A cannabis producer in BC is trying to let retailers know they are not affiliated with the BC government.
BC Cannabis Inc. is an Indigenous-owned micro cultivator based in Sooke, BC, licensed in April 2021.
Albert Eppinga, the company’s owner, says he and his team were excited to launch their first products recently in BC. However, they have received feedback that some cannabis retailers are under the impression the company is connected to the BC government.
Because of pent-up animosity some retailers have towards both the BC LDB, which handles distribution in the province, and the government-run BC Cannabis Stores, Eppinga says some retailers have been hesitant to buy their new BC Cannabis Inc products.
“What we were finding is quite interesting,” explains Eppinga. They think BC Cannabis Inc is a brand from the BC Cannabis Liquor Board or the BC Cannabis Store. Since some stores are opposed to the BC LDB and BC Cannabis Store, they don’t want to buy our products because they think we’re a part of the government.”
As an independent, Indigenous-owned cannabis grower in BC, he says he has been working overtime to ensure retailers know more about his company and who they are—and that the BC government does not own them.
“It’s becoming a bit of a controversy. We were all excited to get into the BC LDB, and now we’re finding that people don’t want to purchase from central delivery, and they think we’re a part of the government.”
While some retailers might not be familiar with the brand, two StratCann spoke with said they not only know it, they have gone out of their way to support it because of their appreciation for Eppinga and his unique, small-scale operation.
“I love Albert’s weed,” says Mike Babins of Evergreen Cannabis in Vancouver. “I never thought about the name issue. I really want his company to succeed!”
Andrea Dobbs, at Village Bloomery, also in Vancouver, says she’s been happy to carry the product because she’s familiar with it. However, she can see why some retailers might be confused by the somewhat corporate-sounding name.
“I think Albert is great, he’s a great grower, and I think it would be great if he had a brand that better reflected his expertise, his knowledge, and his personality.”
Laina Yates, who works as the western sales manager at Mercari Agency Limited, which markets cannabis products including those from BC Cannabis Inc., says she can understand the confusion, and agrees that producers need to ensure their brand conveys the unique aspects of their personality.
“Your name really needs to reflect your brand and personality,” says Yates, “and we can see here how that can be very important.”
A man connected to a recently-licensed micro cultivator in Manitoba is part of an ongoing case relating to the illicit production, sale, and distribution of cannabis.
As part of the proceedings, the Manitoba government is also seeking to seize three properties it says are connected to illicit cannabis grows operated by the owner of a micro cultivation facility, including one that is also home to the micro cultivator licensed as Elevated Prairies.
Elevated Prairies was licensed for cultivation by Health Canada in February, 2023.
The three properties in question were raided by the RCMP in June, 2023, with RCMP seizing around 2,000 cannabis plants, along with growing equipment and other items that police allege are proceeds of crime.
Court records show the RCMP first became aware that James Robert McGirr, of Springfield, Manitoba— one of the owners of Elevated Prairies—was an alleged member of a drug trafficking network being invested under the name Project Divergent. This led to an investigation of McGirr and the three properties where cannabis was either grown, stored, or sold.
McGirr told police he grew up to 150 kg of cannabis a month and that he smuggles a cannabis extract into and out of the country via barrels of honey or maple syrup.
Court records also show that during an investigation into McGirr’s activities, he told agents he grows up to 150 kg of cannabis a month and that he smuggles a cannabis extract into and out of the country via barrels of honey or maple syrup. As part of the investigation, RCMP say they purchased 40 pounds of cannabis from McGirr for $40,000.
Two of the properties the province wants to seize had operated under medical production licences from 2021-2022. Court records don’t distinguish if these were personal or designated production licences.
Court records also show that Health Canada had initially denied a security clearance to McGirr “on the basis that he has current family members with links to organized crime, specifically drug trafficking activities”. McGirr was to hold the positions of RPIC, head of security, master grower, director and officer.
Elevated Prairies refiled their application after removing McGirr as an officer and was granted their micro cultivation licence about nine months later.
McGirr is due in court on his criminal charges in July.
The Manitoba government argues that the properties in question are connected to the proceeds of crime in part due to financial records showing McGirr declaring less than $100,000 in income from 2015-2019, despite depositing hundreds of thousands of dollars in cash into several accounts over the same time period. McGrirr was also collecting funds from the Federal Government through CERB payments.
McGirr, Elevated Prairies Inc. and the company’s director, 6440780 Manitoba Ltd., and two credit unions that issued mortgages on the properties were also named as defendants in the criminal property forfeiture lawsuit filed by the Manitoba government.
Note: The case was closed in April 2024 following the death of one of the defendants, the other six men charged having their proceedings stayed. In August 2024, Elevated Prairies was listed as having their licence revoked.
In other news, CBC News looked at the AGCO’s consideration of an amendment to remove the requirement for window coverings on cannabis stores, and spoke with Elisa Keay, of K’s Pot Shop on Queen Street East in Toronto, and Omar Khan, chief communications and public affairs officer with High Tide Inc. Khan highlighted the safety concerns retailers have resulting from passers-by being unable to see inside the store, in cases of robberies.
Meanwhile, Toronto Policearrested a man this week for a violent cannabis store robbery on Wednesday, June 21 in the Dundas Street West and Burnhamthorpe Road area. Police allege that the armed man attacked an employee to get access to cash and cannabis.
The Canada Border Services Agencyreminded travellers coming to Canada, along with several other pieces of advice, not to bring cannabis into the country. They also reminded travellers not to bring sand to the beach.
Following Canopy’s reported $648-million Q4 loss last week, one BC investor launched a class action lawsuit, saying his shares dropped in value when the company admitted to errors in its financial reporting.
The organizer of an annual cannabis protest on Canada Day in Vancouver said he’s not holding the event this year due to a lack of interest. VIA reports that the event organizer had been selling vendors non-refundable spaces.
BC retail chain Trees released its annual financial results for the fifteen-month period ended March 31, 2023. The Company currently has 14 Trees branded storefronts in Canada: nine in Ontario and five in BC.
Eric Costen was appointed Associate Deputy Minister of Health on June 26, 2023. Costen has worked on the cannabis file in Ottawa almost constantly since 2013.
The Cannabis Regulators Association (CANNRA), a non-partisan, nonprofit association of government officials involved in cannabis regulation from more than 45 US states, opened an international, non-voting membership category this year, and has welcomed Health Canada as its first international member.
Tantalus Labs, a BC-based cannabis grower first licensed in 2017, has announced it’s closing up shop.
Dan Sutton, the company founder, announced today that Tantalus Labs LTD has filed a Notice of Intent for Restructuring (NOI) in Canadian Federal Court.
Sutton says Tantalus is laying off the “substantial majority” of its team, “retaining only a few key employees to navigate the complexity of this restructuring process.” He also says the company seeks to “find a path forward for our brand and winning products to continue to deliver value to customers and distributors nationwide.”
“Despite continued market success by firms like Tantalus, the regulatory and taxation environment is persistently so burdensome that even today, five years into recreational legalization, free cash flow in the Canadian cannabis industry remains systemically challenged,” says Sutton.
“Tantalus is not alone,” he adds, “and in a recent survey of 120 small cannabis cultivators across Canada, 85 percent indicated that they believe their businesses will become insolvent over the next 6 months. No company of any size has been able to consistently demonstrate a sustainable business model given an excise tax rate of 25-45 percent of gross sales.
“This is a difficult day for Tantalus employees, shareholders, and creditors, and our only consolation is the knowledge that each individual on our exceptionally talented team worked tirelessly to persist as long as we could in these challenging conditions.”
Dan Sutton, Tantalus Labs
“This is a difficult day for Tantalus employees, shareholders, and creditors, and our only consolation is the knowledge that each individual on our exceptionally talented team worked tirelessly to persist as long as we could in these challenging conditions.”
Several former employees with the company shared the news on social media, as well.
“I will say that Tantalus was a dream and the people I met and had the pleasure of working with have been some of the biggest blessings!,:” shared Katherine L on Linkedin, a former Ontario sales manager with Tantalus.
The greenhouse cannabis grower, located in BC’s Lower Mainland, operated initially under a medical cannabis licence before expanding into the non-medical recreational market following full legalization in 2018.
With a focus on sun-grown cannabis as a brand, Tantalus was also the recipient of a $2.9 million grant and contribution from the federal government for an expansion of its greenhouse.
Following the rapid expansion of the cannabis market in the lead-up to legalization and the first few years following, the industry has been undergoing some contraction recently, forcing companies to reconfigure business operations to meet current market demands or, in some cases, closing the business entirely.
Last December, MJBiz reported that 40 percent of the CCAA filings in Canada between January and December 22 involved companies operating in the cannabis space, most of them cannabis producers. MJBiz also covered the growing unpaid tax bill from many cannabis producers, including comments from Tantalus CEO and founder Dan Sutton.
Sutton has also been one of the leading voices trying to draw attention to industry challenges regarding high taxation rates and the impact of that on the ability of businesses to maintain profitability.
“It’s no exaggeration to say that, unfortunately, all businesses of any size in the production and processing side of the cannabis industry today….cannot pay (their) own bills and cannot make ends meet,” Sutton said earlier this year.
Canadian cannabis producers work under the same federal laws, but when it comes to provincial jurisdictions, each has a different approach. Some provinces have programs to support local producers, whereas others essentially ignore the industry; some are more protectionist, whereas others have equal access for all providers—no matter their location.
“The Société québécoise du cannabis, or SQDC, is very protectionist,” says Cartel Cutler, Managing Partner at Higher Peaks Agency, a Toronto-based sales and marketing organization that represents over 20 different brands. “With the SQDC, there is no chance of getting a listing unless it comes from a local provider. The SQDC will take product from out of province, but it has to be distributed through an LP in Quebec.”
Quebec is something of an outlier in that other provinces and territories in Canada are nowhere near as protective of local producers. Most, in fact, make little distinction. That said, some have policies that are specifically designed to help the local cannabis industry, such as British Columbia.
“The BC Liquor Distribution Branch (LDB) is committed to supporting local, BC-based producers,” says Kate Bilney, Senior Manager, Communications and Stakeholder Relations at the BC LDB. “The province has implemented two key programs aimed at supporting local producers in the province: the direct delivery program, and the BC Indigenous Cannabis Product (BCICP) program.”
The LDB’s direct delivery program was launched in August 2022, and continues to grow. It helps small-scale producers in BC to enter the market, authorizing them to deliver directly to retailers.
The BCICP, launched in January 2022, aims to highlight cannabis products from BC-based Indigenous producers, and to help consumers identify Indigenous products. The program is available to cannabis producers with at least 51 percent Indigenous ownership and facilities in British Columbia.
Home Grown Pride
The Ontario Cannabis Store (OCS) – the largest centralized wholesaler of legal cannabis in the world – also has programs that support local producers.
“The ‘Ontario-Grown’ curated product list, exclusive to OCS.ca, invites adult consumers to browse and shop a variety of cannabis products grown locally in Ontario,” says Mike Hajmasy, Senior Communications Advisor, Strategic Communications at the OCS. “As well, The OCS’s ‘Craft Cannabis’ designation and product list invites adult consumers to browse and shop craft-designated cannabis products, which are sourced from LPs in Ontario and across the country.”
The OCS, which has a catalogue of 3,000 unique cannabis products and distributes to more than 1,600 brick-and-mortar retail stores across the province, also has a farmgate program to help out local LPs.
“LPs can sell cannabis products to the OCS for sale at the farmgate store without first having to ship that product to the OCS Distribution Centre,” says Hajmasy. “As a result, farmgate stores located at production facilities across Ontario can make their products available directly to adult consumers. There are currently five farmgate stores operating in Ontario.”
Overall, getting products into the OCS is a complex process. When it comes to smaller and local producers, the province’s flowthrough program, which allows retailers to order select products that aren’t stocked by the OCS warehouse, should help with market access.
“The OCS is trying to get to a better place by expanding the flowthrough program,” says Cutler. “Conceptually, it’s a great idea, as it gets products into people’s hands faster. Ultimately, it could replace the product call process, which would be great because right now it’s an onerous and drawn-out process.”
Alberta, which has received some criticism for not supporting local LPs, is making strides in this area, given that 35 of the 147 LPs that the Alberta Gaming, Liquor and Cannabis (AGLC) works with are Alberta-based, and that many of the AGLC’s product listings are made up of Alberta-produced products.
Meanwhile, Saskatchewan and Manitoba, which don’t have a formal product call process or specific programs for local LPs, nonetheless receive praise for their ease of doing business. In Saskatchewan, all LPs ship to one of the approved distributors or directly to retailers. In Manitoba, the Manitoba Liquor & Lotteries Corp (MLLC) coordinates with LPs for direct-to-retail delivery.
“My favourite model is by far Saskatchewan,” says Cutler. “Manitoba as well, because it is easy to get listings and to bring all of the products that you’d like to market.”
Promoting the industry
The cannabis industry in Canada is still dealing with stigma, which some observers claim has resulted in a reluctance to support the sector and indifference to the need for tax reform. At the provincial level, many jurisdictions have been reluctant to promote the industry in the same manner as local wine or craft beer.
