retail is saturated in some Canadian markets, with gross margins challenging. Ontario has promised some relief to producers and retailers with its promise to move to a fixed markup pricing model, but overall, margins remain tight. 

With the possible exception of medical cannabis, this is the reality across the cannabis supply chain.

“The gross margins are very challenging in most of the categories in our sector,” says George Smitherman, president and CEO of the Cannabis Council of Canada (C3), representing Canada’s licensed producers and processors. “There are a lot of licence holders out there – we know that – but low-cost producers, and those that hit all the marks, and sell every gram, deserve to be successful.” 

Smitherman remains optimistic about the industry’s overall prospects. 

“Things are challenging, but the industry will continue to grow in Canada,” he says. “Product innovation still provides an opportunity for us to bring in billions of dollars of market share from the illicit market.”

For many individual companies like North 40 Cannabis, however, the tables appear to be tilted against them, and the road ahead remains uncertain.

“If I could get out without losing my house, I would,” says Nichol from North 40 Cannabis. “This approach is destroying it for the little honest guys.”

The Week in Weed – April 1, 2023

Written by Kieran Delamont on . Posted in Business, Cannabis News.

It was budget week and, as we covered, many in the cannabis industry were a bit disappointed (though perhaps not all that surprised) at the lack of tax reform contained in the federal government’s Budget 2023. 

Also on Stratcann was news of Shoppers Drug Mart’s announcement that they will be exiting the medical cannabis market in May and transferring their platform to pharma company Avicanna. We reported on a Health Canada recall of two Pure Sun Farms products in Ontario, and also shared a profile on Herbal Dispatch and their transition from the legacy market to the legal market. 

Here’s what else was going on in the cannabis industry news this week (no foolin’!):

MJBizDaily reported on two retailers’ press releases reporting losses this week. Nova Cannabis reported an $11.2 million loss (an improvement over last year’s $20.6 million loss) while Fire & Flower reported a steep $89 million loss, calling 2022 a “turnaround year.” 

Delta 9 also shared their Year-end Financials for 2022 with retail revenues increasing 26 percent, wholesale revenues decreasing 35 percent, and business-to-business revenues decreasing 65 percent. 

Auxley also shared its financial results for the three and twelve months that ended December 31, 2022. Total net revenues increased 13 percent, while fourth-quarter total net revenues were down nearly $5 million from the same quarter in 2021. 

MediPharm Labs released its fourth quarter and full year 2022 results, as well. Net revenue was up 71 percent from the same quarter in 2021.

Another “embattled” retailer, Dutch Love, is selling four of its stores to SNDL, the Canadian Press reported. Dutch Love, a chain of stores run by the restaurant operator Donnelly Group, has thirteen locations in BC and Ontario, but sought creditor protection at the end of 2022.

After another raid, the Victoria Cannabis Buyers Club plans to sue the BC government, founder Ted Smith says. Despite their legal troubles (and mounting bills), Smith says they have no plans to stop “supplying those medicines that have been keeping people alive.” 

A Niagara mother whose four-year-old daughter fell into a coma after ingesting cannabis edibles has been sentenced to six months’ house arrest, reports the Hamilton Spectator. The crown called it a “crime of carelessness.” The girl’s 13-year-old sibling also suffered medical complications after she ate almost two dozen of the gummies.

A Quebec extraction company, PurCann Pharma, is collaborating with the Canadian Institutes of Health Research and the Multiple Sclerosis Society of Canada to study “the potential effectiveness of cannabinoids to alleviate the symptoms of people with MS.” Plenty of MS patients have used cannabis over the years, but the research project—which is slated to produce results next year—hopes to understand how minor cannabinoids in particular could be used in treatment.

Organigram announced this week that they were partnering with Greentank Technologies, makers of new 510 vape technology that will be used in “the development of a custom all-in-one device that will be proprietary to Organigram.” Greentank claims to have created “a new way of heating cannabis oil without the need for a ceramic coil,” which they say will reduce “ceramic particle emissions.” 

A Whitehorse, Yukon butcher is on trial for selling THC-infused jerky in late 2020. The jerky sent four people to the hospital. The trial will be attempting to sort through, as the CBC put it, “conflicting details on how that batch came to be and how much the owner knew about, as one lawyer put it, the ‘spicy’ batch.” The butcher’s son has stated that the whole thing was “an accident.”

Outside of the Canadian market this week, Kentucky has finally legalized medical cannabis after ten years of failed attempts to pass the bill. Repeated attempts to legalize it had been blocked by the state Senate, but on Friday morning, the bill was signed by the governor and finally made official. 

And lastly, burn one down for the former Leafly reporters who lost their jobs this week after the company announced it was ending its cannabis industry reporting, choosing instead to focus on its core consumer product listing business. 

The company laid off its Canadian editorial staff last year, and now the same fate has hit south of the border. Former reporter Ben Adlin (who left the company in 2019) said: “Leafly was relevant for a few years because they took cannabis journalism seriously at a time when even mainstream news outlets didn’t. Apparently they think there’s more money to be made as the Yelp of weed. I’ll be curious to see how that works out.”

Health Canada issues product recall for Pure Sun Farms BC Sour Kush for inaccurate labelling

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

Health Canada has issued a recall notice for cannabis due to an errant decimal point. 

Two lots of Pure Sunfarms Corp.’s Original Fraser Valley Weed Co. B.C. Sour Kush dried cannabis, both sold through the Ontario Cannabis Store (OCS) and through authorized retailers in Ontario, were recalled due to incorrect cannabinoid values.

The THC labelled is lower than the actual THC due to a misplaced decimal point. 

The OCS originally posted its own product recall for the BC Sour Kush on March 1. Both products were packaged on March 1. Health Canada’s own recall was posted on March 30.

To date, Pure Sunfarms Corp and Health Canada say they have not received any complaints related to the recalled lots. Neither Health Canada nor Pure Sunfarms Corp. has received any adverse reaction reports for the recalled cannabis product lots.

There were 1,442 units of recalled product sold in Ontario from March 14 to March 24, 2023.

The printed value on Lot number 03984 of the B.C. Sour Kush was THC: 9 mg/g (Total THC: 216 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g). The correct labelling should have been THC 90 mg/g (Total THC: 216 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g). 

Lot number 03985 was labelled as THC: 7 mg/g (Total THC: 202 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g). The correct label should have read THC: 70 mg/g (Total THC: 202 mg/g) and CBD: 0 mg/g (Total CBD: 0 mg/g)

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Mislabelling and packaging errors are the most common reason for cannabis product recalls in Canada: Health Canada currently notes 31 cannabis recalls for packaging and labelling errors. There have been only nine for a suspected quality concern, one for a chemical hazard, one for a dosage error, one for microbial contamination, and one for unauthorized product since legalization began in late 2018.

Shoppers Drug Mart to exit medical cannabis market

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

Shoppers Drug Mart, one of the largest medical cannabis platforms in Canada, announced today its plans to transition out of the business, effective May 15, 2023.

The Medical Cannabis by Shoppers platform will be transferred to Canadian pharmaceutical company Avicanna over the next three months. First licensed in late 2018, the platform was launched in Ontario in January 2019 and later expanded into other provinces. Shoppers is owned by retail giant Loblaws.

“We are grateful for the trust placed in us by our medical cannabis patients over the past few years, and are confident we’ve found the right partner in Avicanna to continue to support them,” said Jeff Leger, President, Shoppers Drug Mart. “As we move away from medical cannabis distribution, we remain firm in our belief that this medication should be dispensed in pharmacies like all others and will continue our advocacy to that end.” 

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Medical cannabis in Canada is managed federally, with individuals able to register—once authorized by a medical professional—to order from one or more producers through an online platform. Shoppers Drug Mart, and several other similar businesses, offer patients the ability to register with one single platform while accessing different products from an array of producers who sell through them. 

Medical Cannabis by Shoppers provides patients access to medical cannabis products from more than 30 licensed cannabis brands from around the country. According to a company press release, it has served tens of thousands of medical cannabis users over the past four years.

As part of the transition, Avicanna says it plans to introduce a new medical cannabis care platform designed to “enhance the patient journey.” The website, MyMedi.ca, will have pharmacist-led patient support programs and aims to provide a similar product portfolio including various formats, brands, and competitive pricing.

“We are thankful to be selected as the partner for this transition and look forward to introducing MyMedi.ca, with a view towards supporting patients and facilitating continuity of care,” said Aras Azadian, CEO, Avicanna.

“We are motivated towards furthering the work started by Shoppers to create Canada’s leading independent, comprehensive medical cannabis platform and continuing our efforts towards advancing access to medical cannabis and its long-term incorporation into the standard of care.”

AviCanna’s products have also been carried by Shoppers Drug Mart. In late 2022, AviCanna launched its medical cannabis education portal, ”Avicenna Academy,” a no-cost resource and medical education portal for Health Care Professionals (“HCPs”) designed to help support HCPs through education and practical information with respect to the potential use of medical cannabis.

AviCanna was previously affiliated with a production facility in Colombia, although their products are created in Canada with Canadian cannabis.

Most cannabis is around 18-24% THC, according to one lab’s results

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

One cannabis testing lab in Canada, with several years of experience in the industry, says most of the cannabis they have analyzed is around 18-24 percent THC, with only a fraction cracking the 30 percent threshold. 

In data recently shared with StratCann, High North Laboratories says less than one percent of samples they’ve tested showed results of over 30 percent total THC: just 154 in more than 20,000 cannabis samples. The data was anonymized to remove client names and other identifying information.

Rick Moriarity, COO of High North Laboratories, says they are sharing the information now to add to the conversation around consumer expectations for high THC products. While the market increasingly demands higher and higher THC products—sometimes pushing into the high twenties and even thirties—Moriarity says the cannabis flower they have analyzed tends to be around 21 percent THC.

In fact, after controlling for lower-THC products they test (like hemp or more CBD-rich flower), just over half of nearly 20,000 samples were in the range of 18 to 24 percent THC.

These findings mirror research published in 2021 in the US that showed a similar breakdown of THC levels peaking around 18 to 20 percent.

The expectation of high THC being the only indicator of quality, says Moriarity, isn’t realistic. It can be a factor, but not the only one. 

“I hope this information can help guide consumers not to be looking at total THC for a purchase decision. There’s nothing wrong with looking at the total THC to see what it is and if it is a CBD or balanced product; however, it should not influence you enough that you walk into a store and say, “what’s your highest THC flower?” 

One of the problems, he acknowledges, is that consumers are focussing on THC, at least in part, because they can’t decide based on aroma, as many consumers could do in the pre-legal market. 

“With the regulations around packaging, it is not easy to look and smell before making a purchase decision. I know some stores have jars with little air holes that you can look at and attempt to smell the flower. It’s better than not having that option, but the flower gets old quickly that way and is not truly representative. So I understand why, but THC alone isn’t a good replacement for that. 

“Terpenes are one other factor to consider, as is our endocannabinoid system and several other important cannabinoids that we’re only just starting to learn more about. The point is, this all amounts to so much more than just that one number for THC. And that’s even if those numbers are accurate, which obviously, they often aren’t.”

He adds that he doesn’t mean all lab testing is inaccurate, but emphasizes that “the numbers are not accurate when being inflated by a select few non-reputable labs.”

Similar to another cannabis lab that recently shared results of off-the-shelf products they tested, High North shared with StratCann what they say are the results of 35 cannabis flower products they purchased from cannabis stores. As with their other internal testing results, High North removed producers names in the info provided to StratCann.

Of these, nine were within an acceptable deviation range of no more than 12 percent, while most were within between 20 to nearly 100 percent deviation from the labelled amounts. One product tested at 19 percent THC but was listed on the label as having 38 percent. Interestingly, one flower sample that High North’s second test showed at a whopping 31 percent THC was labelled as 38 percent.

Moriarity highlights this specific result as an example of how absurd it is that a producer who is already hitting such a high number like 30 percent, would need to boost those numbers even more.

These results indicate that much of the cannabis on the market is actually in a range of around 20 percent THC, and also how inaccurate at least some of the available product labels are, says Moriarity. The results also highlight the folly of consumers and even provincial buyers in making purchase decisions based on THC alone.

Content sponsored by: High North Laboratories

The Week in Weed – March 25, 2023

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

With provincial and federal budgets in the air, many have been hoping to see some changes to cannabis regulations in Canada—though as we covered on StratCann this week, this won’t be coming to Ontario, where premier Doug Ford lightly shot down the call from the Ontario Chamber of Commerce to permit cannabis lounges (he doesn’t want to smell people “smoking their doobies or their weed,” apparently…).