“There should be a break for small, local producers, but it has to come at the provincial level,” says Gord Nichol, owner and president of North 40 Cannabis in Nipawin, Saskatchewan. “For example, small craft beer producers in Saskatchewan have successfully lobbied for reduced excise tax. If we were to cut a similar deal for micros, it would really make a difference.”
Nichol is one of the largest employers in his rural municipality, and pays his workers 80% above the living wage. He argues that a break on the excise tax would make a big difference.
“If significant tax breaks were available, we could double our economic output,” he says. “And all of that would go right back into the economy. Sadly, there’s little political interest to do that, perhaps because we are small, or due to ignorance or stigma.”
There are some examples of provinces taking bolder approaches, which suggests that stigma can be overcome. Usually, these programs are promotional, such as in Nova Scotia.
“The best thing about Nova Scotia is the emphasis placed on highlighting local products and producers,” says Cutler. “The Nova Scotia Liquor Corporation (NSLC) stores have dedicated space and signage promoting the ‘Buy Local’ movement that continues to increase in popularity and demand by customers.”
In Ontario, the OCS also helps out with marketing and with sponsorships and grants at industry events. For example, OCS has a new series of written and video spotlights that showcase Ontario-based LPs. There are also ongoing efforts to support grant programs by event organizers that provide Ontario LPs (and retail stores) with access and visibility at industry events.
Clearly, some steps are being taken to support the industry, though cannabis in Canada still doesn’t receive anywhere near the attention or practical support, that is common practice for other economic sectors, with stigma and ignorance being the most likely reasons. Nonetheless, cannabis industry sales continue to increase as production space and headcount plateau, which suggests that now might be a good time for provinces to revisit their policies and find innovative and practical ways to help local producers compete.
In a room located next door to a cannabis store on Yonge Street in downtown Toronto, Lit Research offers producers a way for consumers, store owners, and budtenders to learn about and experience new, up-and-coming cannabis products.
Launched in the fall of 2022, Lit Research bills itself as a hub for the cannabis community, helping cannabis producers and brands to provide a unique, value-added educational experience to anyone looking to learn more about their products.
Al Shefsky, the founder of Lit, as well as the neighbouring business Body and Spirit Cannabis, has been hosting multiple cannabis tasting and sampling events every week at his location just up the street from Dundas Square since first opening.
He’s quick to clarify that Lit Research is not a consumption lounge. The business operates under a federal cannabis research licence that allows for sensory testing of products. Licence holders can conduct organoleptic/sensory testing to evaluate factors such as the taste, touch, sight, and smell of cannabis products with human participants.
A presentation during an event at Lit Research
“The producers come in to educate about who they are, about the product, and then you get a guided tasting opportunity where consumers test cannabis by smoking it. It’s unique. There are no other companies doing it like this to my knowledge. So it’s great for the consumers.”
“Participants value the experience and say it’s a special opportunity for them to see and try new products before and after they reach the market,” he continues, explaining this can then be beneficial for buyers, store owners, and budtenders.
“They also like the idea that their feedback matters. Every participant fills out a Participant Evaluation Form, and then we report that data back to the licensed producer. So they’re feeling empowered.”
In order to get the licence, which he says took about a year, he also had to undertake a significant remodel of the room to be used for research, including installing a high-grade HVAC air exchange system to allow consumers to comfortably smoke or vape products indoors.
Those participating in the study must also fill out information on their experience as a consumer and their thoughts on the products sampled.
Shefsky says Lit Research has held several research sessions every week since opening, with some producers using it as a chance to share products expected to be launched soon in the Ontario market, while others use it as a chance to determine which products they end up bringing to market at all.
“We quickly realized we had more room than we needed and were finding it hard to compete with all the new stores—especially since unlicensed stores continued opening and operating with significant competitive cost advantages in our area. I was looking at all the options, reading the regulations, when we decided a research licence could allow us to create something unique for the community.”
Al Shefsky – Lit Research
The idea for the research centre started as a way to optimize the high rent space occupied by Body and Spirit in the increasingly competitive and saturated retail market in Toronto. Shefsky says his retail store at 361 Yonge St. was the fifth cannabis retailer licensed in Ontario’s second round, following a lottery in 2019 to open the first 50 stores in the province. Body and Spirit opened in May 2020, just as covid restrictions were beginning to come into place, meaning they quickly had to find new ways to stay relevant and economically sustainable.
“We got into the market early,” continues Shefsky,” but we quickly realized we had more room than we needed and were finding it hard to compete with all the new stores especially since unlicensed stores continued opening and operating with significant competitive cost advantages in our area. I was looking at all the options, reading the regulations, when we decided a research licence could allow us to create something unique for the community.”
Anyone over the age of 19 can take part in the sensory testing at Lit Research, although some events are invitation only. Participants are vetted to ensure they understand any potential risks involved. The room itself has a capacity of 48 people. Each table has a vaporizer and various smoking and vaping accessories like grinders and rolling trays, and participants have access to plenty of water as well as games and snacks.
Producers and brands have an opportunity to engage directly with participants, giving not only their brand story but also information about each product or cultivar, and talking points that retailers and producers may be interested in.
Shefsky advises anyone else looking into a similar approach to do their homework beforehand and understand the process, the timelines, as well as the fairly strict parameters around Health Canada’s research licence. Participants cannot be asked, for example, about any medical effects, but can only convey information about sensory attributes such as taste or aroma.
Two and a half years after Yukon issued a recall of jerky due to possible contamination with THC, one man has been found guilty of a single violation of Yukon’s cannabis regulations.
The recall, issued in December 2020, came after several people checked into a local hospital displaying symptoms consistent with cannabis intoxication, despite them all saying they had not consumed cannabis.
The Whitehorse RCMP and Emergency Health Services (EHS) launched an investigation into these reports, finding that the cause of the cannabis intoxication was the consumption of beef jerky from a local company called Off the Hook.
Off the Hook was owned by John Francis Pauch, who was found responsible for the presence of cannabis in the jerky products purchased by dozens of people in at least three provinces. In total, an investigation found thirty-three people, including seven children and two infants, in Yukon, Alberta, and Nova Scotia who reported experiencing symptoms of cannabis intoxication after consuming beef jerky from Off the Hook. Nine people, including one child, visited a hospital emergency department.
The court heard that the investigation led EHS officers to seize 671 bags of jerky from Off the Hook in Whitehorse on December 30, 2020. However, EHS agents left the products in boxes at the business to be picked up the next day. Subsequently, the boxes went missing, and EHS was unable to recover them for testing.
RCMP subsequently seized approximately three hundred unopened bags of Off the Hook beef jerky from seven businesses in Whitehorse. Law enforcement took a random sample of jerky from six stores carrying the products, and all six tested positive for cannabis.
RCMP also seized another twenty-two bags of jerky from individuals and sent twenty for testing. Fourteen of these samples also contained cannabis.
The court heard that John Pauch, his brother Rick Pauch, and adult son Joel Pauch, had plans to begin making cannabis-infused jerky under a federal processing licence.
Joel had been experimenting with recipes for cannabis-infused jerky at home and discussed the idea with his father and uncle. A decision was made to prepare a commercial scale, 25 pound test batch of cannabis jerky at Off the Hook. An employee was tasked with making the batch in early December.
What happened to the boxes of jerky seized by EHC but left on site was undetermined. The judge found the testimony of John Pauch to be “problematic” regarding his explanation of how the infused cannabis made it onto shelves and what happened to the seized products.
In part, this lack of credibility led the judge in the case to find John Pauch guilty of a single count before the Court for the offence contrary to s. 66(1)(a) of the Cannabis Control and Regulation Act.
No sentencing information was yet available as of press time. Yukon’s cannabis regulations call for a fine of not more than $100,000.00 for a first-time offence for such a violation.
The Yukon News reports that he also faces two separate lawsuits filed late last year from people who say they became intoxicated after eating the jerky from his shop.
Retail cannabis sales increased again in April for the second month in a row, following a post-holiday lull in January and February.
Ontario and British Columbia, as well as Alberta and Saskatchewan, helped drive retail cannabis sales up by just over one percent in April compared to March.
Retail cannabis sales in Canada increased by just over $5 million in April compared to the previous month, despite month-over-month declines in sales in the six other provinces. Sales in Yukon were flat, and sales figures from the Northwest Territories and Nunavut were unavailable.
Sales in Canada hit their highest level last December, at $425.9 million, before declining in the post-holiday downturn in January and February. Sales increased again in March to $406.4 million and $411.7 million in April.
Sales across Canada continue to increase year-over-year, although increases in 2023 have been less significant than in previous years. This data correlates with a decrease in new retail stores nationwide and, potentially, consumer saturation among those currently using the legal market.
Retail cannabis sales in Canada since legalization
Atlantic Canada saw the most significant decline in April compared to March, with retail cannabis sales in Newfoundland and Nova Scotia declining by nearly four percent, PEI declining by more than two percent, and New Brunswick declining by less than two percent.
Every province and Yukon (NWT and Nunavut figures are not available) showed a year-over-year increase in sales compared to April 2022, except for Quebec, which saw a slight decline.
Retail cannabis sales across Canada April 2022-April 2023
While cannabis retail sales continue to increase on a year-over-year basis, looking at the trend of sales figures from January 2019, the rate at which sales are increasing is declining, if not levelling off at around $420 million a month.
Sales tripled year-over-year from January 2019-January 2020 and nearly doubled the following year. From January 2021-January 2022, sales increased by about 25 percent. In the most recent year, from January 2022-January 2023, sales only increased by about 14 percent.
Ontario saw a significant spike in retailers from 2020-2022 but has been slowing in the last year. The province has been hovering around 1,700 producers for much of the past year. Alberta has also seen significant retail growth in the first few years of legalization and has settled out around 750. While these provinces still see new retail licences issued, these are often accompanied by other retail closures.
BC is the only province to have seen significant retail expansion over the past year, with around 100 public and private stores added from June 2022-June 2023. Saskatchewan added about 40 stores but has not listed its annual sales report for the past fiscal year.
Despite this slowing in sales, the legal cannabis market does continue to capture more of the overall market share from the illicit market. A survey from late 2022 showed that 67 percent of those who consumed cannabis in the previous year “never” obtained their products from illegal sources. This was an increase from 63 percent in 2021 and 55 percent in 2020.
Folks wanting to enjoy a slice of the vibrant Kootenay cannabis culture, a few days of camping in the woods, and an array of eclectic electronic and acoustic music will gather once again at The Unicorn Music Festival, formerly known as Unicorn Cup, located near Salmo, BC.
Now in its sixth year, this summer’s event takes place August 11-14 as it continues to establish itself as a popular gathering in the region.
Campers will enjoy three days and three nights of music, cannabis, and community, immersed within several hundred acres of BC woodland beside beautiful Rosebud Lake. While there are electric and acoustic music stages (including one floating on the lake), campers will also get to explore new Immersive Camps experiences, and a dedicated “holistic” stage for activities such as yoga, sound healing, wellness talks, and various interactive workshops.
The festival features The Rosebud Bowl, a cannabis comparison where VIPs, or VIUs (Very Important Unicorns), have access to a few extra features, including a kit containing educational cannabis materials and an assessment guide.
Che LeBlanc, one of the founders of the event and a local cannabis grower—whose farm, Rosebud Cannabis Farms is adjacent to the festival—says the event has been steadily growing in size. Around 350 people attended last year’s gathering, and he expects about twice as many this year.
He and his team are taking a slow and steady approach to the festival, with a long-term vision of expanding to something that can serve several thousand annual attendees.
“We’re only going to grow as quickly as we can maintain respect for the land and the environment,” emphasizes LeBlanc. “That’s really a cornerstone of this event, taking care of and working in harmony with the people and land that supports us.”
With Rosebud Farms located right next to the festival grounds, his long-term goal includes integrating farm tours and cannabis sales, once provincial laws allow it.
“I’d love to give tours of the regenerative farm as part of the event,” he continues. “We would love to be able to sell cannabis on-site, that would be a great step in the right direction,” adding that he has heard the province is beginning to look at these rule changes and hopes to hear more soon.
He attributes the festival’s rapid growth to the strength and unique flavour of the Kootenay community.
“There is something for everybody. A lot of the cannabis community is here, a lot of budtenders, a lot of brands. But it’s also a beautiful music and camping festival at the same time. I think that’s part of the reason we’re getting the attention that we’re getting. It’s quite unique to incorporate all of this together, the arts, performance, camping, and cannabis.”
The Unicorn Music Festival offers tickets priced at $220, which includes a camping pass and full access to the three-day festival, along with a three-night camping experience. It’s important to note that camping follows a pack-in-pack-out leave no trace policy.
Those who purchase a VIU (Very Important Unicorn) ticket priced at $420, will have full access to the event, the privilege of car-camping, and the opportunity to engage in a meet and greet with keynote speakers. Additionally, the ticket encompasses a welcome package, complete with directions for participation in the Rosebud Bowl, educational cannabis reference materials, and an official link to the online assessment guide.
The event is 19+ and no alcohol or pets are allowed.