Recent reforms have instead been small, like Alberta’s move to allow producers to provide samples to retailers. We also covered the most recent raid on the Victoria Cannabis Buyers Club, which may have a new location, but does not have a newfound friendship with provincial regulators, as well as publishing a piece about inaccuracies in THC testing.

And Friday afternoon, Health Canada announced they are seeking feedback on some possible regulatory changes.

Elsewhere on the licensing beat, Saskatchewan Polytechnic has been granted a research license that will give students the ability to conduct more hands-on research with cannabis, CTV in Saskatoon reported this week. They were also granted an analytical license that will allow them to provide testing services to licensed producers. 

Researchers at Saskatoon’s Canadian Light Source also showcased new highly detailed images of the cannabis plant, using “groundbreaking” techniques that they say will help growers determine optimal harvest times. The lead researcher, Teagen Quilichini, suggested that this could help growers develop new applications and growing techniques for the plant. 

After our own recent reporting on the effects THC obsession is having on the genetics market, THC testing has been all over the cannabis news lately—including at MJBizDaily, which conducted some third-party testing of their own, and found (as many have suspected) a good deal of discrepancy between the label and the product inside.

Having perhaps exhausted ways to tap into reefer madness relating to humans, the Toronto Sun reported this week on the increase in veterinarian visits related to dogs eating roaches off the ground. Vets quoted in the story say it is becoming a common issue, so it’s at the very least a good reminder not to litter your butts. 

The Saskatoon Star-Phoenix covered the thorny question of when it is safe to drive after using cannabis, reporting on a local man who failed a roadside cannabis test more than 12 hours after using. The story included comments from University of Saskatchewan professor Robert Laprairie, who noted that the research on this question is rapidly evolving. 

Calls for BC’s government to drop mandatory window coverings for retail cannabis stores are getting louder. This week, a Penticton, BC vape shop owner joined a growing chorus of cannabis stores who feel that the window coverings are increasing the risk of break-ins and violence, and doing little to actually protect children. A related story we included in last week’s roundup, of a failed armed robbery at Kingsway Cannabis in Vancouver, was also covered in High Times this week.

A proposed retail cannabis store in Whitehorse is taking the territorial government to court after it blocked their application to open a new store just a block away from a Yukon Montessori School. The province said no, as territorial laws require at least a 150 meter buffer between a store and a school; the applicant, Community Cannabis, is arguing that Montessori’s aren’t registered schools at all, but rather daycares. (Try making that argument to a Montessori parent, though…) 

And in international news, a Czech court convicted the editor-in-chief of the cannabis magazine Legalizace for “inciting the abuse of addictive substances.” Their editor-in-chief, Robert Veverka, has also been accused of sending cannabis seeds out with the magazine, and is a regular thorn in the side of the Czech authorities. Czechia’s Marc Emery, perhaps?

Two residents of the Toulouse region of France were recently surprised to receive packages of cannabis from an unknown sender in Canada.

A plan to import Canadian cannabis into Jamaica continues to garner reactions on the island, with a column in the Jamaican Observer this week. The former chairman of the Cannabis Licensing Authority of Jamaica, LeVaughn Flynn, says the plan “reflects the deep dissatisfaction with our inability to create more revenue opportunities from our own resources.” 

And finally, this week the New York Times published its obituary for Raphael Mechoulam, long acknowledged as the father of cannabis research, who died earlier this month. Mechoulam was the first to isolate THC, and his discoveries still form the foundation of what we now know about the chemical structures and uses of cannabis. Mechoulam was 92.

Free market for retailers, but not consumption spaces, says Ford

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

Doug Ford says he doesn’t like the idea of cannabis smoking lounges, at least outside. 

In response to a question during a press conference, Ford initially began by saying he believes the market should decide the fate of cannabis stores, not the government, before pivoting to his dislike of the idea of areas where people can smoke cannabis. 

“I don’t like the idea of, you know, having a lounge outside and they’re smoking their doobies or their weed or whatever the hell they call it… or sorry, whatever the heck they call it nowadays, and some kids walk by and there’s all this smell? I don’t know, I don’t like that, personally. If you want to do your stuff, do it somewhere else.”

The question was in reference to a recent Ontario Chamber of Commerce (OCC) report sent to Ford calling on him to address cannabis store “clustering” and allowing cannabis consumption sites. The OCC has been championing many cannabis industry-related issues. 

The chamber’s report supported the idea of cannabis spaces where people can consume cannabis on-site, similar to smoking areas in certain venues and special occasion permits for concerts, sporting events, etc.

Ford shared similar sentiments at a press conference in 2020:

“They’re making it legal to go out and smoke a joint, a doobie, a reefer, whatever the heck they call it nowadays,” he said while those in the background chuckled. “I wouldn’t want my kids walkin’ by with a bunch of guys smoking cannabis or marijuana, but if a couple of guys are sitting there quietly on a picnic bench, having a cold little beer, who cares?”

“I don’t like the idea of, you know, having a lounge outside and they’re smoking their doobies or their weed or whatever the hell they call it…or sorry, whatever the heck they call it nowadays, and some kids walk by and there’s all this smell? I don’t know, I don’t like that, personally. If you want to do your stuff, do it somewhere else.”

Ontario Premier Doug Ford

Many in the cannabis community have pushed for similar legislation in different provinces, and a few spaces have emerged here and there, but concerns from different levels of government continue to push back.  

British Columbia released its own What We Heard consultation report on the possibility of cannabis consumption lounges in January. The results were somewhat predictable: cannabis consumers and those connected to the industry were generally in favour, while non-cannabis users were against the plan.

Public health and law enforcement, for their part, expressed similar concerns they’ve had all along with legalization: health consequences, keeping it out of the hands of young people, and increased rates of impaired driving. 

Outdoor consumption has been one of the areas where consumption spaces have made ground in recent years. Many in the industry see opening up cannabis patios and gardens at special events, like concerts or festivals, to be the most likely first step in relaxing consumption rules. 

Last summer, several festivals, including the Edmonton Folk Fest, offered smoking areas for cannabis users. In 2021, retail cannabis shop owner Laura Bradley even opened up a dedicated consumption space business in Grand Bend, ON—a small beach town on the shores of Lake Huron. Called Behind the Bend, it’s a standalone patio behind her retail store (called The Bend) that permits guests to smoke legally purchased cannabis on-site. 

How did she manage to do so within existing regulations? “Very creatively,” she said. “I follow all the Smoke Free Ontario rules, the AGCO rules, the federal rules,” she said, admitting however that she “wasn’t 100 percent confident” that the idea would fly. Municipal officials—keen to keep pot smoke off the popular family beach just down the road—have quietly approved of the business. 

So far, though, these businesses have mostly been the exceptions that prove the rule, so to speak. Behind the Bend has been able to operate thanks to a unique set of circumstances and loopholes within the regulations. 

Festivals have successfully incorporated smoking gardens by not permitting on-site sales (and are likely helped by the existing prevalence of cannabis anyways). But to go from isolated examples to a full-fledged, regulated sector is a jump that regulators don’t seem keen—or ready—to make. 

“There are loopholes,” cannabis lawyer Matt Maurer told StratCann recently. “And by loopholes, I mean there are locations that are suitable, and not technically prohibited.” It’s that ambiguity that has allowed something like Behind the Bend to operate successfully he says, but he also notes that the legal questions around it are far from settled.

“If we just meet up in the parking lot once a week and smoke a joint, no problem,” he says. “If you turn that into a business, then the question from a legal perspective is, what’s the difference?”

THC Testing—What it says vs What it is

Written by Contributor on . Posted in Business, Insight, Products, Research.

THC content has been the talk of stoners since the molecule’s discovery. We’ve spent decades trying to maximize it—we figured out that stressing out unpollinated female flowers gives us the best buzz and, presumably, the most THC content.

Regardless of your opinion on how much—or even if—THC content affects overall quality, the percentage on the bag is often a large factor in consumers’ purchasing choices.

In the nineties, tokers were looking for legendary Cali bud that supposedly hit the elusive 20% mark. In the short time since, plant morphology has not changed all that much, but the internet has led to growers sharing the secrets they use to maximize trichome coverage. 

On a recent product call, the Ontario Cannabis Store is said to have requested more strains that tested above 30% THC. Suddenly, almost every new product in Ontario was hitting marks of 31%, 32%, even a couple 34% batches! Even old SKUs that had never sniffed 26% before were suddenly 30.5%. 

Such a steep jump in such a short amount of time, and seemingly relegated to Canada and California labs: Australian labs don’t seem to agree with our numbers up here—a batch of Orange Crescendo sent to Aussie medical outlet Alfie was purported to be 28%, but once tested down under, the new label for the batch was 22%. How did we get here?

In the Canadian legal market, online wholesalers, retailers, and most retail stores are set up in a way that makes THC and price the only things you can judge before the product is in your hands. This blind buying is causing more consumers to ask for the bud with the highest THC, and LP’s are incentivized to make sure they can always be on the top of that list.

The Cannabis Act prescribes a lot about the testing of cannabis, but never explicitly says how cannabis should be tested. Different labs use slightly different methods of finding the levels of cannabinoids, terpenes, bacteria, heavy metals, and all the other things Health Canada requires to be tested in cannabis. Now, certain labs have gained reputations as known “THC inflators,” and some suggest that tests from these labs should raise eyebrows.

One batch of a product recently launched in Ontario purportedly hit 39.58% total THC, and another claims 40.41%. These figures are usually found on cannabis concentrate products like hash and infused pre-rolls. THC and its precursor THCa are predominantly found in the trichome heads of cannabis plants. If these numbers are correct, we can expect approximately 45% or more of the cannabis by weight to be trichome heads. This dense covering of trichome heads would be immediately apparent to even the novice user.

“They should just put a range on the label. Or, even a disclaimer: ‘Flower in bag may be lower than advertised THC.’”

Jennawae Cavion of Calyx and Trichomes in Kingston

How to Test for THC

On a dreary Friday in March, I paid Thomas Fraleigh a visit at his lab in Mississauga. He took me on a tour of his surprisingly small testing space, walking me through the basics of microbial testing, terpene analysis, and cannabinoid content analysis. For the latter, Fraleigh’s lab, Vivariant, uses what’s known as high-performance liquid chromatography (HPLC), which most other accredited labs in Canada also use. There are different types of HPLC used, but the broad strokes are the same.

How it works for Vivariant, in layman’s terms, is that each sample is weighed, homogenized cryogenically, and a specific amount of that homogenized, powdery cannabis sample is combined with a sterile liquid. This combined solution is then put through an HPLC machine, where a filter separates the contents of the sample and each ingredient is registered by a detector.

The ingredients are separated one at a time, and once registered by the detector, they are plotted on a graph in relation to the time they took to separate. This leads to ‘spikes’ on a graph, one for each of the compounds tested for. These spikes are then measured against standard cannabinoid concentrations to find the levels of cannabinoids present in the sample.

Once that is known, a math formula is used that takes into account all of the factors going into the sample—sample weight, amount of cannabis sample powder added to sterile liquid—which then translates the amount of cannabinoids in the solution to the milligrams per gram we see on cannabis labels today.

One part of the process where Fraleigh thinks it may be possible to skew the result is the math formula at the end. One could, theoretically, add more of the cannabis powder sample to the sterile liquid than they account for in the end formula, leading to a higher concentration of cannabinoids in the end test, and therefore a higher overall percentage on the end result.

Vivariant’s methodology is tested regularly by Proficiency Testing Canada, an organization that sends labs homogenized cannabis samples for testing. The issue with this is that the samples are clearly marked. If a lab were purposely skewing results, it would be very simple for them to not skew the results provided to PT Canada.

Fact-Checking

Health Canada allows a 15% variance in the stated label claim of cannabinoid content on some regulated cannabis products. Theoretically this means that, legally, your bag that’s marked as 27% THC could contain some bud that tests anywhere from 23% to 31%.

What happens when the weed in the bag falls outside of that allowance? So far, not much. Tom Ulanowski, the chair of C-45 Quality Association, has been raising similar concerns with Health Canada as far back as October 2021. C-45 has a vested interest in accurate testing, as they represent a number of labs and quality assurance professionals across Canada’s cannabis industry. As of yet, Health Canada has not taken any action…. Well, not since 2015 at least. That was the last time Health Canada issued a recall of a product based on inaccurate THC labeling. And yes, eagle-eyed reader, 2015 was before recreational cannabis was legal.