Ontario’s cannabis regulator is launching a consultation on window coverings in cannabis stores as well as advertising and promotion of cannabis.
The AGCO, the Alcohol and Gaming Commission of Ontario,—responsible for regulating Ontario’s alcohol, gaming and horse racing sectors, and cannabis retail stores—is looking to gather feedback on two revisions to the province’s cannabis rules.
The first revision relates to the visibility of cannabis and cannabis accessories from the exterior of stores, while the second relates to inducements for customers to purchase cannabis.
Specifically, the provincial regulator is asking for feedback on two rules in Ontario’s Standards for Cannabis Retail Stores:
The first is a rule that says cannabis stores must ensure that cannabis and accessories are not visible from the exterior of the premises;
The second deals with an existing rule that prevents retailers from giving out free cannabis or providing incentives to purchase cannabis or cannabis accessories.
The proposed changes to the first rule change would mean the “elimination of any provincial requirements related to visibility of cannabis or cannabis accessories from the exterior of the store.”
The proposed changes to the second rule would mean that Ontario’s regulatory framework “would no longer specifically prohibit retailers from offering loyalty programs based on sales or cannabis or accessories, free delivery related to a purchase amount, or other things or benefits in exchange for purchasing cannabis or accessories, assuming compliance with all other regulatory requirements. Retailers would continue to be prohibited from offering cannabis to patrons free of charge.”
The AGCO will be collecting feedback from relevant stakeholders until July 11 through its Engagement Portal. A notice is being sent out to retailers and other stakeholders by the end of day on June 20.
The AGCO also has a call for proposals for a Cannabis Retail Employee Training Program, and is accepting applications until September 1, 2023. Through this process, up to two programs, in addition to the province’s current CannSell program, could be approved by the AGCO Board for a five-year term. Any approved programs will begin offering training in 2024.
Micro cannabis licences continue to grow in popularity in Canada, at almost 42 percent of all licences issued as of March 31, 2023. Just over half (51 percent) of licences were standard, three percent were nursery licences, and nearly four percent were medical-sales only licences.
At the current pace of licensing, the total number of micro licences could surpass standard licences in 2024.
Totals were 151 cannabis production licences in the queue and 913 active production licences in Canada as of March 31, 2023, according to Health Canada’s newest figures.
Of those active cannabis production licences, as of March 31 this year, 470 were standard licences, 381 were micros, and 26 were nurseries. Fifty-five of these licences were Indigenous-affiliated (six percent of all licences), and 158 were outdoor growers.
Of those applications seeking a licence, 44 were Indigenous-affiliated and 37 were for outdoor licences. Fifty-six of the applications were for standard production licences, 84 for micros, and two for nurseries. Most applications were in BC, Ontario, and Quebec. Prince Edward Island, Newfoundland and Labrador, Yukon, and Nunavut had no applications in the queue.
Image via Health Canada
BC is still home to the most micros with 91, followed by Quebec with 87, and Ontario with 76. Micros are the majority of licences in Manitoba, Quebec, Nova Scotia, PEI, and Saskatchewan. Indigenous-affiliated applications—which have access to the Indigenous Navigator program through Health Canada—were also more likely to be for a micro, with 29 out of 55 licences being micros. Thirty-six of these are medical-only sales licences.
As of June 16, another 36 micro licences and another 13 standard licences were issued, along with one nursery and four medical-only sales licences. A medical-sales only licence allows a business to manage cannabis sales, generally through an online platform, without ever producing or touching cannabis.
This represents a decline in applications in the queue compared to the previous update posted in March, covering up to the end of 2022, when there were 175 applications to grow or process cannabis commercially, the majority of them micros.
Of those 175 applications by the end of 2022, 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 an outdoor cultivation licence. Similar to the first three months of 2023, Newfoundland and Labrador, Northwest Territories, Nunavut, Prince Edward Island, and Yukon Territory also had no applicants.
Image via Health Canada
While new applications continue to come in, the number of licences throwing in the towel continues to increase as well. As of March 31, 2023, there were 166 licences either revoked or expired—146 of these were revoked at the request of the licence holder, while three were revoked by Health Canada and 17 expired.
Between March 31 and June 16, 2023, there were another 24 new licences issued, along with 21 licence revocations, four expiries, and one licence suspension.
The Société québécoise du cannabis (SQDC) will have a new interim President and Chief Executive Officer as of June 26, 2023, as the agency begins the recruitment process for a permanent replacement.
Robert Dalcourt, CPA, CGA, is replacing Jacques Farcy for the presidency of the Société des alcools du Québec (SAQ). Farcy has served as CEO since October 2021 and oversaw a shift for the SQDC from rapid expansion of their retail footprint across the province to one focussed more on refining customer experience in those stores. Farcy spoke recently with StratCann about this shift.
Cannabis sales were flat in the SQDC’s most recent annual report, compared to the previous year Consumers in Quebec bought $601.9 million worth of cannabis in 2022 during the fiscal year that ended March 25, 2023, compared to $600.5 million in the previous year. The estimated share of the total market the province captured declined slightly, from 58.5% in 2022’s annual report to around 56% this year.
Despite that small decrease, according to Quebec’s most recent annual survey on cannabis, fewer consumers bought from illegal suppliers compared to the year prior, meaning while few people use the illicit market, those who do are purchasing more. The SQDC’s target for 2022-2023 was to capture 75% of the total market.
Dalcourt first joined the SQDC in 2018, where he first held the position of Director, before taking the role of Vice-President of the Finance Department. The SQDC notes he is also an active member of the agency’s Management Committee, and provided “significant leadership” in the SQDC’s 2024-2026 strategic plan.
Dalcourt brings over 35 years of management experience to the SQDC, primarily in the manufacturing and food distribution sectors, as well as accounting and finance.
The recruitment process for the next officer will be overseen by the SQDC’s Board of Directors and is expected to begin quickly.
Michael Forbes is a BC entrepreneur who has brought his experience in medicine, business management, production, and retail into several successful cannabis outfits in the province and across Canada.
In addition to an array of businesses outside of the cannabis space— pharmacies in BC and Alberta, a brewery on Salt Spring Island, and a storage facility in Sooke, BC—Forbes has also founded the micro-business park Sitka Weed Works in Sooke, opened numerous cannabis stores across the country, and is the CEO of Adastra Labs, a cannabis extraction facility in Langley BC.
Background
Michael Forbes
With a BSc. in Pharmaceutical Sciences from the University of British Columbia, Forbes is also certified in cannabis plant production and facility management, as well as age management medicine and hormone restoration, and he owns three methadone clinics.
Bringing his array of experience into the cannabis space on both the medical and “recreational” side is as much about his passion for people and plant medicine as it is about developing thriving businesses and navigating a highly regulated industry.
“I am an advocate for helping patients have a better life, and I believe in plant medicine,” says Forbes. “Our bodies have evolved over thousands of years with nature, so the medicines that plants provide typically work better in the body and are safer than alternatives. And more specifically, cannabis has been shown to provide relief for chronic pain, anxiety, and insomnia.
“My decision to enter the cannabis space was informed by this knowledge of its benefits and wanting to enhance the quality of life for patients, as well as my personal passion for solving complex problems.”
Sitka Weed Works
Ever since he started his first pharmacy in his early 20s in the early 2000s, Forbes realized his knack for operating a retail business, scaling up to a workforce of 350 people. This eventually aided in his development of a chain of retail cannabis stores across Canada, and led him to develop a business park for micro-growers on Vancouver Island and a processing facility in Langley.
“Sitka is unique,” he explains. “It was set up to help bring higher-end craft products to market while also working with legacy growers in the micro space. The cannabis market has been constantly evolving, and consumer demands are shifting. We are seeing that the market is now starting to desire (and demand) higher and higher quality cannabis.
“Since Sitka was created to be a high-quality, high-end brand, it is extremely well positioned to provide the products consumers are looking for and play a key role in this niche area.”
Sikta is currently home to several micro producers who can sell through Sitka’s in-house processor or to third-party processors, ideally giving clients a leg up on entering provincial markets.
Avoiding common mistakes
With the number of people investing a lot of their own money to enter the cannabis industry, especially micro producers transitioning from the legacy space, he says his business experience can be an asset.
Grow Facility
“My recommendation for those looking to avoid making common mistakes is to educate yourself or bring on expertise that will help you navigate all the regulations. Ensuring that you’re aware of what the regulations mean will help you make decisions regarding the future of your business that will pay off in the long run.”
While some might think the industry is easy money, the reality is quite the opposite.
“I think a lot of people rushed in thinking it would be easier to operate and make it in this market than it is. Regulation is a convoluted and tricky part of the industry that few have the experience to navigate. On top of that, banking regulations have also made it very difficult. I hope those can be changed to be like any other legal Canadian business.
I recommend others in the industry buckle up, watch overhead, and plan to be in a marathon. It is critical to pace your growth and make sure you stay in positive cash flow. And, of course, try and enjoy the ride!”
Navigating provincial markets
A key to Sitka’s success, he continues, is providing the additional knowledge and infrastructure for smaller growers who may not have the interest or ability to navigate the often complex process of being able to sell into a provincial market.
“I think that producers struggle in this area because there can be a tendency to direct all focus on growing, or alternatively, all focus on business functions like sales and marketing. I think that being a skilled grower is only half the business, and quality assurance, distribution, team management, and sales and marketing make up the other half. Both sides of the business need to be mastered, as they work in lockstep with each other to achieve success.”
Another piece in any business, he says, is building strong, cohesive teams.
“It is imperative to learn how to build teams with individuals that have unique and diverse skill sets. It may sound cliché, but you need to surround yourself with people who share your passion and have specific talents that you don’t have. This has always helped keep me from working in an echo chamber and ensures that different perspectives and considerations are brought to the table.”
Employees at a chain of retail stores in Manitoba have signed a collective agreement with the United Food and Commercial Workers (UFCW), highlighting concerns with safety rates of pay and what they say are unfair penalties.
The new 30-month agreement was signed on June 14 and covers employees at ten The Joint locations in the province. The Joint also has stores in Saskatchewan and Alberta.
The Union first received a province-wide certificate in June 2022 after workers contacted UFCW Local 832 about joining the union.
“I’m proud of our new members who stood up for their rights to join UFCW and worked together on not only organizing their workplace but also working with us to obtain the first collective agreement for Cannabis retail workers in the province of Manitoba”, stated UFCW Local 832 President, Jeff Traeger.
The union says the new 30-month collective agreement addresses numerous concerns that were raised during the organizing drive, such as safety concerns, rates of pay, and “unjust disciplines”.
The union held a meeting for members of The Joint on June 13.
“This is a fairly new industry. Since these workers have joined us, we have heard from numerous other Cannabis retail workers about joining our union. Many of them have been waiting to see what a collective agreement would provide them. We will continue to work on advocating for all Cannabis workers in Manitoba to ensure this industry has the proper protections these workers deserve.”
UFCW Local 832 represents over 19,000 Manitoban workers in food production, food distribution, warehousing, hospitality, security, personal care, assisted living, grocery retail and cannabis retail.
Ariel Glinter, head of business development and regulatory compliance for The Joint, says the company is supportive of their employees’ decision.
“As a company we believe that our employees are responsible for our success and as such have always supported our workforce and ensured our goals are aligned with theirs. We are optimistic in entering this relationship and look forward to working alongside the union.”
Note: This article has been edited to provide comment from The Joint.
Unions and cannabis in Canada
Budtenders and cannabis employees in other provinces have also been unionizing, or seeking to do so. A union representing BC cannabis retail employees has slowly been gathering members since it became the first union to represent budtenders in Canada in 2020.
The SQDC, which manages cannabis sales in Quebec, has been dealing with an ongoing strike, which continues in 22 of their 90 branches. Although these branches are still open, they are operating at reduced hours and face picket line pressures.
In June, members of a different union, the Confederation of National Trade Unions (CSN), voted to accept an agreement with the SQDC for increased wages, hours, and better working conditions.
In 2020, a court ruled a BC cannabis company had unfairly penalized workers for trying to unionize. In September 2020, the union began organizing and soon applied to be certified for 17 employees at a Peachland, BC operation.
Then, on October 5, the company laid off nine employees at the same Peachland operation, citing “the Company’s financial circumstances.” The union argued these employees were laid off for seeking to unionize. The court agreed.
In 2016, UFCW tried to organize workers at a MedReleaf facility in Ontario, but the Ontario Labour Relations Board ruled the workers did not have the right to unionize. The union has appealed that ruling.
Two men from Ontario who operated an illicit cannabis website and delivery service in PEI received conditional sentences from a Supreme Court Justice in PEI in May.
The two men, David Jones and Aaron Jones Braithwaite, aged 48 and 24 respectively, were running what police described as an illicit cannabis delivery company operating online. Charlottetown Police investigated the operation in 2021 following information received about the business.
Police say they arranged several controlled buys from the website in March and April 2021, including several hundred dollars worth of cannabis, hash, shatter, and edibles.
Following the fourth controlled purchase from police in April 2021, the two men were arrested. Police seized 1,901.3 grams of dried cannabis; 218 grams of cannabis edibles; 173.2 grams of shatter cannabis concentrates, nearly $2,500 in Canadian currency, and other materials related to the business.
Unfortunately, it’s been described as a whack-a-mole: We take down one site and two more open up.
Chief Serr, Abbotsford BC Police Chief
The court report notes that Jones had initially believed he could transition his business into a legal, licensed delivery service but has since acknowledged his efforts were not compliant with provincial and federal regulations.
The judge in the case issued a conditional sentence to both men. Jones was sentenced to imprisonment for 18 months to be served in the community, subject to numerous conditions, including house arrest for a period of 14 months, a curfew following the house arrest, and community service. He was also sentenced to probation for a period of two years.
Braithwaite was sentenced to imprisonment for 14 months to be served in the community, subject to numerous conditions, including house arrest for a period of 11 months, and adherence to a curfew following the house arrest and community service. He was also sentenced to probation for a period of 18 months.
The number of illicit online cannabis sites has only increased following cannabis legalization, with some former brick-and-mortar businesses moving online to avoid enforcement.
While there have been some notable instances of enforcement against illicit online retailers, law enforcement says it lacks the resources to target them all.
“Unfortunately, it’s been described as a whack-a-mole: We take down one site and two more open up,” Abbotsford BC Police Chief, Chief Serr told the Globe and Mail at the time.
“If you were to do a simple Google search, you would see numerous sites coming up, and one of the issues for consumers is it’s really difficult to tell online who is a legal seller and who is an illegal seller.”
A popular subreddit geoblocked a forum dedicated to illicit online retailers in Canada earlier this year, although the subreddit is still easily accessible.
Earlier in the year, BC’s director of civil forfeiture announced the province was seeking to confiscate cash and eight properties worth nearly $7 million alleged to be connected to three illicit cannabis websites.
In 2020, Ontario Provincial Police (OPP), along with the Ontario Provincial Joint Force Cannabis Enforcement Team (PJFCET), conducted a raid on an illicit online cannabis retailer.
More than $100 million worth of cannabis was sold in Nova Scotia last year.
Nova Scotia sold $111.1 million worth of cannabis in the fiscal year ending March 31, 2022, an increase of 9 percent compared to the previous year according to the most recent annual report.
Transactions involving cannabis also increased by 12.7 percent. While the average basket size decreased by 3.1 percent to $38.40, this is likely due to a 2.8 percent reduction in the average price per gram of $6.19.
The Nova Scotia Liquor Corporation (NSLC) which oversees cannabis sales in the province also added 11 new cannabis stores, for a total of 48 across the province.
“We continue to look for ways to compete with the illicit cannabis market and offer Nova Scotians an accessible and safe supply of cannabis,” said Greg Hughes, NSLC president & CEO. “This includes finding ways to partner with local cannabis producers and help them bring their products to market.”
The NSLC has also been promoting Nova Scotia-grown cannabis products. These products accounted for over 30 percent of all cannabis sales in the province, an increase year-over-year of nearly 42 percent for a total of $33.5 million in sales.
Revenue from cannabis sales in Nova Scotia goes towards the funding of “key public services”.
New Brunswick’s sixth cannabis farmgate store is opening June 23, located about 45 minutes outside of Moncton.
Greenherb Farms in Saint Joseph-de-Ken is an outdoor cannabis farm processing its flower into solventless rosin on-site. The farmgate licence is one of the final stages of development for the four-person operation that has been building the business since 2020.
Eventually we’re going to have a kind of farmgate belt here, where tourists are going to be able to come out and visit us all and really enjoy the experience
Once open, consumers will have the opportunity to visit the farm and directly purchase rosin made from flowers cultivated and processed on-site. Additionally, they will find a selection of flower products from other local producers such as ECO Canadian, Crystal Cure, and Golden Peak
Greg Claroni, general manager of and one of the owners at Greenherb, says the plan for their farmgate store is to create a more interactive experience for local consumers and tourists alike. He praises the province and CannabisNB specifically for being one of the few provinces in Canada that are allowing producers to get a farmgate licence.
The entrance to the cannabis farmgate store at Greenherb Farms
“Eventually we’re going to have a kind of farmgate belt here, where tourists are going to be able to come out and visit us all and really enjoy the experience. It’s great that we’re able to do all this in New Brunswick, all working together, and hopefully, we’ll see tourists and locals doing a bit of a cannabis hop from our farmgates in the future.”
Claroni says getting licensed was fairly easy, taking only a few months, but it’s the culmination of many years of hard work to get to this point. They received their licence on April 20, but delayed their opening while they put on some of the finishing touches.
“We are thrilled to open our doors to the public and share the fruits of our labour,” said Claroni. “Our Farmgate license represents the culmination of 7 years of dedication and hard work. We are eager to showcase our commitment to sustainable practices, product quality, and community engagement, and we look forward to building long-lasting relationships with our customers and partners.”
Another piece of the puzzle for Greenherb is a private members club and lounge on-site that can be used while visiting the facility for special events, info sessions, and other unique experiences. The lounge will be inside the old agriculture research centre that sits on the property, retrofitted for ventilation.
Cannabis farmgate across Canada
Cannabis farmgate stores in New Brunswick are private retail locations that are owned and operated by New Brunswick licensed cannabis producers. These producers are authorized to sell their own products on-site, directly to customers. There are five other cannabis farmgate licence holders operating in New Brunswick, including one cannabis nursery.
Ontario and British Columbia also issue farmgate licences to producers. Ontario has issued at least four, while BC has two working their way through the licensing process and two currently operating.
A BC cannabis producer has recalled two lots of dried cannabis sold in British Columbia and Manitoba due to a labelling error.
The two lots of dried cannabis from Aarons BCBud—one of Lindsay OG (3.5 and 7 gram) and one lot of Island MKU (14 gram and 28 gram)—were recalled due to incorrect cannabinoid values on the labels and errors in the THC, CBD and Total CBD values.
The Island MKU Dried Cannabis had a printed value of 23.70 mg/g THC and a total THC of 22.10 mg/g. The actual values were 12mg/g and total THC 221 mg/g. The printed value for CBD was 0.10 mg/g and Total CBD of 0.10 mg/g, with the actual value being <1 mg/g and total CBD as <1 mg/g.
The Lindsay OG was listed as having 20.64 mg/g THC and a total THC of 176.8 mg/g, while actual THC was 18.11 mg/g and total THC was 278.94 mg/g. CBD was listed as <0.01 mg/g and total CBD was listed as 0.10 mg/g, while actual CBD was <0.10 mg/g and total CBD was 0.62 mg/g.
Health Canada’s recall notice says that, to date, Aaron’s BCBUD Inc. has received one complaint related to incorrect cannabinoid values on product labels while Health Canada has not received any complaints related to the recalled lots. It also notes that neither Health Canada nor Aaron’s BCBUD Inc. have received any adverse reaction reports for the recalled cannabis product lots.
Labelling errors are the most common reason for cannabis product recalls in Canada. There were 590 units of the recalled product sold between October 14, 2022 to June 7, 2023. Health Canada reminds consumers that they should verify whether their product is affected and to contact the retail store where the product was purchased if they wish to return the product.
New Brunswick’s first privately-owned cannabis store is open for business as of June 14.
Cannabis Xpress, located in Grand Bay-Westfield, a town of about 5,000 located 15 minutes outside of Saint John, is the first of up to ten private retail locations that the province opened up applications for in 2022.
Although privately-run, the retailer will still be required to purchase products from Cannabis NB.
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.
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 fewer.
CannabisNB also currently lists three other privately owned retailers as “coming soon”, including one in Blackville, one in Bouctouche, and one in Chipman
“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,” said Cannabis NB president Lori Stickles in 2022.
Cannabis Xpress already operates 14 cannabis stores in Ontario. This is their first foray into the New Brunswick market.
Chris Jones, the owner of the new retail store, tells StratCann that he and his team are excited to enter the market and look forward to supporting the local community while continuing to expand/seek opportunities in Ontario, New Brunswick, and other limited license provinces.
“Our whole team is excited about the opening of the new store this week,” says Jones. “It was a new process for us to expand into another province. Over the last few months, we have spoken to many people in the community who have been extremely supportive of us, including the town council, and residents.”
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.
The province 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.
Judging will remain open until June 19. Results will be announced in late June.
The President and CEO of the SQDC says the agency needs to continue improving customer experiences in order to expand its reach into the illicit market.
After growing its retail network to nearly 100 stores, Jacques Farcy, who has been at the head of the SQDC since late 2021, sees the agency’s challenge is to ensure Quebecers are aware of the variety of products the provincial retailer carries.
The CEO has made this his mission since first taking the reins, sharing similar goals with StratCann in 2022. Since then, sales have not expanded—a trend playing out across much of Canada—as the market appears to be slowing after an initial rapid expansion.
Consumers in Quebec bought $601.9 million worth of cannabis in 2022 during the fiscal year ended March 25, 2023, compared to $600.5 million in the previous year. The estimated share of the total market the province captured declined slightly, from 58.5% in 2022’s annual report to around 56% this year.
Despite that small decrease, according to Quebec’s most recent annual survey on cannabis, fewer consumers bought from illegal suppliers compared to the year prior, meaning while few people use the illicit market, those who do are purchasing more. The SQDC’s target for 2022-2023 was to capture 75% of the total market.
Approximately 67% of cannabis consumers obtained cannabis at least once from the SQDC in 2022, similar to the rate in 2021. Among consumers aged 21 and over, around 44% purchased their cannabis exclusively from the SQDC, while approximately 22% said they obtained their cannabis only from sources other than the SQDC.
image via SQDC
One of the challenges Farcy says the SQDC is trying to address is that many consumers are unaware of many of the products the store carries. Although Quebec has more restrictions on products than other provinces, such as no high potency extracts or vape pens, they have introduced kief, hash, and a handful of edibles for the first time.
He says the market plateauing is an expected development, and now the agency is focusing on better serving customers within the existing footprint rather than expanding it.
“It’s time now to reconsider the way we do things, and enhancing the network or the number of stores is not a winning strategy for the future,” Farcy tells StratCann. “Now that we have 98 stores, we need to make sure that we satisfy our customers more within our stores. We need to put more energy there.”
In addition to new products, the province has also expanded its delivery service. About 20% of the province can now have cannabis delivered within 90 minutes of ordering from the SQDC’s online store, and same-evening service is available for about half of the province—something he says was just “a dream” a year ago.
The inability to sell all the products that consumers want is another challenge, he admits, as is the prevalence of illicit online sites that consumers may not know are illegal. Although Farcy expects to see the agency make more inroads with consumers still buying from the illicit market by informing them of newer products and the variety of prices—from a low of around $3 a gram to higher quality products at nearly $20 a gram—capturing all of the market will not be possible.
“That’s the reason we cannot claim that we will capture 100% of the market in the next three years, because there are these products that would be illegal.”
“The other thing that is important is what is legal in the minds of customers,” he adds, referring to illicit online stores.
“Customers don’t necessarily understand that buying on a website outside of Quebec, by nature, is illegal. We can’t really blame them for not understanding, because we have not made enough information available around those grey zones. And illegal markets are very clever with their approach.”
“It’s really important that we do as much as we can to not keep this confusion alive.”
Still, he sees many opportunities the SQDC is already taking to refine that shopping experience and better educate customers about what is available. One example he gives is some new store designs that provide employees with a better chance to engage with customers on the floor rather than just behind the counter.
He acknowledges the next few years will be a harder fight than the first several years of legalization, but sees many opportunities for continued success.
SQDC annual report 2023
The Société québécoise du cannabis (SQDC) sold $601.9 million worth of cannabis in 2022 according to the agency’s most recent annual report.
This amounted to $94.9 million in revenue from sales for the fiscal year ended March 25, 2023. The SQDC also brought in an additional estimated $137.8 million in consumption tax and excise tax, for a total of $232.7 million to the Quebec government, which directs the funds to prevention and cannabis research.
Website sales were also down slightly, from $36.2 million in 2022 to $34.1 million at the end of March 2023.
The SQDC sources products from 48 active suppliers, 54 percent of which are based in Quebec. Forty-one percent of the total volume of cannabis sold in Quebec carries the Quebec Grown identifier, meaning it is mostly grown in Quebec.
Ten new branches of the SQDC opened in the 2022-2023 fiscal year.
On May 23, 2023, Dynaleo Inc. and Dynaleo Group Services Inc. (collectively, the “Companies”) filed a Notice of Intention to Make a Proposal (the “NOI”) pursuant to Section 50.4(1) of the Bankruptcy and Insolvency Act (Canada), R.S.C. 1985, c. B-3 (the “BIA”) and Harris & Partners Inc. was appointed as Proposal Trustee of the Company (the “ProposalTrustee”).
The Companies operate a premier, state-of-the-art, cannabis edibles facility located in Nisku, Alberta. The facility boasts several pieces of manufacturing equipment, including a complete candy processing line, packaging and labelling and a significant degree of tenant improvements.