So what would it take to trigger a recall? Let’s find out.

I submitted a sealed sample of the 39.58% bag, a product called Pearadise by Wink, to Vivariant for independent analysis. The result? Vivariant tested the flower in the bag at 22.19% Total THC—a whopping 44% below the nearly 40% stated on the label. I’ve submitted a complaint to Health Canada about the difference in the stated amount vs the tested amount. Wink responded saying they trust their lab, Pathogenia, to give accurate results, and offered the original batch Certificate of Analysis (COA).

Editor’s note: A representative for Weed Me, which brought the Wink product to market, provided this comment to StratCann in response noting they will begin vetting the results from their tests with multiple labs. In part:

“As more and more incredible people apply their remarkable skills perfecting their respective art of cultivating cannabis, we at Weed Me are continually impressed with what they are producing. Through improvements in techniques, fertilization, light and environmental controls and most importantly development of genetics, some of the results we see are hard to believe. 

“We equally listen to you as the consumer, and we hear that ultra high potency flower, approaching or exceeding that of infused products, can be hard to believe. In response to these concerns we will implement a competing double-testing methodology of any strains that test over 34% THC. We will submit samples for testing to 2 different 3rd party analytic laboratories and provide the average of the 2 in an effort to most accurately represent the product specifications. While the labs are licensed and regulated by Health Canada we feel it important to go the extra step and double-check. This testing is in addition to the testing provided to us by our cultivating partners.”

Other high-THC products are being called into question as well. High North Labs recently tested a sample, Raptors Rntz by Celebrity, that claimed on the bag to be 40.4% THC. Their tests showed the product to be only 28.74% total THC. This is still an impressive amount by most standards! But alas, it’s also 29% below the claim on the label.

The problem isn’t relegated to extremely high THC numbers, though. Rob O’Brien from Supra Research and Development also tested 46 different whole flower cannabis products in BC, with a variety of products and brands at different price points, THC levels, and bag sizes. Similar to Vivariant’s results, some products were up to 45% below the stated Total THC on the label. 

However, O’Brien believes his findings to be a result of inaccurate batch representation in testing, as he found larger buds tested much closer to the stated THC levels than the smaller buds. He believes this to be an issue with LPs who use one crop to fill various sized bags. Larger 3 or 4 gram buds will not fit into 1 gram bags, but are what’s used to test the potency of the whole batch.

What do we do from here?

Everyone has different ideas on how to fix this. Many believe that switching to a “deli style” system, where products are able to be seen and smelled prior to purchase would remove the incentive of testing at ridiculously high THC levels. 

Others, like Jennawae Cavion of Calyx and Trichomes in Kingston, had a simpler idea: “They should just put a range on the label,” she says. “Or, even a disclaimer: ‘Flower in bag may be lower than advertised THC.’”

Some believe independent testing at the federal, or even provincial, wholesale level for incoming products should be the norm, with punishments for being outside of the allowance. The OCS has contracted Sigma Analytical for independent analysis of cannabis products, but the extent to which they have tested products remains unclear.

Health Canada said in a statement that of 919 samples they collected since October 2018, when recreational cannabis was legalized, only 68 were tested and “found to be in contravention of the requirements set out in the cannabis act or its regulations.” These 68 could be in contravention for any reason, including failing microbial or pesticide analysis, and do not refer specifically to THC level contravention.

What can be done?

What will happen next remains unclear. Hopefully, it involves more transparency in all aspects of the industry, lest the problem of inflated THC will continue until the balloon eventually pops.

In my perfect world, we would have a hybrid deli-style system alongside the present prepackaged system for those who want it. There’s something to be said for seeing and smelling a product before you purchase it. It would be a long road to get there with regard to regulation changes, but we can do it. 

Deli style shops and budtenders who actually tend to your bud is how brick-and-mortar stores started pre-legalization, and, hopefully what we’ll return to. I’d trust my eyes and nose over a number on a bag any day, especially if it doesn’t match what’s actually inside that bag.

~Cass Whichelo

Cass is a cannabis enthusiast and former budtender who resides in Toronto, Ontario. They fight for radical transparency in the cannabis industry and beyond. They can be found on Twitter @terp_kaczynski

Sea Dog Farm becomes first Sun+Earth certified cannabis grower in Canada

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

A Vancouver Island outdoor cannabis farmer is the first in Canada to have their cannabis certified through Sun+Earth Certified, a US-based nonprofit third-party certification for regenerative organic cannabis.

Sea Dog Farm, located in Saanichton, BC, is a five-acre property about an hour outside Victoria where Shawn and Katy Connelly grow cannabis as well as fruits, vegetables, berries, eggs, herbs, and cut flowers using a no-till, regenerative organic method. Their outdoor micro cannabis farm is licensed for 200 square meters at the back of their small but lively property.

“We chose to pursue Sun+Earth certification because we believe it is essential to use both organic and regenerative practices in our stewardship of the land, and while we grow for our community,” said Sea Dog Farm co-owner Katy Connelly. 

“The Sun+Earth seal will help our customers identify products that were grown using methods that help to sequester carbon and build healthy soil and don’t use fossil fuels or petroleum-based chemical fertilizers. As more consumers become aware of the devastating impact indoor cannabis has on our planet, we hope they will choose ethical and sustainable products.”

Katy Connelly has been an outspoken member of the Canadian cannabis community, helping to educate policymakers on the challenges facing small-scale cannabis growers, speaking at industry conferences, and hosting farm tours. Through British Columbia’s Direct Delivery program that allows small-scale BC cannabis growers to ship products directly to retailers, Sea Dog Farm has been able to launch its sun-grown pre-rolls into select retail stores across the province.   

Sun+Earth was founded in 2019 and currently counts more than 70 Sun+Earth Certified cannabis farms and manufacturers across several US states, as well as now in British Columbia. As the name implies, the standards require crops to be “sun-grown” and grown using techniques that help rebuild the soil, all without the use of synthetic fertilizers or pesticides. 

Standards also encourage the planting of cannabis alongside food crops, and the use of cover crops, composting, and reduced soil tillage. 

“Sun+Earth strives to certify farms wherever cannabis can be grown under the sun, in the earth, and without toxic chemical inputs,” said Sun+Earth Certified’s director Andrew Black. “Sea Dog Farm is the first Sun+Earth Certified cannabis farm in Canada, but hopefully not the last,” continued Black. “Sun+Earth aims to point the cannabis industry—across borders—in a cleaner, healthier, and more ethical direction, and provide needed support for struggling small-scale farmers in our regenerative organic community.”

The use of the term “organic” in the cannabis space in Canada has long been a bit of a wild west situation, with little oversight of the term due in part to a lack of federal Canadian standards. The Canadian Food Inspection Agency doesn’t allow cannabis or other non-food products to be certified organic under their own organic standards, nor can it bear the “Canada Organic” logo. Instead, many third-party agencies provide varying levels of organic certification based on internal standards. 

In addition to Sun+Earth, cannabis companies in Canada can receive organic certification under organizations such as the Pacific Agricultural Certification Society (PACS),  Fraser Valley Organic Producers Association (FVOPA), Ecocert, and Pro-Cert. Each organization has its own standards and enforcement methods to ensure compliance with those standards. 

Shawn and Katy Connelly on their BC farm

Organic cannabis is also in high demand, at least according to an online poll from before legalization in 2017 that showed 57 percent of Canadian medical consumers and 43 percent of recreational consumers cared about such a distinction. Nonetheless, the amount of cannabis companies with some form of organic certification remains just a small handful of the more than 900 production licenses across the country. 

But for consumers seeking out these products, this can mean greater certainty of the methods behind production than just the term ‘organic’.

Cannabis production licenses continue to come in, as licence revocations increase

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

There were 175 applications to grow or process cannabis commercially in Canada in 2022, the majority of them micros.

Of those 175 applications, 65 were for standard licences, 99 were for micros, and four were for cannabis nurseries. Of those, 44 applications were from Indigenous applicants, and 44 were for outdoor cultivation licences. Another seven were for medical-sales-only licences. 

The figures are part of new data released by Health Canada on March 13.

Micro’s have been the fastest growing cannabis licence category for some time now, likely due to their lower cost and more rapid licensing times. 

The bulk of the applications came from Canada’s three most populated provinces, Ontario (52), Quebec (46), and BC (43). Newfoundland and Labrador, Northwest Territories, Nunavut, Prince Edward Island, and Yukon Territory all had no applicants in 2022. 

Chart via Health Canada: Licence applicants

The province with the largest number of Indigenous-affiliated applications was BC with 17, followed by Ontario with nine, and Alberta with seven. 

Quebec saw the most outdoor applications with 15, followed by BC with 12 and Ontario with 11.

As far as active cannabis production licences go, Health Canada lists 918 as of December 31, 2022. Of these, 472 are standard licences, 377 are micros, and 28 are cannabis nurseries. There are 937 active licences currently listed as of March 14.

Unsurprisingly, Ontario is home to the most federal cannabis production licences, with 280, followed by BC with 221, Quebec with 173, and Alberta with 107. Every province and territory lists at least one production licence except for Nunavut.

BC lists the most Indigenous-affiliated production licences with 22, followed by Alberta and Ontario with nine in each. 

Ontario is also home to the most outdoor production licences with 51, followed by BC with 45 and Quebec with 35.

Graph via Health Canada: New licensed sites by month

BC was also home to the most micros in 2022 with 86, followed by Quebec with 84 and Ontario with 83, and Alberta with 46. Despite a population of just under one million, Nova Scotia boasts the most micro licences per capita with 25.

While the number of new licences continues to increase, the number of licence holders throwing in the towel is increasing as well.

As of the end of 2022, there were 113 licences revoked by the licence holder, three revoked by Health Canada, and 13 that expired, for a total of 129 inactivated licences.

Buying cannabis seeds and clones in Canada in 2023

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

As Canadians prepare for the 2023 cannabis growing season, home growers are beginning to get more options for finding cannabis clones and seeds. 

In New Brunswick, the provincial retailer Cannabis New Brunswick (CNB) started selling clones this February in coordination with two local cannabis growers. 

New Brunswickers who want to buy up to four cannabis clones at a time can order in-store at one of a dozen different CNB stores around the province and pick them up about a week later

Currently, the province offers six different cultivars from two local growers, ECO Canadian Organic in Ruxton and Hidden Harvest in Moncton.

ECO Canadian Organic first began selling clones from their farmgate store in April 2022, and Hidden Harvest recently began selling clones from their own newly-acquired farmgate licence for their cannabis nursery at 555 Edinburgh Dr.

Cannabis NB was also selling cannabis clones at a recent event they hosted in February called Cannabis East.

ECO Canadian says their clone sales have been a welcome addition to their farmgate sales, with more than 1,000 plants sold in 2022.

Kevin Clark, the QAP at Eco Canadian Organic, says the provincial regulator first approached them in the fall of 2022 about their plans to offer clones online. 

“CNB has been an excellent partner, understanding that the product is a living organism and requires a specific environment for the plant to maintain its health throughout the distribution chain,” explains Clark, adding that ECO delivers the products directly to the stores on a weekly basis. 

“Working with CNB has been an educational experience for both parties as we are developing a pilot program not seen before at the retail level, and we are excited about how CNB is taking a proactive approach in contacting other LPs to join in the sale and distribution of clones.”

Emilie Dow, a Communications Specialist with Cannabis NB, says the province has sold more than 200 clones so far. Clones are $25 each. New Brunswick allows residents to grow up to four cannabis plants at home. (editor’s note: This article has been corrected to correct the price of clones.)

“We’re excited about the program, and initial feedback has been positive,” Dow tells StratCann via email. “It’s very new, but we hope to expand it in the future once we’ve had a chance to properly assess customer interest.” 

Rod Wilson, the owner of Hidden Harvest, says selling clones through Cannabis NB helps add to the viability of his business, as does his newly-acquired farmgate licence that allows him to sell clones directly to consumers from his facility in Moncton. This makes Hidden Harvest the second farmgate store in New Brunswick offering clones after ECO Canadian Organic. 

Although the majority of Hidden Harvest’s business is B2B sales of clones to other commercial growers, every little bit helps.