On May 30, 2023, the Court of Kings Bench of Alberta granted an order (the “SISPOrder”) permitting the Companies and the Proposal Trustee to commence a Sale and Investment Solicitation Process (“SISP”). The SISP is being conducted in accordance with the procedures included in the SISP Order, which can be found on the Proposal Trustee’s website: www.hpiadvisory.com/dynaleo.
Interested parties who wish to pursue a potential investment or acquisition are required to execute a Non-Disclosure Agreement to receive access to the data room.
Per the SISP, non-binding letters of intent must be submitted by no later than 5:00 pm (Calgary Time) on June 23, 2022 (Phase 1 Bid Deadline).
Newfoundland sold more than $70 million worth of cannabis in the last year, according to Newfoundland and Labrador Liquor Corporation (NLC) Q4 and Fiscal Year 2023 Performance numbers released by the province this week.
Cannabis sales through Licensed Cannabis Retailers (LCRs) including online sales in the province, totalled $18.7 million in Q4, an increase of 22 percent over the same period in the previous year.
Total retail cannabis sales for fiscal year 2023, ending April 1, 2023, increased by 15.8 percent over the prior year to $70.7 million. The NLC recorded $61 million in cannabis sales in 2022 and $52 million in 2021.
The NLC also incurred a significant increase in operating and administrative expenses through the fiscal year (44 percent) due to an increase in commissions paid to some cannabis retailers. This commission is tied to higher sales volumes and an increase in the commission rate paid from 15% to 20% to these LCRs.
The end of the 2022-23 fiscal year also marks the end of the provincial agency’s three-year planning period for the 2020-2023 Business Plan. During this period, NLC reported record sales and earnings in each of the three years. The amount the NLC paid to the provincial government for the three-year period totalled $613 million, an increase of $80.9 million over the previous three-year period (including alcohol).
“I’m extremely proud of the NLC team for their continued commitment to serving Newfoundlanders and Labradorians,” said Bruce Keating, NLC President and CEO. “We’re proud to have contributed $208.0 million to fund valuable programs and services in communities across the Province.
“Importantly, we have continued to take important steps with respect to enhancing the customer experience with our regulatory mandate, corporate governance, and corporate social responsibility, as well as diversity, inclusion and belonging. As an employer to more than 600 NLC team members, we will continue to work towards earning trust in everything we do, and strive to become the kind of organization we believe NLC can be.”
The NLC also conducted 1,484 inspections on liquor establishments and cannabis retailers in Q4. This represents a 42 percent increase over the number of inspections conducted during the same period in fiscal year 2022. The increase in inspections is due to fewer inspections during covid restrictions.
During the fiscal year, the NLC conducted 4,468 inspections on liquor establishments and cannabis retailers. In fiscal year 2023, the NLC also worked with local law enforcement and Canada Post to investigate 18 files resulting in seizures of 409 kg of cannabis products. Since legalization in October 2018, NLC’s Regulatory Compliance and Enforcement team has seized approximately $10 million in illegal cannabis products.
In Q4 of 2023, staff representatives participated in the Evidence to Policy Symposium: Coming Together to Foster Safe Cannabis Use, hosted by Cannabis Health Evaluation and Research Partnership.
The NLC is a Crown Corporation of the Government of Newfoundland and Labrador with responsibility through the Liquor Corporation Act, the Liquor Control Act, and the Cannabis Control Act for the importation, sale, distribution and management of beverage alcohol and cannabis. It also regulates and distributes to over 40 licensed cannabis retailers across the Province. Consumers of legal age can also purchase cannabis at ShopCannabisNL.com.
The province also began allowing the sale of cannabis vape pens in September 2022, a move the government says will help its legal stores better capture market share from illegal cannabis operators, noting that such products represent about 20% of total sales in other legal markets.
Effective October 1st, 2022, the NLC increased commission rates paid to Tier 1 and Tier 2 LCRs from 15% to 20%. The province has four different retail “tiers” of cannabis retail licences, with Tier 1 stores operating as stand-alone cannabis-only locations, while Tier 2 stores are cannabis-only stores that are located in an existing non-cannabis retail location.
Tier 3 stores operate within non-cannabis retail locations but have their own separate counter, while Tier 4 stores sell cannabis at the same counter as other non-cannabis products. For example, the island of Newfoundland currently has 11 “C Shop” cannabis stores located inside larger shopping centres.
The provincial regulator hopes the new commission rate will help these stores to “mitigate the specific challenges of this store format compared with other tiers and improve the viability of these specialized stores in our local cannabis industry.”
Chart via NLC.
*Note – Total Retail Cannabis Sales includes all sales of cannabis in Newfoundland and Labrador. In October 2021, NLC began warehousing and selling cannabis to LCRs. Prior to October 2021, licensed cannabis producers sold cannabis directly to LCRs and remitted a commission to NLC that was included in other income.
There is a lot more to selling cannabis in Canada than just taking your harvest to market. Each province and territory has its own approach to managing how cannabis is bought, sold, and even consumed within its boundaries. Some provinces take a very strict hands-on approach, a few take a more friendly direction, but each has its own nuances that growers and processors, residents and visitors must navigate.
Below is an overview of each of these jurisdictional approaches to the retail and distribution models, as well as fees and taxes imposed across Canada.
ALBERTA
Distribution Model
Albertans can buy cannabis products from private retailers that receive their products from Alberta Gaming, Liquor & Cannabis (AGLC). Licensed retailers are the only stores that can sell cannabis, with cannabis retailers able to sell cannabis online. These retailers cannot sell cannabis if they also sell alcohol, tobacco or pharmaceuticals.
Fees
Alberta has an adjustment rate for additional cannabis duty on packaged and stamped cannabis products of 16.8%. Alberta has no provincial sales tax, charging only 5% GST.
Starting February 25, 2022, the AGLC introduced a 6% markup on all wholesale purchases of cannabis by Alberta retailers. At the same time, the 2% public education fee applied to licensed producers was eliminated.
In Alberta, the general liability insurance coverage requirement is $2 million for seeds, $5 million for dried flower, and $10 million for everything else. Micros are exempted from recall insurance.
Alberta has a one-time SKU listing fee of $1,500, which is under review. A 2% damage fee is taken on every order. Shipment errors are subject to a $1,000 fine. Product is shipped at the same price no matter where it’s going.
The provincial security clearance, known as the Cannabis Registration Representative application, costs $3,000. This is paid upfront, on a retainer basis. Some funds could be reimbursed if the process moves more quickly than anticipated. However, as is more common, additional fees can be charged should the process be longer than expected. As well, although security resubmission is required every six years, the government can demand resubmissions at any time, with the same fee requirements. For more details on this process, go here.
Product call schedule
Every month, Alberta has a new product submission deadline for one of three groups of product categories, with SKU creation coming one month after, and an estimated PO date two weeks after that. The three product category groups are: dried flower and pre-rolls; vapes edibles/beverages; and concentrates/extracts topicals. These roll over every three months. Seeds are only ordered once, in January. An example of the schedule structure can be found here.
BRITISH COLUMBIA
Distribution Model
BC has a wholesale cannabis distribution model governed by The Cannabis Distribution Act (CDA). Under the Ministry of Finance, BC’s Liquor Distribution Branch (LDB) has a General Manager and CEO responsible for administering the CDA, subject to direction from the Minister.
For retail, the province has a hybrid public-private model. The BC Liquor Distribution Branch (LDB) operates standalone retail stores, as do private retailers, both of which procure their products from the government. Online sales are from government-owned BC Cannabis Stores.
Fees
The LDB applies a 15% mark-up on the landed cost of cannabis. British Columbia’s combined GST/PST is 12%, with the exception of vaping products (devices, cartridges, parts and accessories, cannabis e-juice), which are subject to 20% PST, with a combined GST/PST of 25%.
Retail stores are subject to a one-time $7,500 application fee, a first-year licensing fee of $1,500, and annual renewal fees of $1,500. Some cities in BC have by-laws requiring retail fees. For example, the annual fee in Vancouver is $5,000 (formerly $13,500).
Product call schedule
The LDB maintains an open product call, and product submissions are evaluated on an ongoing basis. However, the LDB issues a winter-season product call for the temporary introduction of seasonal products during the winter season (October to December).
Information about the LDB’s vendor registration and product registration processes, and the winter season product call, is available on the LDB’s vendor portal. If a licensed producer wants to access the vendor portal, they can email cannabis.vendor@bcldb.com to request access.
MANITOBA
Distribution Model
Manitoba Liquor & Lotteries Corp. (MLLC) sources and distributes recreational cannabis to private retailers in Manitoba. All cannabis must be purchased from MLLC. MBLL also coordinates with licensed producers to provide direct to retail store product delivery model. Licensed producers can direct ship themselves or through a third party.
Fees
Manitoba does not impose listing fees on suppliers. It is in the process of repealing the six percent Social Responsibility Fee (SRF) it charges to retailers. The province charges 5% GST on recreational cannabis and 13% GST/PST on medical cannabis.
Product call schedule
In Manitoba, licensed producers may list a product whenever they wish, as MBLL does not have a regular call schedule. The only time they would issue a call for listings is if there was a gap in the catalogue where suppliers were not proactively meeting the retailers’ needs.
NEWFOUNDLAND & LABRADOR
Distribution Model
In Newfoundland & Labrador, cannabis is sold through private retailers licensed by the Newfoundland and Labrador Liquor Corporation (NLC), which acts as regulator and distributor. NLC controls the possession, sale and delivery of cannabis, and sets prices for cannabis products.
All Newfoundlanders and Labradorians can buy online from NLC at ShopCannabisNL.com.
Products are shipped directly from NLC’s Distribution Centre in St. John’s. Products are typically delivered within 1 to 2 business days, with some exceptions.
Fees
Newfoundland & Labrador charges 15% HST.
The province works on a consignment model and charges a nominal cost-of-service fee, currently 2.25% of landed cost (as defined in the NLC Cannabis Pricing Policy), effective April 1, 2023. Suppliers are charged this fee to cover warehousing, distribution, and inventory management costs. The fee may be adjusted annually and/or as deemed appropriate by NLC to cover warehousing and distribution costs.
The cost of shipping from the online store is $9.00 + HST.
Product call schedule
For the fiscal year, the call schedule is as follows.
+ January. Spring OTO product call. Launch April/May.
+ March/April. Full product call and review. Launch June/July.
+ June. Fall OTO product call. Launch September/October.
+ August. Holiday OTO product call. Launch November/December.
+ October. Full product call and review. Launch December/January.
To reference this schedule, including the category review process, go here.
*Adjustment rates for the additional cannabis duty are: Alberta, 16.8%; Nunavut, 19.3%; Ontario, 3.9%; and Saskatchewan, 6.45%. NB. With some exceptions, across Canada licensed providers (LPs) selling their cannabis products wholesale (to another licensed producer or a provincially-authorized distributor) are not subject to PST.
NEW BRUNSWICK
Distribution Model
The province’s Cannabis Management Corporation oversees sales, with the New Brunswick Liquor Corporation (known as “NB Liquor”) operating the cannabis retail operations via its subsidiary, Cannabis NB. Cannabis NB includes online sales. New Brunswick is migrating from a government-owned and operated retail model to a hybrid public-private model, as in BC.
Fees
New Brunswick charges 15% HST.
For online sales, Cannabis NB charges a $7 flat rate for shipping to the end consumer. Same-day delivery is $11. Orders over $150 have free delivery. New Brunswick has a social responsibility fee of 2% of the pre-HST invoice value of any cannabis product purchased by CNB. This amount is withheld from each payment made to a supplier.
Cannabis NB charges for onboarding, handling, maintenance, and administration of cannabis products and accessories. Short, late, and inaccurate shipments can be subject to fines up to $5,000, with products possibly returned at the supplier’s sole expense and risk of loss.
Data inaccuracy fines are in the $2,000–$5,000 range, with $250 per instance of data administration fees. Non-compliant packaging can be subject to a $5,000 fine. CNB also reserves the right to charge a supplier a reasonable fee for inspecting and handling unsatisfactory products. Suppliers must have $5,000,000 in liability insurance.
A supplier may request 14-day payment terms by contacting product@cannabis-nb.com. Expedited payments will be processed for a fee equal to 3% of the pretax purchase order invoice.
Product call schedule
Cannabis NB is currently revamping the new product listing process, along with PO terms and product requirements.
NORTHWEST TERRITORIES
Distribution Model
The Northwest Territories Liquor and Cannabis Commission (NTLCC) regulates the distribution, purchase, and sale of cannabis in the NWT. Legal cannabis is only available in the NWT through NTLCC-approved vendors and/or the NTLCC-approved online store. In total, there are six retail stores in the NWT.
Fees
Northwest Territories charges 5% GST.
Call schedule
There is no published call schedule.
NOVA SCOTIA
Distribution Model
In Nova Scotia, the sale and distribution of cannabis is restricted to one provider, the Nova Scotia Liquor Corporation (NSLC). Cannabis can be purchased at designated NSLC physical stores or the NSLC online store. To order cannabis online, customers are asked to enter their date of birth to enter the site and then must show ID to the carrier when the cannabis is delivered.
Fees
There are no unique fees for LPs in Nova Scotia. HST is 15%.