“The way we look at it, our bread and butter is still the professional market,” says Wilson. “We don’t sell the same product to the professional side as the consumer side, so we look at the farmgate as a different way to bring in some income. But even if we can capture even just a tiny part of the home grow market, I think it can work for us.”

Cannabis clones and seeds across Canada

New Brunswick isn’t the only province that has offered clones to home growers. In the past few years, a few growers and nurseries have offered short-lived pop-ups for clone sales without much fanfare or success. In Newfoundland and Labrador, cannabis producer and retailer Atlantic Canada started selling clones in their own stores in 2022. 

Clones on display at Seed and Stone in BC. Image via Seed and Stone.

In BC, cannabis chain Seed and Stone began selling clones at a few of their stores in March. The cannabis starts are available through a partnership with Herbal Dispatch, which provides them through BC’s direct delivery program. Clones are being sold in-store for $40 each. 

Vikram Sachdeva, the founder of Seed and Stone, says they hope to expand their offerings to not only cannabis seeds and clones, but everything a home grower will need. 

“Providing these services to our customers is really important. We want to become a one-stop shop where we will offer pots, soil, nutrients, and also be educating our budtenders on educating the customers on how to grow these plants”.

Home growers seeking seeds can also find an increasing variety in nearly every province other than Manitoba and Quebec, which both still don’t allow their residents to grow their own cannabis.

In New Brunswick, ECO Canadian made waves recently by announcing a deal with Greenhouse Seed Co to offer the company’s unique genetics in Canada. New Brunswick currently lists about a dozen seed varieties from a handful of Canadian companies. 

Home growers in BC have a handful of cannabis seed varieties to choose from, and several private retailers list seeds online in Alberta and Saskatchewan. Ontario currently appears to offer residents the most cannabis seed options with over 30 varieties available. 

New Brunswick currently lists a handful of seeds, as does Cannabis NL in Newfoundland and Labrador. PEI, which initially offered cannabis clone sales via direct delivery, also offers residents a handful of cannabis seeds to choose from. 

Home growers in Yukon also have options for legal cannabis seeds, as do those in the Northwest Territories.

Feature image via Cannabis NB

The Week in Weed – March 11, 2023

Written by Kieran Delamont on . Posted in Business, Cannabis News.

It’s been relatively quiet elsewhere in the cannabis industry this week, but here at StratCann we brought you stories on calls from lab owners for more oversight on cannabis testing, the reaction from both sides to a new export partnership to ship Canadian cannabis to Jamaica, coverage of the launch of the Global Cannabis Trade Association, and an in-depth look at how THC obsession is changing the market for classic cultivars and keeping consumers from some high-quality bud. 

In international news, Raphael Mechoulam, Israel’s ‘father of cannabis research,’ died this week at the age of 92. 

Canadian cannabis companies are reporting increasing amounts of theft and loss, reports MJBizDaily. They published data from Health Canada that showed that more than 2,000 kg of cannabis loss or theft was reported last year, although the number of reports has been in decline since 2020, which expert David Hyde says is down to theft incidents being “greater in volume, but not more frequent.”

MJBizDaily also reported on potential misdoings of another kind: Tilray is being sued by an investor, Michael Hudson, who alleges that the company’s leadership misled investors “by both overstating inventory and understanding labour costs.” The suit also claims that Tilray was keeping $40 million in “unsellable trim,” and “worthless” cannabis oil on its books to inflate its margins. 

Six people were arrested in an illicit cannabis crackdown in Trois-Rivières, QC this week. Four men and two women were arrested by the Sûreté du Québec after complaints that they were selling cannabis in a park.

Mississauga mayor Bonnie Crombie is backing a push by a new city council to finally allow cannabis retail in the city, local outlet Insauga reported this week. Councillors who were formerly opposed have softened, newly elected councillors are more supportive, and a report looking at how other nearby municipalities have fared is set to come to the council by the summer. 

Some residents of Parson, BC are upset at the odour created by a nearby outdoor cannabis grow, according to the Golden Star. Like other stories about odour-related concerns, residents feel that the regulations designed to prevent odour pollution aren’t doing their job, especially around outdoor grows (where few regulations actually apply). 

If you’re one of the 37 percent of Canadians who experience tinnitus—a ringing in the ears—you may find that cannabis is helpful in managing the symptoms. A new study from the Journal of Otolaryngology found that 80 percent of serious tinnitus patients are actively using cannabis to deal with symptoms like dizziness, anxiety and sleep issues, and that 96 percent were open to using it more formally. 

Moving to the international market, a Canadian cannabis company—Xebra Brands’ subsidiary Desart MX—has been granted the first license to grow cannabis in Mexico’s nascent legal market. The regulators are taking baby steps, and the company is only allowed to grow high CBD cannabis, for now. 

In the US, Reuters ran an in-depth story looking at the challenge of weeding out grey market cannabis operators in different legal states, with some mention of Canada, as well. 

And finally, a belated happy International Women’s Day to the many women who’ve made their mark on the Canadian cannabis industry. Herbal Dispatch offered short interviews with a handful of high-profile cannabis leaders, while the National Post ran an interview with Kyrsten Dewinetz, CEO of White Rabbit OG, on being a woman in the cannabis industry. There are many more out there doing great work with less publicity, of course, and they’ve all helped make this industry better in their own way.

Global Cannabis Partnership launches Global Cannabis Trade Association

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

A Canadian group is launching what they hope will be a global trade organization for the cannabis industry. 

The Global Cannabis Partnership (GCP) announced the launch of the Global Cannabis Trade Association (GCTA) on Thursday, March 9.

Established in 2018, the GCP bills itself as an “international initiative focused on the development of standardized management practices related to social responsibility.” 

As part of the GCP, the GCTA intends to focus on bringing together members under two membership types: one for individuals and one for businesses. Membership then provides access to event discounts, opportunities for speaker sessions, open RFP bids, international trade development support, and more. All members will also be able to highlight their international business developments.

The GCTA is being launched by several long-time veterans of the cannabis space.

Alex Revich, who has been active in the cannabis sector since 2013, is spearheading this initiative. He was present at the outset of the Canadian Medical Cannabis Industry Association (CMCIA) where he served as chair of various committees and held the position of Executive Director. Alex will serve as the Chairman of the Board for the GCTA.

Stephanie Bach had her start in the cannabis and hemp space in 2007 as a plant biotechnologist at the Alberta Research Council (now Innotech Alberta). She has an undergraduate degree in molecular biology, a graduate degree in plant breeding and genetics, and now runs her own regulatory and consulting firm. 

She has a strong background in agriculture & food, with 15 years of experience in the Ontario and Alberta industries. She has worked for several licence holders in cultivation, processing, and food production. Stephanie currently serves as the Executive Director of the GCP.

“As the Executive Director of the GCP, I am pleased that we are continuing our objective of unifying the global cannabis industry with the launch of a global trade association,” Bach tells StratCann. “We welcome individuals and organizations that participate in any level of cannabis business, whether it be your primary business stream or not. We will continue to roll out the GCTA and round out its foundation. We strive to be a focal point for industry participants to connect, share resources, and grow their business.”

Nathan Mison, also a founding member and President and Co-Founder of Diplomat Consulting, has years of experience in launching businesses and creating successful partnerships. In recent years, he was a founding member of Fire & Flower and launched the Independent Retail Cannabis Collective.

More info can be found at globalcannabispartnership.com/joingtca.

Challenges for some small producers shipping products to provinces

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

Cannabis producers outside of Ontario are trying to make shipping to the Ontario Cannabis Store work for them, although high costs to ship small-batch orders can be challenging and onerous. But some producers are finding creative ways to make shipping to Ontario financially feasible.

Brad Churchill isn’t shy about revealing the heavy costs he faces in shipping to Ontario, he says in an interview. The CEO of Choklat, a chocolate manufacturer in Calgary that produces edibles and THC-infused sugar under the Phat420 brand, posted his take on shipping fees on LinkedIn, which garnered more than 100 likes and 15 comments. 

He explained how the OCS issued his LP a purchase order for $600 worth of infused sugar. He said with other orders from various provinces, he could slip the product into a 12X12 box and ship it via Canada Post.

What incentive is there for me to process these orders and lose money with this system?

Brad Churchill, Choklat

“However the OCS expects us to palletize it (yeah… put a 12X12 box on a pallet all by itself), include a $50 data logger, and then ship it temperature-controlled to their warehouse. And of course book a dock time, which if the driver misses we get penalized. Essentially we are shipping an empty pallet—which incidentally costs $1200 to send as a base rate from Alberta,” he writes.

In an interview, he explains how gatekeepers such as OCS don’t make it financially logical to deliver smaller orders when they come through, especially since he has to use their carrier and pallets for each order. 

“What incentive is there for me to process these orders and lose money with this system?” he asks rhetorically.

Churchill says he prefers the setup BC offers, which allows LPs to direct-ship to retailers, which the OCS restricts.

Even within Ontario, shipping to the OCS warehouse in Guelph can be costly. For Abide Cannabis, based in Mississauga, they’ve had to cancel small orders the OCS sent them, such as when a $1,200 PO for one of their CBD creams had a shipping cost of $700.

CEO David Marcus says, “And that’s just from Toronto to Guelph, because we have to use their carriers and data logging system, and so on. I try to ensure that shipping doesn’t cost more than 10 percent of the PO.”

He adds that Abide only sells within Ontario “because I can’t imagine the logistical nightmare of shipping to other provinces.” 

Josh Adler, VP of Operations & Business Development at Aqualitas in Nova Scotia, sympathizes with Choklat’s shipping struggles, but he recognizes how OCS has policies and processes that require LPs to “play within their system,” as he says.

“Their automatic ordering system is going off forecasts and what has sold before, so it makes sense if a small order goes through to an LP because the OCS doesn’t want to sit on a lot of unsold products,” Adler says.

Not many LPs are synergizing their shipments but we wanted to work with other partners in the Maritimes to merge shipments together and help them save on shipping costs.

Josh Adler, Aqualitas

In a statement sent to StratCann, OCS spokesperson Jessica Rochwerg noted the current processes (i.e., appointment booking, data logs, pallets, etc.) are required “for quality assurance purposes, faster speed to market, and to effectively handle the large number of Purchase Orders (POs) that the DC receives on a regular basis. However, we appreciate that some of these measures may be challenging for micro producers or suppliers with smaller POs.”

She added that the OCS is now exploring ways to “accommodate smaller deliveries and Purchase Orders at the DC, and are continuously looking for ways to work with producers to better enable a vibrant cannabis marketplace,” but couldn’t elaborate on specific plans.

On the flip side, what small orders tell some LPs is that these products aren’t so hot right now, which can help producers make smart business decisions on what to delist, says Adler. While the majority of Aqualitas’s SKUs perform well in Ontario, one product wasn’t receiving as many orders as they expected, so the LP discontinued their CBD pre-rolls instead of dealing with minuscule orders.

In addition, Aqualitas and other LPs have found a few strategies to help ease the burden of costly shipping. Consolidating orders can be useful when several small-batch orders come through the queue, and Abide’s Marcus says his OCS rep has been flexible enough to allow POs issued on different weeks to be on one pallet. But he also notes that another OCS rep he worked with earlier hadn’t been as cooperative about order consolidation. 

For both Manitoba-based Delta-9 and Aqualitas, establishing a partnership business can be the route forward. This means other LPs can send their orders, for a fee, to another LP that handles the shipping. Delta-9 spokesperson Ian Chandley said they set up this type of service last year so other Manitoba LPs with OCS orders could consolidate their POs into one shipment.  

At Aqualitas, a similar approach has worked well for them and their neighbouring LPs. “Not many LPs are synergizing their shipments but we wanted to work with other partners in the Maritimes to merge shipments together and help them save on shipping costs,” Adler says.

Marcus says the OCS can be responsive to market shifts and feedback, such as the recent announcement the store will lower its price margins this fall, which the OCS estimates will put $60 million back in the hands of LPs in the 2024 fiscal year. “That is an amazing move,” he adds, “because the margins have become so slim in the cannabis industry.”

-David Silverberg

David Silverberg is a freelance journalist who contributes to BBC News, The Toronto Star, The Globe & Mail, Fast Company, MIT Technology Review, Leafly and several brands. He also coaches creative and non-fiction writers via online 1-on-1 courses which can be found on his website.

Edible extracts, direct delivery make a big splash in BC

Written by Staff on . Posted in British Columbia, Business, Government, Insight, Provinces.

The price of cannabis continues to decline in BC, while the number of cannabis stores increases. 