Product call schedule
Nova Scotia currently doesn’t have a published product call schedule for LPs, but it plans to publish one later in 2023. The anticipated schedule will include two annual product calls—one in the fall and one in the spring. The fall product call will be open to any licensed producer for new products that will hit the market in the spring. The spring call will be limited to existing LPs for new products that will go to the market in the fall.
NUNAVUT
Distribution Model
At present, the retail market for recreational cannabis in Nunavut is made up of a single licensed private retailer in Iqaluit, under a licence from The Nunavut Liquor and Cannabis Commission.
Fees
Nunavut charges 5% GST. In Nunavut, the total adjusted cannabis duty on packaged and stamped cannabis products is 19.3%. This is the highest in Canada. Retailers in Nunavut are charged a $2,000 application fee.
Product call schedule
There is no product call schedule, per se, in Nunavut.
ONTARIO
Distribution Model
As partners of the Ontario Cannabis Store (OCS), LPs are required to enter into a Master Supply Agreement (MSA) with the OCS as part of their onboarding process. The Ontario Cannabis Retail Corporation, operating as Ontario Cannabis Store (OCS), is a Crown corporation that manages the online retail and wholesale distribution of recreational cannabis. This legal monopoly distributes to consumers and to privately operated brick-and-mortar retailers.
Fees
In Ontario, the total adjusted cannabis duty on packaged and stamped cannabis products is 3.9%.
While the OCS does not charge LPs additional ongoing fees, there are other financial requirements for working with OCS, including general liability insurance. Upon signing an MSA, LPs must provide a Certificate of Insurance, which shows that they have Commercial General Liability coverage of no less than $15M per occurrence. Based on LP feedback, OCS waived the product recall liability insurance requirement as of November 17, 2022.
Ontario charges 13% HST on recreational cannabis. Qualified medical cannabis receives an 8% PST rebate, resulting in payment of only the 5% GST.
The MSA includes a Data Subscription Agreement. The Data Program provides LPs with supply chain and/or market information, such as unit sales and warehouse inventory levels, to help facilitate their product forecasting and to enable greater fulfilment service levels. The Data Program currently comes with an annual fee of $2,500 plus: an amount equal to 0.2 percent of each Purchase Order sent to the OCS (Level 1), an amount equal to 0.3 percent of each Purchase Order sent to the OCS (Level 2).
With Level 1 access, LPs gain insight into their products’ sales performance across Ontario. With Level 2 access, LPs can access data pertaining to their competitors’ products to help determine relative market share and explore market opportunities. Attributes include an inventory snapshot and data on unit/dollar sales at an SKU level, with various ways to filter and visualize data.
In Ontario, a Cannabis Retail Manager Licence is $750 for the first two-year term, with a two-year renewal fee of $500, and a four-year term costing $1,000.
A Retail Operator Licence is $6,000 for an initial two-year term, with a two-year renewal fee of $2,000 and a four-year term costing $4,000.
Retail Store Authorization is $4,000 for the first two-year term, with a two-year renewal fee of $3,500 and a four-year renewal fee of $7,000.
These fees are all under the purview of the Alcohol and Gaming Commission of Ontario (AGCO), not the Ontario Cannabis Store (OCS).
Product call schedule
The OCS product call schedule is a complex process. Currently, the OCS issues product calls four times each calendar year: in spring, summer, fall and winter. The OCS warehouse delivery window and rolling launch dates are updated once Purchase Orders (POs) are issued for each call.
Each of the four calls has ten steps: publications of assortment needs bulletin; pre-submission form deadline; feedback from pre-submission; submission deadline; NTP sent; NTP received by OCS; PO issuance; launch of OCS catalogue; last arrival into OCS warehouse; and anticipated product launch. The schedule can be found here.
PRINCE EDWARD ISLAND
The Prince Edward Island (PEI) Cannabis Management Corporation, which operates as PEI Cannabis, has the exclusive right to purchase recreational cannabis, and to conduct retail sales. There are four stand-alone stores on the island.
Distribution Model
In PEI, adult-use cannabis is sold through four (4) stand-alone PEI Cannabis retail stores. There is an online sales storefront (peicannabiscorp.com) with direct-to-home delivery. The PEI Cannabis Management Corporation oversees the operation of cannabis retail locations and the e-commerce platform.
Fees
Prince Edward Island charges 15% HST.
The province’s standardized mark-up structure is applied against the excise exclusive mark-up base to determine retail prices. There is a system for inventory buy-backs, also known as Return-to-Vendors (RTVs). If a product being returned is treated as unsaleable, it will be added to the PEI Cannabis quarterly unsaleable consolidation and will be subject to chargeback conditions. For more information on RTV policies, go here.
PEI does not charge listing fees but does offer 12 merchandising periods for LPs to participate in programs at a cost. This is a complex program, with details available here.
Product call schedule
PEI currently doesn’t have a product call schedule.
QUEBEC
Distribution Model
The Société Québécoise du cannabis (SQDC), a subsidiary of the Société des alcools du Québec (SAQ), Québec’s Liquor Commission, is the only authorized retailer of recreational cannabis in Quebec. All cannabis retail stores are owned and operated by the provincial government.
Fees
Quebec charges 14.975 GST/QST. The additional duty rate in Quebec for the ad valorem duty is 7.5%.
Product call schedule
Quebec has two product call cycles, each lasting six months. The province also has a product call program for small batch products, called Petite Lot or Project Petits lots de fleurs séchées, that allows for new lots of cannabis under 40 kg and new to the Quebec market.
SASKATCHEWAN
Distribution Model
Saskatchewan has a competitive private model for the wholesale/distribution and retail sale of recreational cannabis. Private and online stores are regulated by the Saskatchewan Liquor and Gaming Authority.
Fees
Saskatchewan charges 11% GST/PST. In Saskatchewan, the total adjusted cannabis duty on packaged and stamped cannabis products is 6.45%.
For retail, a permit application fee is $2,200. The annual permit fee is $3,300 if the cannabis retail store is located within a city; and $1,650 for all other cannabis retail stores.
Licensed providers must pay a registration application fee of $550 and an annual registration fee of $1,650, initially payable at the time of application.
Product call schedule
LPs ship directly to retailers. As a result, product calls are unique to the requirements of each store.
YUKON
Distribution Model
The Yukon Liquor Corporation (YLC) purchases recreational cannabis products from licensed producers as the wholesaler. The YLC then sells to licensed cannabis retail stores, which in turn sell to consumers.
Fees
Yukon charges 5% GST. There are no fees for licensed producers wishing to sign a supplier agreement with the YLC.
The initial application fee for retail is $2,050, and the renewal application fee is $1,550. There is also an annual licence fee of $2,150, which renews on April 1. If the licence is not issued on April 1, the fee will be pro-rated from the month it is issued to March 31.
Product call schedule
The Corporation shares inventory lists three times per week with the Yukon’s licensed private retailers, and hosts weekly calls.
Canada’s cannabis industry sees a continued increase in sales, even as the amount of production space and the number of employees at production facilities appears to be levelling off.
The newest market data figures for the October 2022 to December 2022 reporting period show a continued increase in cannabis inventory and sales across Canada. The total amount of approved production space and employees at these federally-approved facilities declined for the first time in 2022, following several years of steady growth.
Sales of dried cannabis (packaged units) have been holding relatively steady in 2022, while sales of edibles and extracts rose through the year. This occurred while the total amount of approved indoor and outdoor grow space declined slightly over the year.
Cannabis topicals also saw increased sales in 2022, with more than 81,000 packaged units sold, the majority in the non-medical stream.
Sales of cannabis plants were sporadic throughout 2022, with the most significant spike in sales occurring in June, with nearly 3,000 cannabis plant packaged sales. The vast majority of those sales were through the medical stream. Only 71 cannabis plants were sold through the non-medical stream in 2022.
Cannabis seed sales saw a spike from January to June 2022, almost exclusively sold through non-medical sales channels. Only 80 packaged units of seeds were sold through medical channels in 2022. The amount of seeds that producers and provinces have in inventory has declined significantly since 2021.
The total approved growing space in Canada also declined in 2022, from 1,756,642 square meters in December 2021 to 1,595,724 in December 2022.
The total amount of approved processing space has also declined, from 418,081 square meters in December 2021 to 378,863 in December 2022. The total building area for licensed producers, however, increased, from 4,128,904 square meters in December 2021 to 4,427,069 in December 2022.
The total approved outdoor growing space also declined, from 713 hectares in December 2021 to 595 in December 2022.
The number of employees on federally-licensed production sites also decreased, from a low and high estimate of 13,210 and 17,453 employees in December 2022, to 12,576 and 16,812 in December 2022.
Residents of Mississauga no longer need to drive outside of the city to visit a licensed cannabis store.
The city’s first legal cannabis store opened Friday, May 26, to an eager crowd of locals and other supporters.
Pop’s Cannabis, with another 25 locations across Ontario, recently became the first licensed cannabis store to open in the city, following council’s vote in April to finally allow them. The store is located in the Clarkson Crossing Mall.
The city of Mississauga had previously opted out of allowing cannabis stores, citing concern over a lack of control around zoning.
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 their limits.
Rebecca Kinch, who leads training and development for Pop’s Cannabis as the chain’s Eastern store manager, says they also plan to open their second Mississauga location on Friday, June 2 near Applewood and Bloor.
Kinch says the community has been very supportive of the first store. Not just customers, but even other tenants in the mall.
“It’s amazing, everyone is excited to see us here. This is a very supportive community.”
Kinch says the application process was no different than the other two dozen locations they have opened, but notes they did try to move as quickly as possible to secure the distinction of being the first in the city.
Omar Khan, Chief Communications and Public Affairs Officer at High Tide, which currently has three applications for its Canna Cabana chain working their way through the process in Mississauga, expects to open their first locations soon.
“We are exploring up to half a dozen potential Canna Cabana locations in Mississauga,” says Khan. “To date, we have submitted three applications into the AGCO and look forward to opening soon.”
As of press time, there were 13 applications listed by the AGCO in Mississauga. New application notices are posted regularly. There are more than 1,700 cannabis stores listed as being approved to open by the AGCO.
Map of cannabis store locations and applications via AGCO.ca
BC’s direct delivery program for small-scale cannabis producers is beginning to mature but still receives mixed reports from the local industry.
British Columbia launched its direct delivery program in August 2022 with a goal of helping small-scale producers establish a better foothold in the legal market.
Now that the program is approaching one year this summer, more producers and retailers are beginning to lean into the model but say there are still significant challenges to making it a truly viable model for small BC cannabis growers.
Rather than sending products to the BC Liquor Distribution Branch’s (LDB) central warehouse in the Lower Mainland, the LDB allows producers to register and list products for sale through the direct to retailer program. Retailers can then select products from that list and contact the producer directly to arrange delivery.
“It allows for cash up front before we deliver it, which is at least 30-45 days faster than BC LDB. It also creates a one-on-one bond with the dispensary, thereby creating a two-way relationship of understanding.”
While the LDB’s centralized distribution system allows a more one-stop service for producers and retailers. It also means products can be less fresh and creates more of a homogenized product selection across the province. Direct sales to retailers, on the other hand, can mean one less middleman between the grower and the retailer.
The program is limited to growers located in BC who produce the equivalent of less than 3,000 kg of dried cannabis flower per year. The program grew from a precarious launch that happened to coincide with a strike at the LDBs warehouse, with only a few SKUs of an array of products from dried flower and pre-rolls to edibles, beverages, vape pens, topicals, concentrates, seeds, and clones.
In the first eight months, the LDB sold the equivalent of nearly one metric ton of cannabis through direct delivery worth $5.7 million. Although this represents a small fraction of the several hundred million in wholesale sales during the same time period, the program was designed to serve a niche of small-batch BC growers rather than the entire provincial market.
Cannabis clones sold direct to retailers
Janeen Davis, VP of sales at Joint Venture Craft Cannabis Inc (JVCC), says the program is not without its challenges, especially a hefty 15% fee the BC government places on any direct delivery sales. Still, JVCC, primarily through their BC Black brand, has seen significant increases in the sales of products they have been selling through the program.
One of the big advantages, she explains, is that it allows a more fresh product onto shelves, and more closely resembles the supply chain for cannabis growers and sellers prior to legalization.
“One of the nice things about direct delivery is you know exactly who’s brought your product in, and it allows us to give a superior level of customer service,” says Davis. “With the LDB, we don’t always know who is even carrying our product.
“Another nice thing about it is we can get an order to a retailer in under 48 hours. Going through the LDB, that can be two or three weeks. So it’s just not as fresh of a product.”
However, one of the challenges is the 15% proprietary fee the LDB levies on the program. This is the same 15% they charge producers to sell through their central distribution system, without most of the LDB’s support. This means delivering the product to each retailer, either personally or through a delivery service, and extra logistics like handling individual payments, tracking shipments, more internal record keeping, etc.
“If it weren’t for that, it would be incredible. And if that fee were reduced, some of that could go back to the retailer, and some could go back to the small batch producers.” She points out this will help a lot for smaller businesses that are struggling to survive.