The BC LDB’s newest quarterly report, from October through December 2022, also shows the popularity of edible extracts, which saw sales of more than $1 million, and more than $2.5 million in sales through BC’s Direct Delivery program. 

Wholesale sales also increased from the same time last year by 13 percent to more than $113 million from the equivalent of more than 25 million grams of cannabis. 

Cheaper eighths, bigger SKUs

Consumers are moving to larger SKU formats for dried flower, especially the 14-gram and, to a degree, 28-gram.

Although declining, eighths still remain popular. Sales figures show consumers shifting to lower-priced eights, with significant growth in the under $3 a gram category, while sales of the over $5 per gram eighths decreased. 

Fourteen-gram SKUs saw significant growth in all price ranges, with modest growth in the 28-gram SKUs. There was also significant growth in the one-gram SKUs while 7-gram SKUs declined.

Sales for dried cannabis overall continued to decline as well, as other products have entered the market. Sales for dried cannabis were just over $40 million in the last three months of 2022, a slight decline from the previous quarter’s $41 million and a 7.3 percent decrease compared to Q3 2021’s sales of more than $43 million.

Cannabis pre-rolls

As opposed to dried flower, sales of pre-rolls saw a modest four percent increase in year-over-year sales with more than $24 million. This, however, represented a slight decline from the previous quarter’s sales of more than $26 million.

via bcldb.com

Sales for infused pre-rolls increased much more, though. Sales were up by more than 500 percent compared to the same three-month period in 2021 to almost $10 million. 

Inhalable cannabis extracts

Sales of inhalable extracts like vape pens and concentrates saw a massive jump to more than $​​34 million, a nearly 70 percent increase from the same quarter in the previous year, and an increase from the $29 million sold in the previous quarter. This category also includes infused cannabis pre-rolls.

Vape carts and disposable vape pens both increased significantly in YOY sales, with disposable pen sales increasing by nearly 200 percent compared to the same period in 2021. The previous quarter saw a more than 200 percent increase in YOY sales, as well. 

Vape carts are the most popular of the inhalable extracts, with about 56 percent of total sales, followed by infused pre-rolls at 29 percent, shatter at four, hash, disposable pens, and resin and rosin at around three percent each, followed by wax, vape kits, and dry sift all under one percent of total category sales.

Sales of resin and rosin increased modestly, as did hash, while shatter and dry sift declined. Cannabis wax sales exploded as more products arrived on the market, with a more than 330 percent increase in YOY sales, although only a small increase in sales compared to the previous quarter. Still, wax sales represent less than 1 percent of sales in this category. 

via bcldb.com

Ingestible Extracts

Another notable increase in popularity was for so-called edible extracts, with more than $1 million in sales in just three months. This was a 300 percent increase from the last three months of 2021 as well as an increase from the previous quarter’s sales of $437,689 in Q2 2022.

Health Canada has been pushing back at these products, arguing they are non-compliant because they contain more than the 10 mg THC per package limit under federal regulations. At least one producer admits to receiving a stop order in January.  

via bcldb.com

Edibles

Sales of edibles, while still a small portion of all cannabis sales, also saw a modest 14 percent compared to the same time last year, for a total of more than $6 million.

Cannabis chews/gummies dominate the category, accounting for 86 percent of sales, followed by chocolate at about 12 percent and baked goods at about two percent.

Cannabis beverages

Cannabis beverages also saw an increase in year-over-year sales, with over $1.8 million sold from October-December 2022. This is a slight decline from sales of $1.9 million in the previous Q2 2022 period that covered sales in July-Sept, likely due to seasonal purchasing habits. 

via bcldb.com

Carbonated cannabis drinks are the biggest seller in BC, at around 82 percent of market share, followed by non-carbonated drinks at about 14% and all other categories taking up the other few percent.

In December 2022, Health Canada announced changes that allow retailers to sell up to 48 cans of cannabis beverages at a time, up from the previous amount that allowed for only five. Sales figures following this announcement would not be fully captured in this most recent quarterly data that only goes through December. 

Cannabis seeds and cannabis topicals

Sales of cannabis seeds saw a more than 50 percent increase compared to last year, with $12,641 in sales. This represented a decline from the previous quarter’s sales at $17,327.

Sales for cannabis topicals were down two percent from the previous year at $779,806, but this represented an increase from the previous quarter’s sales of $592,469. Sales were down YOY in all categories of cannabis topicals (Balms, Creams and Lotions, Massage Oils & Lubricants, and Other Topicals) except for “other,” which increased by nearly 75 percent, and Bath Products, which increased by almost 25 percent.

Creams and lotions make up the bulk of cannabis topicals sales at around 43 percent, followed by bath products at 28 percent, other topicals at about 25 percent and balms at just under 3 percent.

Direct delivery

This reporting period represents the second quarterly report that captures sales from the province’s new direct delivery option that allows producers to sell and ship products directly to retailers, bypassing the province’s centralized warehouse. 

The program launched on August 15 and requires that cannabis flower used in any products must come from an approved BC grower who produces no more than 3,000 kg of dried flower a year.

For October through December 2022, there were 362,180 grams of cannabis (and its equivalent) sold through direct delivery, accounting for $2,575,858 in sales.

Combined with the previous quarter’s sales, there were 480,010 grams of cannabis sold through direct delivery in BC, with $3,280,836 in sales. 

Dried flower and pre-rolls represented the biggest portion of these sales, followed by inhalable extracts, edibles and beverages, ingestible extracts, and then topicals. 

via bcldb.com

Sales by region

Unsurprisingly, most sales in the province were in the Lower Mainland, with nearly $46 million, a 17 percent increase in YOY sales compared to Q2 2021. The region, the most populated in the province, also saw the addition of 28 new stores from the same time last year.

Vancouver Island, the second most populated region of the province, saw the second highest amount of sales at more than $26 million, an increase of more than 10% YOY compared to Q3 2021. The island had 14 new stores compared to the same time last year. 

This was followed by $25,195,731 in sales in BC’s interior, a nearly 10 percent increase from last year, with 12 new stores compared to Q3 2021. Lastly, Northern BC saw $16,016,622 in sales, a 12 percent increase YOY, with four more stores than the previous year. 

BC currently lists 480 public and private cannabis stores. 

Lab owner calls for more oversight of cannabis testing standards

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

The owner of one analytical testing lab is calling out what he says is a serious problem with the accuracy of THC levels on cannabis flower in Canada. 

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

The results of his tests show what he says are significant variations in the cannabis flower he tested compared to what was stated on the label. In some cases there was more than a 40 percent difference. In one example results show a product labelled at 34 percent THC to be only 19 percent with his own testing.

Results can be found here, here, and here.

Rather than publicly calling out producers or labs, though, O’Brien says his biggest concern is holding federal and provincial regulators accountable. While he shared the results online, he didn’t share the labs, producers, or product names. But he says he did share the entire, unredacted info with the BC government and with Health Canada. 

“I’m not here to try to shame companies, I’m here to try to solve this problem,” says O’Brien. “The credibility of the entire sector is in question if we don’t get this right.”

Instead, he’s placing that burden on those two levels of government.

“They are the ones that should be responsible for naming names if that does come up.”

Although he doesn’t rule out labs or producers who may “put their thumbs on the scale,” O’Brien says he believes much of the discrepancies he found in his own testing were due to flaws in how producers are required to take samples for testing in the first place. 

There’s no other product on the market where you have this kind of false sense of security, this level of accuracy down to two decimal points.

Hubert Marceau, Laboratoire PhytoChemia Inc.

One of the problems, he explains, is that the current federal regulations only require testing per harvest, even though there can be significant variation in the THC levels in the flowers from that harvest. Flowers closer to the light tend to have higher THC than those further from it. And while some growers take steps to mitigate this, variation of a biological product like cannabis is nearly inevitable. 

This, combined with a tendency for producers to then send in only the largest, most impressive flowers that have the highest THC, means that what is actually in the consumers’ packaging won’t necessarily match what the THC numbers show on the label. 

“The largest buds are the ones that are closest to the label claim. That’s likely the type of buds that are being sent to the labs for testing. These buds are two to three grams, maybe four at the extreme. And you can’t put a two-gram bud in a one-gram bag. So the smaller package sizes have the smallest buds in them, typically two or three, and those buds are 30-40 percent below the bigger ones. That’s part of the problem.”

Another factor is the tested buds aren’t going through a sometimes disruptive packaging process that can lower the THC level. 

“And when you send the first pristine buds to the lab for testing, then the others go through the process of being sorted and packaged, there’s a lot of tumbling and bouncing around, and that knocks off trichomes that affect the THC level. So if you’re testing the packaged product, you’ll be much closer to what’s there.”

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If provincial buyers were held more accountable for the products they are generally the gatekeepers of in their provinces, he contends this would immediately force producers to begin better testing procedures on their own, regardless of the minimal requirement from Health Canada for batch lots covering an entire harvest.

This is especially true since, as he points out, most provincial buyers tend to have a bias against cannabis flower that is under 20 percent THC.

“The provincial buyers need to throw away this thing that if you don’t have 20 percent THC on the COA that they’re not going to buy their product. That is ridiculous and is contributing to the problem.”

“THC content has significantly increased over the last two years. We need to have a better regulatory system, and we need to have better transparency.”

The provincial buyers need to throw away this thing that if you don’t have 20 percent THC on the COA that they’re not going to buy their product. That is ridiculous and is contributing to the problem.

Rob O’Brien, Supra Research and Development

Hubert Marceau, a chemist and the director of development at Laboratoire PhytoChemia Inc., an analytical testing lab in Quebec, says consumers should take this kind of knowledge into account when buying cannabis. 

Even relatively fair and accurate testing results will always have some kind of variance, he says. Instead, he thinks consumers should think of the THC level on the label as a range, give or take a few points in either direction, not a specific number. 

This would account for at least some of the variance in flower size and batch size. 

“You can never test the whole batch. So by testing a sample of that batch, you’re only estimating the average. Consumers need to be aware they are askew. There’s no other product on the market where you have this kind of false sense of security, this level of accuracy down to two decimal points.”

Like O’Brien, he says he is also aware of stories that some labs will simply provide the testing results that a processor demands in order to keep their business.

“Eventually, it just becomes a numbers game where people just want to have the higher number and will do everything in their power to have a higher number. And that’s what’s happening here.”

This also brings the credibility of the industry into question for Marceau. THC levels, from his perspective, seem to often hover just under 20 percent THC, so very high THC levels, sometimes well over 30 percent raise his eyebrows. 

He references a study from 2021 that showed clustering of testing results from cannabis flower in two US states that, once corrected for outliers from labs found to be inaccurate, showed most cannabis flower, when accurately tested, was around the 20% threshold, some a little under, some a little over. 

“Eventually, the plant gets to a point where it can’t produce more THC. There’s no way in hell that THC—that only resides in the trichomes that are on the surface of the flower—is going to be 35 percent of the cannabis.”

Eventually, it just becomes a numbers game where people just want to have the higher number and will do everything in their power to have a higher number. And that’s what’s happening here.

Hubert Marceau, Laboratoire PhytoChemia Inc.

Like O’Brien, he says he thinks a lot of it comes down to the 20 percent (or, in the same cases, even higher) THC threshold some provinces prefer. This creates a situation where cultivars, processors, and labs are all encouraged to push up their levels to meet these demands. And this creates a situation where consumers are largely only able to buy these higher THC products, further cementing the idea of higher THC equalling higher quality. 

“You have the consumer who has been told higher THC is better, which is the equivalent of saying only drink everclear alcohol, so the distributor is saying it will only buy lots over 20 percent. This forces the producer to put out more than 20 percent flower.”

BC company clarifies that they are not authorized to sell cocaine, psilocybin to the general public

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

BC-based cannabis company Adastra has issued a press release clarifying that they are not going to be selling coca leaf, psilocybin or cocaine to the general public.

The clarification comes following a flurry of media attention in the past few days that often mischaracterized a company press release about a research permit for cannabis as potentially leading to cocaine sales to the general public.

This even prompted BC Premier David Eby to comment that he was “disturbed” by the news. 

The Company received its Controlled Substances “Dealer’s Licence” on August 24, 2022, and an amendment on February 17, 2023. The Company’s wholly-owned subsidiary Adastra Labs Inc. is licensed to possess, produce, assemble, sell, and transport coca leaf, cocaine, and psilocybin. Adastra Labs is only allowed to produce up to 1,000 grams of psilocybin and 250 grams of cocaine in 2023.

“The Dealer’s Licence issued to Adastra Labs does not permit Adastra Labs to sell coca leaf, psilocybin or cocaine to the general public,” stated the press release. “For cocaine, and under the Dealer’s Licence, Adastra Labs is only permitted to sell to other licensed dealers who have cocaine listed on their licence, including pharmacists, practitioners, hospitals, or the holder of a section 56(1) exemption for research purposes under the Controlled Drugs and Substances Act (CDSA).

“The Company is not currently undertaking any activities with cocaine under the Dealer’s Licence and before doing so, it will only undertake such activities legally permitted by the Dealer’s Licence and after consultation with applicable Provincial Governments.”

A so-called “Dealer’s Licence” is required by Health Canada for each physical location where activities are conducted with controlled substances. Despite the name, this does not imply one can sell to the general public. In addition, there are no legal federal mechanisms for such sales of cocaine, coca leaf, or psilocybin.

Canadians purchased $4 billion worth of cannabis in 2021-2022

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

This comes from $4 billion in legal cannabis sales in from April 1, 2021 to March 31, 2022, the equivalent of $131 per person of legal age to consume cannabis.

The new figures released by Statistics Canada are the first time it has included data on recreational cannabis as part of their Control and Sale of Alcoholic Beverages publication. Federal and provincial governments earned $15.2 billion from the control and sale of alcohol in the same time frame.

The Territory of Yukon had the highest per-person cannabis sales ($291), followed by Alberta ($210), and Saskatchewan ($185), while Quebec had the lowest ($89), followed by Manitoba ($107), and Nova Scotia ($125).

Image via Statistics Canada

Unsurprisingly, ​dried cannabis remains the most popular type of cannabis sold, accounting for 71.1% of recreational cannabis sales, followed by inhaled extracts such as vape pens, hash, and rosin (18.1%) and edibles (4.1%).

More than $2.8 billion of this was for dried cannabis flower, $721 million was for inhaled extracts, $156 million for ingested cannabis extracts (oils, capsules), $164 million for cannabis edibles, nearly $59 million was cannabis beverages, and more than $52 million was topicals, seeds, and “other” products.

Extracts and vape pens have been increasing in popularity since they were first introduced into the market in late 2019 and early 2020, eating into dried flower’s market share.

Image via Statistics Canada

Quebec, which does not allow the sale of high-potency extracts or vape pens (or most edibles), sold the highest proportion of dried cannabis (86.3%). Newfoundland and Labrador, which until recently also had a ban on vape pens, sold the smallest proportion of inhaled extracts (3.8%).

Canada assessed more than $500 million in excise taxes for the previous fiscal year 2020-2021.

Canadian cannabis $4 billion sold
Image via Statistics Canada

Cannabis businesses rally behind banking lawsuit

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

The Canadian cannabis industry is reacting to a recent lawsuit filed against several Canadian lending institutions.

Following the announcement of the lawsuit on February 10, people operating different businesses within the Canadian cannabis industry have been sharing their own frustrations about working with banks in Canada.

The biggest challenge—says Paul Hakimi, owner of The Hash Guild, a micro processor in Ontario—is not only being refused by banks, but also being accepted only to have the rug pulled out from under them sometime later. 

“When we first started The Hash Guild in 2019, the banks, and RBC in particular, were very supportive in setting up our accounts,” explains Hakimi. “Now in 2023, with all of our federal licensing as well as overcoming the challenges of the pandemic, banks have withdrawn their support and even closed our accounts.”

Although he has been able to find other banks willing to work with his business, he says they tend to charge very high rates for cannabis businesses. 

“Other financial institutions are now charging exorbitant rates to licensed producers while black market producers are finding ways to grow with these same institutions. As a federally licensed producer, our hands are tied with the banks. It is our hope that the government, which created this industry five years ago, will step in and mandate that the discrimination against our market stops.”

John Karroll, CEO of Trichome Consulting Services Inc., which has assisted different cannabis businesses through the licensing process, says he’s seen these same challenges arise again and again for new cannabis companies trying to find a bank to work with. 

Karroll says his company has helped more than 200 companies through the commercial licensing process and estimates that around 60% have run into challenges finding or keeping a bank account. 

“This issue is significant and widespread across Canada. It impacts many legally registered cannabis companies, from retail to micro & standard licenses, and creates financial hardship for these companies. In addition, the majority of companies that are in the application process with Health Canada are also victims to this banking issue, as they cannot open accounts if they state openly to the bank they are in the cannabis industry”.  

“These companies are spending thousands of dollars to be part of this industry and meet all regulatory requirements, municipal, provincial and federal,” he adds. “They are compliant and go through the stringent licensing requirements. Yet they have to process these operational funds through personal bank accounts or other companies that are not listed as cannabis operations.”

Karroll says he suspects some of the challenges could be related to banks and other lending institutions that also do business in places like the United States, where cannabis remains federally illegal. 

However, Joshua Reynolds, President of CapitalNow Cannabis, a small financing company focused exclusively on small-to-medium-sized licensed operators in the Canadian cannabis sector, tells StratCann he thinks this may often be an easy excuse some banks use when they simply don’t want to work with cannabis companies.

“I think they have conveniently been able to blame those rules, but I don’t think they would jump into it. I think they see it as too risky still, that it’s not mature enough. I think they would be concerned about the business acumen, and a few other things.”   

Highlighting how widespread the issue is, following the announcement of the class action lawsuit against Desjardins Federation, National Bank, Royal Bank, Bank of Montreal, TD Bank, Royal Bank (RBC), and CIBC, numerous cannabis companies also left comments online mirroring similar experiences across Canada. Here are just a few:

Ghost Drops closes Toronto store after purchasing production facility

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

First opened in April 2022, the Ghost Drops store at 1184 Queen Street West in Toronto featured limited edition drops of Ghost Drops products.

Now that Ghost Drops has also purchased a 10,000 square foot cannabis processing facility in Ontario in November 2022, the company is pivoting away from retail to ensure compliance with Ontario regulations, and to focus more on production. 

The store’s final day was January 31, 2023.

“You likely are aware that in Ontario, Licensed Producers can only own up to 25 per-cent of shares in a retail cannabis store (unless that store is located on the same site as a production facility),” explains Gene Bernaudo, CEO of Ghost Drops, in an email to StratCann. 

“After this change, and assessing our ownership stake situation in 1184 Queen Street West, we decided that our resources were better allocated towards controlling the manufacturing and distribution of our products in order to continue the growth of the Ghost Drops brand.”

Bernaudo says the decision was not related to any concerns with cannabis retail saturation in Ontario, and says the company has no current plans to open any additional retail locations in Canada. But he adds that they are also “assessing new ways to allow our consumers to experience the Ghost Drops brand in-person and have some announcements coming soon.”

Ghost Drops has been in operation since 2017 as a cannabis brand, before officially launching in the legal cannabis market in Canada in 2021. The company has been partnering with licensed cannabis producers in Canada to bring their various cultivars to market, such as Donny Burger, Baklava, White RNTZ, C.R.E.A.M. Cake, King Sherb, First Class Funk, Khalifa Mints, and Z-Splitter.

Products are currently offered in pre-rolls, blunts, 3.5-gram and 14-gram packs and are available in hundreds of retail cannabis stores across Canada.

SQDC in Q3: Net income of $32.2 million from $187.3 million in sales

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

The SQDC brought in more than $30 million in net income in the last three months of 2022, from nearly $190 million in cannabis sales. 

During its third reporter quarter of 2022, the Société québécoise du cannabis (SQDC) recorded an overall net income of $32.2 million from $187.3 million in sales. 

In addition, the province brought in another $38.4 million in estimated tax revenue in the same time period, out of $54.4 million collected (75 percent of excise taxes collected goes to the province). A total of $86.6 million was earmarked for governments from this reporting period, including $70.6 million for the Quebec state.

Quebec reinvests this income for prevention and research in the field of cannabis, as well as against any harm related to the use of psychoactive substances. 

Sales from September 11 and December 31, 2022, represented a slight decline from the same time period in 2021 of $190.5 million. The provincial cannabis agency says sales volume (33,242 kg of cannabis) declined slightly, potentially due to ongoing strike actions impacting two dozen SQDC locations. 

The sales also represent an increase from the previous quarter, which saw $139.1 million in sales, with an overall net income of $22.3 million.

The SQDC sold 31,274 kg of cannabis for a total amount of $176.6 million. Sales on the SQDC website accounted for another 1,968 kg of cannabis, for a total of $10.7 million. Net expenses for retail sales with 14.6 percent of sales, or $27.3 million. 

The SQDC had 92 branches operating as of Q3 2022, compared to 81 branches in the third quarter of 2021-2022. Forty-eight SQDC branches are non-unionized, while 26 are unionized. Twenty-four of those 26 are currently on strike. The stores are operating with limited hours. 

Two SQDC stores recently faced break-in, one at the Beauport SQDC location and another at an SQDC location in Montreal.

The SQDC’s President and CEO Jacques Farcy told StratCann in 2022 about the province’s plan to move from adding new stores to refining consumer experience, including a new “small lot” program to introduce new, unique products into the market.

If the pilot project is successful based on producer and consumer feedback, the SQDC plans on fully implementing the program in April-May 2023.

Lawsuit alleges banks in Canada are discriminating against cannabis industry

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

The lawsuit—brought by Groupe SGF, a group of cannabis legal advisors and consultants—is suing on behalf of Gabriel Bélanger, the founder of Origami Extraction, a micro processor in Quebec. The suit names the Desjardins Federation, National Bank, Royal Bank, Bank of Montreal, TD Bank, Royal Bank (RBC), and CIBC. 

The class action includes all individuals or corporations that, directly or indirectly, do business with any of the defendant banks and who have been involved in the legal cannabis industry since October 17th, 2018.

Maxime Guérin, a lawyer with Groupe SGF who is representing the case, says the issue of banks treating legal cannabis businesses unfairly has been damaging to the development of the legal industry. 

“For far too long, Canadian banks have treated the cannabis industry like pariahs, as if it was still completely illegal,” says Guérin. “By doing so, they are depriving the Canadian—but especially the local—economy of developing a promising market.”

“It was necessary, almost 5 years after legalization and discussions between the industry and the banks, that we took this step. Enough is enough, the legal cannabis industry and its players are 100% legal and should not be treated as criminals anymore, especially in a corporate environment such as a bank.”

The lawsuit contends that these lending institutions have taken “reprehensible and discriminatory actions” towards numerous individuals and businesses who have been operating within Canada’s legal, regulated cannabis market. 

“This class action covers anyone that has a relation with legal cannabis. It covers anyone that is directly or indirectly part of the industry, either it be the bud tender in Ontario, the LP in Saskatchewan, or the hydroponic shop in Québec that sells fertilizers.” 

Maxime Guérin, a lawyer with Groupe SGF

The lawsuit contends that prior to October 18, 2018, the legal medical cannabis industry still faced numerous challenges to accessing banks, but options remained available. This changed, it continues, after cannabis was fully legalized in 2018, though with no clear policy and many banks often refusing to open bank accounts, supply loans, or do any kind of business with some cannabis business owners while continuing to do business with others. 

In the instance of Gabriel Bélanger, the micro processor who is pursuing this issue, he opened a bank account registered to his own cannabis consulting agency in 2020 with the National Bank of Canada.

Then, in 2022, after Bélanger incorporated his company Origami Extraction Inc, he received a letter from National Bank telling him that the account of Origami Extraction would be closed on October 11, 2022. Bélanger contends he only discovered his accounts had been closed when he checked his bank account. 

Over time, Bélanger then says he was also refused by Desjardins and CIBC, and not provided a clear explanation of why. 

Then, on December 2, 2022, the lawsuit says a National Bank account manager told Bélanger that his two bank accounts, as well as any linked credit cards, were closed simply because the businesses were connected to the cannabis industry. 

Bélanger was initially able to open a bank account with the Royal Bank of Canada between October and November 2022, but was then informed in December that the accounts were closed due to an “internal policy”.

Bélanger says he also attempted to open an account with Desjardins in 2020 connected to another cannabis company in Quebec but was refused.

This inability to secure permanent banking caused Bélanger undue hardship, contends the lawsuit, and forced him to use his personal account for business, further putting himself at financial risk. With his micro processing licence, he says he has a minimum annual turnover rate of one million dollars, highlighting the challenge of operating this kind of business without a bank account. 