William Marshall, the Founder of Aaron’s BCBud, located on Vancouver Island, says he’s been using the program since shortly after its launch. While most of Aaron’s BCBud products sold in BC still go through the LDB, he says the advantage of the direct delivery program is not only a fresher product for retailers and consumers, but also ensures the grower is paid faster.
“The one thing I’m hoping for is getting rid of that 15 percent fee, or at least reducing it. That would make direct delivery a lot more attractive for people. They’re not actually doing anything for that 15 percent. Getting rid of it could give us that competitive edge and give more incentive for the retailers to come over to the direct delivery side.”
“Direct delivery is a dream for the grower,” explains Marshall. “It allows for cash up front before we deliver it, which is at least 30-45 days faster than BC LDB. It also creates a one-on-one bond with the dispensary, thereby creating a two-way relationship of understanding.”
Once a local retailer likes how much fresher the product is, they will sometimes drive to the facility to pick it up themselves.
The grass isn’t always greener
Not everyone is entirely sold on the program, though.
Cam McKinnon from Papa Joe’s Organics, a micro producer in Sooke, BC, just began using the direct delivery model in May. While he likes it, he says he prefers to sell through the LDB’s central warehouse because he thinks products will sell faster.
“I like the direct delivery approach because it’s more honest. You’re getting paid, and it’s gone, rather than potentially sitting around (at the LDB) for 90 days before it gets pulled and returned to vendor for not selling fast enough.”
“But the downside is only about a quarter of the stores will do it in BC. The larger chains don’t seem to be all that interested in it. And it is more paperwork. Obviously, it would be easier to just ship one pallet to central delivery.”
“The one thing I’m hoping for is getting rid of that 15 percent fee, or at least reducing it. That would make direct delivery a lot more attractive for people. They’re not actually doing anything for that 15 percent. Getting rid of it could give us that competitive edge and give more incentive for the retailers to come over to the direct delivery side.”
“We’re getting closer to how it was before everyone was legalized, where everything was this kind of farm-to-table type system.”
Vince Collard of 642 Cannabis
Ryan Brown, the owner of Just Kush Enterprises, a producer in Kootenays, says he was initially using the program when it first launched but noticed sales slowing in early 2023. Although he still uses the program with a handful of retailers, he says the sales volume isn’t enough to keep the lights on.
Although the handful of retailers who buy his products directly are supportive, he points to the extra logistics involved in each of those orders compared to one single shipment through the LDB.
“If we just deliver a pallet to the LDB, then we’re done. Whereas if we keep direct delivery going, we have to put shipments together for each store, track it, and report it. It’s a lot. And for no discount. We still have to pay 15 percent. There’s no advantage, really, for us.”
Getting listed and carried by the LDB still gives him access to hundreds more stores and broader brand recognition.
“Then all the stores see you. It helps get your name out there and into more stores around the province. So we still like direct delivery for a few stores who support it, but we couldn’t survive on it. Not yet, at least.”
Inside Papa Joe’s organic cananbis
One of those retailers, who Brown says is the exception, is Mike Babins of Evergreen Cannabis in Vancouver. Babins says nearly every product in his store is currently ordered through direct delivery.
He says he loves dealing with a company like Just Kush because they are a small business. And while some retailers might find it easier to get one consistent weekly order from the LDB, he says he prefers the flexibility of ordering direct from the retailer based on his needs, not the LDB’s.
“We’re supposed to be supporting locals, right? People complain about the big growers in Ontario coming in. Well, we have the opportunity to do that, and this is how we do that.”
“In the old days, you ordered what you needed when you needed it. With the provincial model, you have to order by your cutoff date whether you have the money or need the product; that’s what you order for the week. With direct delivery, we can see what is out and contact them directly if we need something. It’s so much easier and makes much more sense. You pay people as you’re buying what you need. And you don’t have weed sitting in the stock room for a week until it goes out because you had to buy it on a certain date.”
Direct Delivery cannabis available at Evergreen Cannabis in Vancouver
Grown just down the road
Vince Collard of 642 Cannabis, a cannabis retailer in Sooke, is just down the road from Papa Joe’s. While only a small portion of their overall stock is direct delivery, he says it’s been increasing significantly because it delivers a higher quality, more unique product. It also gives a path to market for more BC growers who might not otherwise get picked up by the LDB.
“The LDB doesn’t take all the products grown in British Columbia, so with direct delivery, I have a much larger network of products I can actually pick from.
I’m happy the program exists, and it does allow access to some of these growers who the BC LDB won’t take their SKUs—and these can be some of the best companies with the best products. But through direct delivery, as long as they have it registered, they can sell it to me.”
Collard has been buying products through direct delivery since the program was launched and says he was happy to see the first Papa Joe’s product listed recently.
“Why should he ship it to Burnaby where they hold onto it, put it on a website, and then ship it back to me? It’s a waste of everyone’s time and resources, and it’s bad for the environment.”
“We’re getting closer to how it was before everyone was legalized, where everything was this kind of farm-to-table type system.”
Another municipal group is asking where the provincial tax revenue they were promised has gone.
Organizations representing municipalities in New Brunswick are calling on the provincial government to honour a campaign promise from 2018 to share cannabis revenues with local cities and towns.
The Union of Municipalities of New Brunswick (UMNB), as well as the Association francophone des municipalités du Nouveau-Brunswick (AFMNB) say they want to know where their share of the revenue has gone.
“The Premier told us that as soon as they make a profit with cannabis taxes they will be ok to share with us some of this money,” AFMNB President Yvon Godin said in a recent interview with Global News.
A representative from New Brunswick’s Department of Finance told Global News in an emailed statement that “there is still no plan to share revenues related to legal cannabis retail, and municipalities haven’t demonstrated they have new costs connected with the legalization of cannabis.”
New Brunswick munis say they need the money to help offset the cost of recent municipal reforms, with new costs previously covered by the province now being covered by munis.
New Brunswick is not the only province facing such criticism. In 2021, the Association of Manitoba Municipalities released a position paper that called on the province to share 25 percent of its cannabis tax revenue with its municipalities.
The same issues were raised in the association’s pre-budget plan, as well. The report notes that the Federation of Canadian Municipalities (FCM) says that municipal administration and local policing costs related to legalization will total $3-4.75 million per 500,000 residents, representing a range of approximately $210-335 million per year in costs incurred by municipalities across Canada.
“According to the Federation of Canadian Municipalities (FCM), municipal administration and local policing costs linked to cannabis legalization will total $3-4.75 million per 500,000 residents on an annual basis,” wrote the AMM in an email to StratCann at the time. “Since these costs should not be downloaded to municipalities, it is imperative that municipalities be included as meaningful participants in revenue-sharing conversations. We continue to urge the federal and provincial governments to co-develop a revenue-sharing model that respects municipal authority.”
Other municipalities in other provinces have also been asking where their share of the cannabis excise tax is. In 2020, the Union of BC Municipalities (UBCM) noted that although provinces successfully lobbied the federal government prior to legalization for a larger share of federal tax revenue, in part to address the cost of implementation of legalization at the municipal level, BC munis have yet to see any of that revenue. The municipal organization also says the provincial government “continues to decline UBCM’s requests to negotiate a cannabis taxation revenue sharing agreement.”
Saskatchewan’s municipal organization, MuniSask, also issued a resolution in 2019 asking for munis’ share of the province’s federal excise tax. A representative with MuniSask says they still have not received their share and continue to lobby the province.
The federal/provincial agreement to share 75% of the federal excise tax on cannabis with provinces is up for review, and several municipal organizations say they are lobbying the federal government to include the need to share this with municipalities in any new agreements signed. Although the federal government increased the provinces’ share of the excise tax from a proposed 50% to 75% with the promise that provinces would share it with their municipalities, the promise was not written into the contract and was therefore not binding.
Ontario and Quebec are the only two provinces that have upheld a commitment to such tax sharing. In 2018, Ontario set aside $40 million over two years to help cities manage the implementation and oversight of cannabis legalization. The first $30 million was distributed in 2019, with $10 million set aside for unforeseen costs. Ontario also invested $3.26 million to support municipalities through enhanced enforcement against illegal cannabis operations.
NB Minister of Finance Ernie Steeves: ''There's good weed for sale; CannabisNB, folks. Have at 'er.'' pic.twitter.com/aPuxq7CB20
The Lift Expo has been a staple in the Canadian cannabis scene since 2016, bringing different aspects of the industry together for networking, education, and merry-making at their annual Toronto and Vancouver events.
The Expo has undergone several changes over the years, with new ownership and branding and, like all large events, a hiatus during COVID. The event remains the same industry staple, though, with people from across Canada flocking to those two cities to ensure they don’t miss out.
The Lift Expo was initially a part of Lift Cannabis (and briefly Lift & Co), an online news and review site for the industry, from 2014 to 2020. The Expo was purchased by a new owner in 2020, MCI Group, an international leader in event management. Following a hiatus due to COVID restrictions, the Lift Expo returned to Toronto in late 2021 and May 2022, followed by Vancouver in January 2023.
The Expo returns to Toronto on June 1-3, 2023, continuing to build momentum on what the MCI Group says has been a steep learning curve to rebuild an audience post-COVID and redesign the event to meet the needs of today’s cannabis industry.
Lindsay Roberts, the Senior Vice President of Lift Events & Experiences, sat down with StratCann to discuss how she sees the Expo evolving to continue meeting the needs of the ever-changing cannabis industry.
“We’re constantly engaging with the industry here in Canada to ensure we can continue to refine the Lift Expo not just to meet but to exceed people’s expectations,” says Roberts. The industry is growing through enormous changes, as Lift continues to hold space for the industry with these events.”
With members operating in Canada and the US, the Lift Events & Experiences team at MCI produces all aspects of Lift in both countries. Some members have extensive experience in the events industry, while others have a background in the cannabis industry. The team is dedicated year-round to the cannabis industry and producing the Lift events.
Here’s our Q&A with Lindsay.
What do you see as the vision for the Lift Expo in Canada and abroad in the coming years?
“Lift is Canada’s first and original cannabis event. Our vision is to gather the cannabis community for unmatched networking and business opportunities, provide cutting-edge educational content, embrace the cannabis culture, and have some fun! We want to positively contribute to the forward progression and increase professionalism in our industry.”
What gaps in the industry is Lift seeking to fill?
“Our vision is to produce an event encompassing the entire cannabis supply chain. All industry segments are welcome at Lift, and while primarily a B2B event, ultimately everything ties back to the end user – the consumer. We have a diverse attendee base and want the event to be a safe, comfortable, professional, and inclusive space. Our vision is that all major elements are thoughtfully curated to produce a well-rounded experience that seamlessly combines networking, business transactions, educational content, experiences, cannabis culture, parties, and fun.”
How are things going? How have the last few Expos been received by the community?
“Our most recent event was Lift Vancouver in January 2023, and it exceeded our expectations. Traditionally an underserved market, Lift 2023 was the first Lift event post-pandemic, and we could not have been happier to see the community embrace, engage and show up with incredible energy, despite a market in a less-than-ideal place. The audience was able to express shared frustrations with their peers while also discussing what it will take to weather the storm and find motivation through collaborating face-to-face as the industry re-convened.
Lift Cannabis Business Conference – a segment of the Lift Expo
“An industry event is always a reflection of the industry itself. Even if financial investments were less than usual, everyone who showed up saw a clear need and value and had a great time. Vancouver proved that when times are tough, sometimes these events are needed more than ever.
“Toronto is right around the corner, and since 2022, we’ve made some significant headway in upgrading our content, creating more precise paths for each industry segment, such as budtenders, consumers, retailers, and brands, and ensuring there are plenty of networking opportunities and fun moments to celebrate our industry’s accomplishments and resiliency.”
What are some challenges of running a large cannabis industry event like the Lift Expo?
“Events always have unique opportunities and challenges, but market conditions and event saturation are by far the biggest uphill battles right now. The industry needs and wants Lift but doesn’t have the same financial means to support it as in previous years when the industry was healthier. Lift is professionally produced and encompasses a large educational conference program, expo floor, and networking events. We must be creative to deliver a quality experience while balancing expenses.
“Historically, Lift events performed very well when the market was stronger and healthier. We see light at the end of the tunnel, and that gives us a lot of motivation. We intend to weather the storm just like everyone else in the meantime. Once we push through this season, we believe the industry will rebound and return to a state of growth and profitability.”
Lift is expanding into the US this year with a show in San Francisco in August. Can you share how this will differ from what Canadians are used to with a Lift Expo and what this means for the company and brand in terms of international markets?
“We’re taking an existing event, the US Cannabis Business Summit, and honouring its legacy while modernizing it to encompass some of the things we love about the Lift events and brand. The events will have a consistent feel and format while catering to each unique region and marketplace. In addition to the Lift Cannabis Business Conference (LCBC), we’re adding an Investment Summit and a Cannabis Food & Beverage Conference. We’ll also be addressing the global marketplace and trends. We hope to also bring these elements to Canadian events in the future.
“For companies looking to expand their business across the US and Canadian borders, or to gain a better understanding of this emerging global market, Lift is a perfect opportunity.”
Anything exciting we can look forward to for Toronto 2023?