The lawsuit seeks compensation not only for Bélanger, but any others who have had similar experiences in Canada, says Guérin.

“This class action covers anyone that has a relation with legal cannabis. It covers anyone that is directly or indirectly part of the industry, either it be the budtender in Ontario, the LP in Saskatchewan or the hydroponic shop in Québec that sells fertilizers.” 

More information on the class action can be found here. 

Many cannabis companies in Canada have long found it difficult to find and keep a bank or other lending institution, or even to maintain an account. 

Challenges with cannabis businesses in Canada getting and keeping relationships with lending institutions are well known, with many banks unwilling to do business with what they see as an uncertain industry. 

Some have turned to smaller lending institutions like credit unions, some of which have leaned into the gap left by larger banks.

“Data scraping” concerns some Ontario cannabis retailers

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

Some Ontario retailers say they are concerned about a new type of “data leak” circulating within the industry that appears to be showing their sales. 

Unlike a leak of retailer info in 2022 that was the result of an issue with a third-party partner of the Ontario government, this newest release of information seems to be the result of third-party data “scraping” services that collate publicly available information.

Jennawae McLean, the co-founder of Calyx+Trichomes, a cannabis store in Kingston, Ontario, says she became aware of sales information in early February showing figures for stores in the Hamilton area and was concerned it could be even more widespread. 

Posting about it on Twitter, she began hearing from other retailers still reeling from last year’s data leak. 

Scraping is kind of a dirty word in our industry as it diminishes the complexity, but ultimately what we do is go to retail web pages, pull relevant, public-facing data twice a day, clean and organize it for LPs so they can monitor their products in the market.

Jeff Woods, Neobi Technologies

“We’re still not sure exactly what happened,” explains McLean, noting that in her discussion with other store owners, not all sales data appeared entirely accurate.

 The Ontario Cannabis Store (OCS) and the Alcohol and Gaming Commission of Ontario (AGCO) both sent out notices to retailers that the leak did not originate from either of their organizations. 

Owen Allerton, the owner of Highland Cannabis, a retail store in Kitchener, says he suspects the issue comes down to “data scraping” services that collect and collate information from websites like his own in order to glean information about product levels and sales figures. 

The way his own store’s online menu works, he explains, allows someone to select a product to purchase and will tell the user if the amount they selected is more than the store has in stock. By using an automated search mechanism these services can complete enough searches to gain a rough idea over time of what a store’s sales figures could look like. 

“Because it’s linked to inventory…you can inadvertently see your inventory through that dropdown mechanism. So they go through every SKU on a website like mine and take snapshots of what the max quantity is at different points of time and, over time, they’ll see what the sales are.”

His concern, he says—something echoed by McLean—is that this can be a security risk for store owners already facing concerns with break-ins and robberies, as well as giving inside information to retailer competitors in Ontario’s highly saturated and competitive retail cannabis market. 

For Allerton, he says the responsibility comes down to the companies that are managing retailers’ online sales platforms. 

“On one hand, what products I carry and the prices of those products, that’s fair game. It’s on my website. But there’s a line there somewhere when you start to extrapolate my sales from all of this, and I think that, if it is from scraping, it falls back to the e-commerce providers. A lot of us  are talking to our e-com providers and telling them they need to do something about this.”

For their part, Dutchie, the company that operates Highland’s online store, says they have heard concerns about sales information making its way to the public.

“While we are aware of ongoing discussions of data leaks in the Canadian market, we are confident that our customers’ data and our platform remain secure and protected,” Dutchie’s chief technology officer, Chris Ostrowski, tells StratCann. “We are committed to data privacy and place customer trust above all.”

“Protecting our customer’s data is a top priority. As part of our ongoing commitment to doing so, Dutchie recently earned a SOC 2 compliance certification to help keep customer data safe.”

Jeff Woods, the co-founder of Neobi Technologies, a service that utilizes such “scraping” tools to gather information for licensed producers and others within the industry, says the process is somewhat misunderstood. 

“Scraping is kind of a dirty word in our industry as it diminishes the complexity, but ultimately what we do is go to retail web pages, pull relevant, public-facing data twice a day, clean and organize it for LPs so they can monitor their products in the market,” he told StratCann.

The main reason they provide this service, he explains, is for cannabis producers who otherwise don’t have much insight into factors such as what stores carry their products or when and where certain products are or are not selling. 

Rather than exploiting the system, he says Neobi and other similar services are filling a gap in the market, arguing that many provinces don’t provide distribution or inventory data to producers.

“It’s a black hole of data in the supply and demand chain. LPs have no real-time understanding of where their products are and how quickly they’re being sold.”

“This is a consumer packaged goods industry,” he continues, “and inventory and distribution data are the basic information LPs need to operate their business effectively. We aim to ensure our partners have access to the intelligence they need to thrive in a heavily regulated industry.”

 “We don’t collect or produce sales data; POS companies sell that information. We track product inventory counts and how they deplete over time, helping producers understand inventory velocity in specific markets or stores.”

“Regarding the reports circulated on Twitter, we can confirm Neobi does not handle proprietary data and only aggregates publicly available information. From what we can tell, this is not data produced by our team.”

For retailers like Allerton at Highland who aren’t comfortable with that kind of information being available, he says he may start looking for an e-commerce provider who can address his concerns. 

“If they’re able to scrape that data, it’s a problem for the e-commerce providers we’re all using. If they can’t plug this hole, then we’ll need to look at viable alternatives.”

Canopy Growth closing Tweed’s Smiths Falls facility, laying off 800 workers

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

Canopy Growth has announced they are laying off 800 workers and will be closing their flagship facility at the former Hershey factory in Smiths Falls.

The layoffs will represent 35 per cent of the company’s workforce. Forty per cent of the cuts will be immediate while the rest will take place over the course of the coming months.

The former Hershey chocolate factory at 1 Hershey Drive in Smiths Falls was an iconic symbol of cannabis and cannabis legalization in Canada formerly under the Tweed banner.

The company says it will move to an “asset-light model” and will also cease cannabis flower production from Smiths Falls to its Mirabel, Quebec facility. Canopy will also move to a third-party sourcing model for cannabis beverages, edibles, vapes, and extracts.

“Canopy must reach profitability to achieve our ambition of long-term North American cannabis market leadership,” said chief executive officer David Klein in a news release. “We are transforming our Canadian business to an asset-light model and significantly reducing the overall size of our organization. These changes are difficult but necessary to drive our business to profitability and growth.”

Canopy’s recent quarterly report showed net revenue of $101 million in Q3 FY2023, which declined 28% versus Q3 FY2022. The company claims the decrease is primarily due to increased competition in the Canadian adult-use cannabis market, the divestiture of their “C3” Cannabinoid Compound Company GmbH, a decline in their U.S.-based CBD business, and softer performance from assets Storz & Bickel and This Works.

The company hopes these cost-cutting measures will reduce annual expenses by $140-$160-million over the next 12 months.

Featured image shows a grow room inside the Smiths Falls facility.

Note: This article initially reported that Canopy would be moving flower production to their Mirabel facility. It has now been edited to note that Canopy will also cease cannabis flower production from Smiths Falls to its Mirabel, Quebec facility

Ontario cannabis retailer group calls out “kickbacks”

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

A group of Ontario cannabis stores are calling for an end to “kickbacks” that they say are used to incentivize shelf space for some producers. 

Highland Cannabis Inc., an independent retailer based in Kitchener, Ontario, is leading the Cancel Kickbacks campaign in an attempt to pressure the provincial government to look closer at the issue and enforce its own rules against inducements between licensed cannabis producers and licensed cannabis dealers.

“The Cancel Kickbacks campaign is demanding that the Ontario government properly enforce its own anti-incentive regulations, which are being circumvented by retailers and manufacturers who falsely and unlawfully characterize incentive transactions as payments for the sale of ‘data for business intelligence purposes’,” argues the organization in a press release.

“These payments favour larger, well-funded, licensed cannabis producers who have the means to pay sales incentive kickbacks to gain market share, and larger retail chains who have the leverage to collect the kickbacks and then use them to fund such low competitive prices that independent retailers can’t possibly keep up,” it continues.

Ontario, like many other provinces, does not allow inducements, such as producers offering payment for preferential shelf space—or to even carry their product at all. However, it’s become a well-known and controversial practice that some retailers, especially larger retail chains, sell “data plans” to producers that, some argue, are simply a workaround that allows for these kinds of inducements. 

AGCO defines gratuities as payments “made with the purpose of promoting or increasing the sale of a particular brand or product by the licensee or its employees.”

The Cancel Kickbacks campaign is demanding that the Ontario government enforce its own anti-incentive regulations, which the campaign says are being circumvented by retailers and manufacturers who falsely and unlawfully characterize incentive transactions as payments for the sale of “data for business intelligence purposes.” 

Jennawae Cavion, co-owner of Calyx + Trichomes Cannabis, an independent cannabis retailer in Kingston, Ontario says she has been approached by several producers who want to pay such “kickbacks” for shelf space. Although she notes such practices are not uncommon in the retail world, they are not supposed to be allowed in the cannabis space. 

“In our industry it’s specifically not allowed,” explains Cavion. “In my opinion, the AGCO changing the rules to allow for data sales has just opened up this opportunity for retailers to benefit from kickbacks. It’s not even a very thin veil in some places, some are very blatant in it being a kickback.”

Ultimately, she says she thinks producers and retailers participating in such programs will only harm themselves in consumers’ eyes. But this might take years, she says, meaning smaller retailers will have to tighten their belts to make it through this period. 

“It’s really to their detriment because now I won’t carry their products at all. There’s no longevity in these deals. They’re going to dry up. It’s a dead end. But for those of us who are independent, the question is can we outlast this program.”

Owen Allerton, owner of Highland Cannabis Inc, says he thinks these plans will be the end of independent retailers. 

“By not enforcing the inducement ban, AGCO tacitly allows cannabis producers to pay prohibited kickbacks to cannabis retail chains,” says Allerton.

“Several of the big retail chains are using the banned stimulus money to fund predatory pricing, to control the market and thereby drive the small independent retailers out of business. People are talking about the price wars in the cannabis retail market. There are no price wars. There are only big chains, and their ultra-discount models are subsidized by illicit kickbacks. 

“Producers pay these illicit kickbacks for shelf space at major chains while undermining the 1,000+ independent retailers—putting them out of business,” he continues. “In the end, only the chains will remain.”

As of June 30, 2022, the AGCO revised the Registrar’s Standards for Cannabis Retail Stores to allow retailers to sell this “sales data” to producers “for business intelligence purposes.” One retail chain that recently posted its public earnings report noted its “data sales” were $21.7 million for the fiscal year that ended October 31, 2022. Such data sales are not necessarily connected to such ‘kickbacks, making it difficult for the provincial regulator to investigate.

The Cancel Kickbacks campaign argues that this rule change made it possible for some larger industry players to get around this ban by characterizing such payments as being for ‘sales data’, which the organization says threatens to undermine Ontario’s cannabis industry.

“Of Ontario’s 1,573 licensed retailers, about 300 are affiliated with large retail chains and over 1,000 are smaller, independent stores (fewer than 10 stores),” notes the press release. “Independent cannabis retailers are predominantly run by individuals or families who have invested personal finances and savings in their retail startups. These independent businesses make up the bulk of the industry and are most at risk from predatory pricing funded by illicit incentives.”

BC has brought in more than $157 million in cannabis excise tax since legalization

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

The BC government has brought in more than $157 million dollars from their share of federal cannabis excise taxes since the beginning of legalization, but municipalities are still asking for what they say is their share. 

The figures, which span the first day of legalization up until August 2022, do not include additional revenue from provincial taxes or other related industry fees. 

BC, like all other provinces and territories, has an agreement with the federal government to take 75 cents from every dollar of the federal government’s cannabis excise tax. 

Under the Federal-Provincial-Territorial Agreement on Cannabis Taxation, which was signed prior to legalization, it was mandated that the combined rate of all federal, provincial and territorial cannabis-specific taxes would not exceed either $1 per gram or 10 percent of a producer’s selling price. 

This tax revenue was to be shared, with 75 percent going to provincial and territorial governments, and the other 25 percent going to the federal government, with the federal portion of cannabis excise tax revenue to be capped at $100 million a year. 

As per the agreement, provinces and territories were expected to work with municipalities to allocate these funds. Most provincial governments, including BC, never made an official commitment to share cannabis taxation revenue with their municipal governments.

Municipalities in BC have been asking the province for years to provide them with a portion of those tax revenues. In 2020, the Union of BC Municipalities (UBCM) said a survey of their membership showed $11.5 million per year in local government incremental costs for the three years following cannabis legalization.

A representative with BC’s Ministry of Finance says they have not provided any of this tax revenue, but are in talks on the subject with the UBCM as part of a long term plan. 

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

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

Paul Taylor, the director of communications for UBCM affirms that the province remains unwilling to sign such an agreement.

“The province has been non-committal on the question of sharing a portion of federal excise tax with local governments,” explains Taylor. “They have met with UBCM and considered appeals from our membership, but as of yet have not stated a long term approach, adding that “Cannabis tax revenue sharing is part of a much larger ongoing set of discussions with the province on strengthening the finance system for local government.”

In 2019, UBCM developed a survey for local governments to estimate the expected costs to municipalities associated with legalization. 

Cities were asked to provide information covering their expectations for the first three years of legalization, which was estimated at more than $15 million due to projected enforcement costs, the cost of the licensing and oversight of retail stores, and costs to public health. No figures are yet available outlining how these projections have borne out. 

Meanwhile, the cannabis industry has been calling for a lessening of this tax burden on the industry, arguing that $1 per gram tax rate hamstrings producers who are often only selling cannabis for a few dollars a gram. In 2022, the BC Chamber of Commerce called for major changes to BC cannabis laws, including an elimination of the 20 percent provincial tax on cannabis vape products, and  a national excise tax based on a calculation of the percentage of sales rather than price/gram.

Winnipeg’s Delta 9 Cannabis to “temporarily” lay off approximately 40 staff in cost-cutting move

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

Delta 9 Cannabis will be cutting capacity at their Winnipeg-based facilities by 40%, and laying off around 40 staff in an effort to cut costs.

The layoffs will be temporary, the company says in a press release. The cuts are being made to lower costs and save between $3 and 4 million in 2023 as the company seeks to compete in an increasingly competitive cannabis market.

“Delta 9’s retail operations have achieved profitability and positive operating cash flows over the past several years,” Delta 9 chief operating officer Mark Jonker said in a statement. “Our cultivation and wholesale cannabis operations have struggled with profitability due to continued price and margin compression in the Canadian cannabis market. Our decision is designed to significantly reduce costs and to chart a near-term path to becoming cash flow positive from operations.”

Delta 9 was first licensed in 2014, one of the first licensed cannabis producers under the new medical cannabis program at the time. Since then, the company has expanded to include micro cannabis production partners and several retail stores. 

Delta 9’s retail stores will not be affected by the cuts. 

“We recognize that in the current market environment we need to make near-term strides to improve profitability across our operations,” the company’s chief financial officer Jim Lawson added. “The board of directors and executive have also agreed to reducing compensation as part of their commitment to achieving positive cash flows from operations in the current fiscal year.”

Delta 9 Bio-Tech Inc, the company’s subsidiary, is a licensed producer of medical and recreational cannabis and operates an 80,000-square-foot production facility in Winnipeg, Manitoba, Canada. Delta 9 owns and operates a chain of retail stores under the Delta 9 Cannabis Store brand.

“I would like to thank the employees affected by this decision for their invaluable contributions to Delta 9’s success and growth,” CEO John Arbuthnot concluded. “This was a very difficult decision, but it is a key component of executing on our strategic plan and one we believe best positions Delta 9 for profitable growth.”

Delta 9 Biotech posted net revenue of $15.7 million for the third quarter of 2022, an increase of 3%, from $15.2 million for the same quarter last year, and gross profit of $1.9 million for the third quarter of 2022, versus $4.8 million for the same quarter last year.

However, the company faced a net loss from operations of $6.2 million for the third quarter of 2022 versus a net loss from operations of $55,031 for the same quarter last year.

Aurora completes sale of Polaris facility in Edmonton

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

Today Aurora Cannabis announced the sale of a processing and logistics facility located near the Edmonton Airport. 

The company says it has closed the sale of its Aurora Polaris facility with gross proceeds of approximately $15 million.

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

In May 2022, Aurora announced the closure of Aurora Sky, as well, with 214 lost jobs. 

In September 2021, the company then announced their plans to close the facility, representing a loss of 8% of its global workforce at the time. A news report at the time noted an Alberta government website listed the Aurora Polaris facility as being around 2,800 square meters “with one-third of the space dedicated to warehousing and distribution of cannabis products and the remainder hosting product manufacturing.”

Updated: Ontario, BC pause listing any new delta-8 THC products, await guidance from Health Canada

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

The Ontario Cannabis Store sent out a notice to licensed cannabis producers on December 15 to inform them that the provincial cannabis distributor and retailer will no longer be listing delta-8 THC products until it receives guidance from Health Canada.

Update: BC now confirms that they will also not be registering or replenishing any products that contain Delta-8-THC until they determine their next steps.

In their letter, the OCS says they have been monitoring “emerging concerns in the United States, where the Food & Drug Administration (FDA) has issued public health warnings for unregulated products that contain the novel synthetic cannabinoid delta-8 THC. As a result, an increasing number of U.S. States have taken steps to regulate or ban products that contain this cannabinoid.”

The OCS began carrying several products that contained novel cannabinoids, including Delta-8 products. These have been in the form of cannabis vapes, edibles, beverages, and topicals. The OCS will still continue to purchase and list dried cannabis products, including pre-rolls, that contain low levels of naturally occurring Delta-8 THC.

While the provincial agency says it is not aware of any adverse reactions to these products in the legal cannabis market in Canada to date, products that contain delta-8 THC fall “outside the definition of THC under the federal Cannabis Act”.

The OCS says it has contacted Health Canada, asking for direction on the subject of delta-8 products specifically. 

Until Health Canada provides this requested guidance to the industry, “out of an abundance of caution” the OCS will: no longer accept any product that contains delta-8 THC as part of the product call process; will not issue notices to purchase new products containing delta-8 THC that have previously been submitted through the product call process; will not issue purchase orders for any products containing delta-8 THC (any purchase orders that have been issued but not fulfilled to OCS will be cancelled); and will not issue replenishment orders for any currently listed delta-8 THC products.

The OCS will still sell the existing inventory through its online store and whole distribution channels. OCS.ca currently lists nine products that feature delta-8 THC.

Other provinces

UPDATE: In response to a request for comment from StratCann, the BC LDB says that it has become aware of some products containing delta-8 THC “which falls outside the definition THC under the Federal Cannabis Act”. 

“Information about Delta-8-THC and the potential biological effects and health risks to consumers is new and emerging, and the BC Liquor Distribution Branch (LDB) is working with its government counterparts to determine the appropriate next steps,” wrote a representative for the LDB. 

“Until we determine next steps, the LDB will not be registering or replenishing any products that contain Delta-8-THC.”

A representative from the SQDC in Quebec noted that the SQDC does not currently sell products with minor cannabinoids such as delta-8 on the labeling. “As such we do not have a position on the matter at this moment” noted the media representative.

StratCann has reached out for comment from other provinces as well as Health Canada and will be updating as that information is provided.

The NSLC in Nova Scotia does not carry any delta-8 products, nor does Cannabis NL, serving Newfoundland and Labrador. Cannabis NB in New Brunswick lists at least 1 delta-8 product on their website. At least one store in Yukon carries a delta-8 product.

A representative for Cannabis NB (CNB) tells StratCann: “We have just become aware of OCS’ policy approach and we are still assessing the situation. In general, for CNB, we follow the act and the guidelines as mandated by Health Canada when it comes to selling products and adhere to direction that they provide.”

Banking reform in US unlikely to help Canadian cannabis companies

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

Legislation to reform how financial institutions can interact with cannabis companies in the United States won’t change much for Canadian cannabis companies struggling to find banks willing to take their business. 

The SAFE Banking Act in the US made headlines again in the past few weeks, with many in that country’s cannabis industry saying such changes are needed to allow the industry to grow. 

Canadian cannabis companies often face similar challenges in finding banks willing to work with them, despite the industry being fully legal and regulated across the country. One of the reasons sometimes offered to explain Canadian banks’ lack of interest in working with the legal cannabis industry is their ties to other countries like the US, where cannabis is not yet legal. 

While the US bill seems unlikely to pass anytime soon, even if it does, it’s unlikely to change those dynamics, says Joshua Reynolds, President of CapitalNow Cannabis, a small financing company focused exclusively on small to medium-sized licensed operators in the Canadian cannabis sector.

Although the connection to US and European banks and any legal or regulatory concerns are real, he says that even if cannabis was legal in the US and any other country they operate in, most large financial institutions would still not likely want to work with cannabis anytime soon. 

“I don’t think that, even if the (SAFE) Act passed, the banks would jump in,” says Reynolds. “US illegality is a real issue, but it also provides a good excuse to avoid the sector and the risk associated with it.” 

The cannabis industry is still too new and too risky, he explains. 

“I think they have conveniently been able to blame those rules, but I don’t think they would jump into it. I think they see it as too risky still, that it’s not mature enough. I think they would be concerned about the business acumen, and a few other things.”

Mike Schilling is the President and CEO of Community Savings Credit Union, which operates seven branches across British Columbia and works with numerous cannabis businesses. He echoes some of Reynolds’s comments about fear of legal or regulatory penalties, and adds that he thinks it’s just not a priority for larger banks, but is something smaller credit unions are more comfortable with and suited for. 

“There are two key reasons why financial institutions don’t work with cannabis companies,” says Schilling. “The first is that banks that operate in both Canada and the US can be sanctioned by the extraterritorial reach of US law, as cannabis is still not legal at the federal level in the US. 

“The second is that the cannabis industry isn’t seen as a big enough prize to compensate for the additional regulatory burden. Many financial institutions aren’t willing to do the extra hard work. And while there are some examples of larger institutions willing to bank cannabis, they charge exorbitant fees.”

Schilling says legislation like the SAFE Banking Act could begin to change that equation, although it could be too late for many Canadian companies. 

“Banks turn away because of both fears of sanctions, and a calculation of if the industry is worth the effort. As the cannabis industry matures and shows longevity, the calculation of whether it is worth it to bank cannabis will change and more banking options will emerge. Removing the threat of legislation will further change the cost-benefit equation for banks, and more banking options for cannabis will emerge. 

“What we hear from our members is that it’s too late. So many banks weren’t willing to bank cannabis from the start when it was tough, or were only willing to with fees that meant cannabis businesses could not survive. Now that it’s getting easier, financial institutions want a slice of the pie without the legwork.”

Oscar Jofre, the President and CEO of KoreConX, a company doing business with cannabis businesses in the US and Canada, says the issue isn’t as widespread in the US as some might believe, noting that numerous smaller banks are doing business with cannabis companies in numerous legal US states. 

Even if legislation like SAFE passed, he says he doesn’t see it making much of a difference in the US or Canada because of the risk aversion larger banks have to the cannabis industry in general, regardless of any regulatory concerns. 

“Even with the SAFE Act, the bigger banks aren’t going to put it under their risk profile,” says Jofre. “They’re going to do the same thing our banks are doing in Canada. They’re not looking at it from the legal point of view anymore. They’re looking at it from the optics point of view. They’re big banks and don’t want to be seen doing business with cannabis.”

He notes that the banks are also quite inconsistent, even those operating in both the US and Canada. While many Canadian banks say they don’t want to touch cannabis, they have no problem accepting payments through credit cards. In the US, he says it’s often the opposite, with at least smaller banks being willing to work with cannabis companies, but credit and debit card sales are often off the table. 

One solution Jofre says his company has found success with is working with some of those smaller US banks. As the US moves closer to a fully regulated, federal legal model, he says those businesses can then better serve their Canadian partners. 

“Canada has some things that the US doesn’t and the US has some things that Canada needs. I believe if Canadians can’t find banking in the Canadian sector, they should do what the rest of us do, begin the operational side by partnering with someone in the United States and move from south to north.”

For Reynolds at CapitalNow, the early success of the cannabis industry in Canada in bringing in investor dollars may have left a bad taste in the mouths of some of the large banks. With large publicly traded companies seeing skyrocketing valuations for a few years before often imploding, banks are just deciding to stay away until things settle out, regardless of the law. 

“Banking, in general, is very conservative. In Canada, it’s even more conservative. So even if the SAFE Banking Act passed, I don’t think they would have anything to do with it.”