“Always! There is nothing better than seeing your industry peers come together over the course of a few days. The event size is intimate enough to feel like a family reunion but large enough that real business will get done.
“The LCBC (Lift Cannabis Business Summit) content is top-notch. We have some new partners representing important segments of the industry, such as the Ontario Cannabis Store, who we are partnering with on grant & scholarship programs. We have the introduction of the Diners’ Club, our focus on infused cannabis food & beverage, with industry rockstar Chef Jordan Wagman.
“We’re excited to continue supporting the unsung heroes of the cannabis community through our expanded budtender program. Then we’ll end the event with the Lift after-party, where everyone gets to kick back, relax, and celebrate our community and another year of Lift. It’s going to be an epic week!”
Cannabis stores in BC no longer need to worry about being fined for having cannabis products visible through their windows.
The BC Government announced today that provincial cannabis regulations will no longer require that cannabis, cannabis accessories, or their packaging and labelling within the store have to be hidden from the view of anyone passing by outside the store.
The BC Liquor and Cannabis Regulation Branch (LCRB), which oversees cannabis regulations in the province, will instead have a term and condition prohibiting window displays of cannabis and cannabis accessories to people outside the store, keeping provincial regulations in line with federal limitations around product visibility.
We spent a lot of money on this, we tried to make it a little more welcoming than just a black window or like something bad is going on there.
The move is a step beyond changes first made by the province in 2020 when the government removed their rule that required retailers to be enclosed by “non-transparent walls”. This had, in effect, forced most retailers to use window coverings they said were unsafe and, at times, in conflict with local zoning rules.
Many retailers said the change didn’t go far enough, though, since provincial and federal regulations still say that cannabis cannot be visible in areas where minors could see it, which could be as simple as someone walking by a store on a public sidewalk.
Vince Collard of 642 Cannabis in Sooke, BC says he’s happy to hear of the changes, but is frustrated he had to spend thousands of dollars on a window covering he now no longer needs. Still, he says it’s a good change that will make the store more welcoming.
“We spent a lot of money on this, we tried to make it a little more welcoming than just a black window or like something bad is going on there.”
Mike Babins, the owner of Evergreen Cannabis in Vancouver, shares a similar sentiment. He says he’s happy the rule has finally been changed, but is frustrated it took so long, and that the announcement came with no warning before a long weekend. He hopes to have his window coverings on his store down by early next week.
“Finally,” says Babbins. “This is great. We’ve been fighting for this since the day we got our licence.”
The newest change by BC is similar to changes made in Alberta in 2022 that also removed the section of the provincial regulations that prohibited products from being visible to minors outside of stores. Retailers in that province expressed similar safety concerns and the province’s messaging for making the changes spoke to these concerns, as well.
Farnworth discussed the legislative changes at an industry event in Kelowna in April, saying he would be taking the issue to cabinet for discussion. He mentioned looking at the issue from a public safety lens since many retailers have expressed concern that the lack of visibility into the stores makes them easy targets for robberies.
BC’s rules for retailers previously stated that cannabis, cannabis accessories, and the packaging and labelling of cannabis and cannabis accessories could not be visible from outside that store.
Andrea Dobbs, one of the owners of the Village Bloomery, with two locations in Vancouver, says she was very happy with the news.
“I’m grateful to all of the retailers who made noise! I know the RCBC (Retail Cannabis Council of British Columbia) put some energy behind this so I’m grateful to them as well.Im looking forward to waving hello to passers by and to feeling seen. Feeling seen to me means feeling safe.
The Manitoba government will no longer require cannabis retailers to submit Social Responsibility Fee (SRF) payments for 2022 or 2023.
In a bulletin sent to cannabis retailers on May 18, Manitoba Liquor and Lotteries (MBLL), the agency that oversees cannabis in the province, says they are suspending the six percent fee immediately while they wait to pass legislation that will formally repeal the fee going back to January 2022.
Effective immediately, the MBLL will pause the payment withdrawal process for all unpaid SRF assessments that have been approved but not yet processed and will pause efforts to validate 2022 amounts owing for any outstanding bills.
Additional taxes (like the SRF) make it extremely difficult to create a sustainable and profitable business, which ultimately drives purchasing back to the illicit market.
Kerri Michell, Farmer Jane Cannabis Co.
The legislation, Bill 10, was introduced in November 2022 and initially proposed to repeal the fee payments back to January 2023. The government now says they will extend this back an extra year, eventually offering refunds to stores that had paid into the program beyond that date.
Refunds will not be issued until the legislation is passed. A report stage amendment has been on the orders of the day for Manitoba’s House of Commons but has not yet been entered into record. The opposition is not expected to oppose the amendment or the bill.
The six percent fee had been levied on retailers’ sales, to the tune of tens or even hundreds of thousands a year in the case of some larger chains. The government said they were repealing the fee partly because the expected social costs of legalization didn’t come to fruition. In a recent committee meeting, numerous retailers expressed the challenges they faced even trying to pay the fee, and asked the government to push the repeal back by a year.
A spokesperson for Manitoba’s Department of Finance says that while the final amount expected to be refunded to retailers isn’t yet known, it estimates that the SRF would have generated $10.5 million in 2022. The 2022 regulatory costs are estimated at $1.1M. They also note that this is the beginning of more expected changes to help cannabis businesses in Manitoba.
“Repealing the Social Responsibility Fee is the first step in providing business owners in the cannabis sector with more financial room to build their business; once this legislation is in force, the province of Manitoba will look at entering the federal excise tax agreement.”
In a recent back and forth with the NDP’s opposition critic on the cannabis file, Adrien Sala, Manitoba’s Minister of Finance, Cliff Cullen, said the province estimated it had taken in around $18 million from the fee—$10 million in the over the past year and about $8 million in the year prior.
The Minister of Finance also admitted that the provincial government could not account for how they had spent the money intended to address social costs related to legalization.
Kerri Michell, the president of Farmer Jane Cannabis Co, which has a half dozen stores in the province, says the change to provincial regulations will greatly help retailers.
“Challenging regulations, including one of the most unfavourable tax structures in Western Canada, have hindered potential expansion into Manitoba,” says Michell. “With the removal of the SRF, the province becomes open for business from a retailer’s standpoint. Moreover, Bill 10 holds immense significance in achieving federal legalization goals by creating a healthy industry.
“Additional taxes (like the SRF) make it extremely difficult to create a sustainable and profitable business, which ultimately drives purchasing back to the illicit market. If repealed back to January 2022, many independent stores will now be able to operate sustainable and profitable businesses and avoid potential layoffs and closures. I’m grateful the industry is coming together to support positive changes!”
Todd Friesen, a manager at Supercraft Cannabis in Ste Anne, says he was pleasantly surprised by the new announcement, and by the government’s commitment to respond to industry calls to extend the refund back to January 2022.
“I applaud them for this. I think they’re being very proactive by releasing that statement, and this is going to assuage fears that if this doesn’t get passed by June first, they’re still going to be able to keep the lights on. I’m impressed that they rescinded too quickly to this amendment and to issuing this stop payment until this is settled.”
Friesen says he also has to give credit to Adrien Sala for helping to bring in retailers to the May 10 committee meeting that seems to have pushed the government to make these changes.
“He worked with several retailers to really push for that meeting,” he adds. This has been a long, arduous process to get to this point, with a lot of work from a lot of people. It’s nice to see the community come together and actually be able to achieve something.”
Cannabis sales in BC continued to increase in the first three months of 2023, while the price of cannabis continues to drop in the province.
The BC Liquor Distribution Branch (LDB), which oversees cannabis distribution in the province and the BC Cannabis store’s online and brick-and-mortar locations, recently published their Q4 results for 2022/23.
The LDB saw a nearly 30 percent increase in wholesale cannabis grams compared to the same period in 2021/22 and a more than 16 percent increase in wholesale sales with over $119 million sold.
The average price per gram of all cannabis products sold in the province was $4.29, compared to $4.78 in the year prior. The average price per gram of dried flower decreased to a low of $3.50 a gram compared to $3.83 in the same period in the previous year.
For dried flower, 3.5-gram and 28-gram SKUs continue to dominate, but declined compared to sales in the first three months of 2022, while 14 and 15-gram SKUs increased.
Image via LDB
Overall, dried flower sales declined by just over 5 percent compared to the same period in the previous year. At the same time, beverages, edibles, ingestible extracts (oils and capsules), vape pens and other concentrates, pre-rolls, seeds, and topicals all increased.
The increase in year-over-year sales of beverages comes entirely on the back of carbonated beverages, while sales for other beverages like dried mixes, teas, and coffees declined.
For edibles, the most significant increase was in baked goods which increased by more than 50%, followed by chews/gummies at over 25 percent increase year-over-year. Sales of cannabis chocolates, hard candies, and other edibles all declined.
Sales of cannabis pills and capsules increased year-over-year by about 8 percent, while oils and tinctures declined by about 16 percent compared to the first three months of last year.
In the concentrates category, vape pen sales increased by 34 percent, while disposable vape pen sales increased by over 80 percent. Hash sales increased by 23.5 percent, infused pre-rolls increased by nearly 300%, resin and rosin sales increased by 23 percent, shatter by almost 9 percent, vape kits by 100%, and cannabis wax by nearly 1,000 percent. The only year-over-year decline in cannabis extracts was for dry sift.
BC’s direct delivery program, launched in the summer of 2022, also continues to grow. In the first three months of 2023, close to 470 kg of cannabis or its equivalent was sold through the program, accounting for nearly $2.5 million in sales. The average price of a gram of cannabis sold in the direct delivery program was $5.24, while the average price for a gram of dried flower was $4.19.
Although the amount of cannabis sold through the program in the most recent quarter was more than that sold in Q3 under the direct delivery category, the dollar value of sales was down slightly due to the declining cost of products within the program.
Ontario Provincial Police (OPP) seized nearly 12,000 cannabis plants from a large illicit operation in the St. Catharines area in early May.
The OPPs Joint Forces Cannabis Enforcement Team, along with Niagara Regional Police, executed search warrants on May 6 at a greenhouse facility on Third Avenue Louth.
Police say the value of the seized cannabis was nearly $12 million. Law enforcement in Ontario typically values a cannabis plant at around $1,000 each.
Detectives shared with media that around 11,800 plants were seized, along with 77 kilograms of “Cannabis shake”
The OPP say the facility was authorized to produce fewer than 1,000 plants. Such limitations based on plant count only exist for personal and designated medical production licences.
A few days after the initial raid, a second search warrant was executed by law enforcement at a nearby residence. Rodolfo Ramirez, age 40, and Gervi Santamaria, age 25, were taken into custody and have been charged under the Cannabis Act with cultivating cannabis without authorization.
The Joint Forces Cannabis Enforcement Team has seized over 11,800 cannabis plants, worth nearly $12 million in the St. Catherines area. The warrants, in conjunction with @NiagRegPolice, also located appr. 77-kilograms of cannabis shake. Two people have been charged. pic.twitter.com/mrnRQ48v26
— OPP Highway Safety Division (@OPP_HSD) May 16, 2023
This is not the first large cannabis bust in the area. The largest raid in Niagara Regional Police history was made at a similar greenhouse operation in the area of Third Street Louth and Main Street in city of St. Catharines in 2020.
The Niagara region has seen numerous large-scale raids in the past several years of similar operations. Beginning in the fall of 2021 and dubbed “Project Gateway”, investigators from the Niagara Regional Police Service (NRPS), Peel Regional Police (PRP) and the Hamilton-Niagara Detachment of the Royal Canadian Mounted Police (RCMP), uncovered an import/export ring bringing cocaine and tobacco into Canada and exporting cannabis and tobacco from Canada.
In 2019, police in Niagara arrested one man for growing over 1,000 plants which police say was worth over $1 million.
In 2017, police in Niagara busted two large medical grow ops that police said were operating under fraudulent Health Canada medical licences for personal or designated use.
Also in 2017, the Hamilton-Niagara RCMP, with the assistance of the OPP and the Financial Transactions and Reports Analysis Centre of Canada—the national financial intelligence agency of Canada (FINTRAC)—began an investigation into a potential money laundering scheme that was operating through casinos in the GTA and Niagara regions.
Five individuals are facing charges relating to illicit cannabis production, money laundering, and the proceeds of crime. One farm and three Greater Toronto Area (GTA) residences were also seized.
In 2016 there was a bust of a man with 500 plants.
In 2015 Niagara police busted a man for over 1,000 plants that they also valued at just over a million dollars.
The Niagara Regional Police Service also maintains a list of Niagara locations where its officers have executed search warrants for the indoor production of cannabis and other controlled substances.
The Provincial Joint Forces Cannabis Enforcement Team (PJFCET) is an OPP-led Joint Forces Operation that has active participation from all the major police services in Ontario including the Niagara Regional Police.
The team was established after cannabis was legalized recreationally in Canada in late 2018 and is responsible for enforcing cannabis laws and investigating criminal operations that exploit or abuse the legal cannabis market in Ontario.
In its most recently-available figures for 2021, the OPP says the PJFCET Unit was involved in numerous investigations resulting in the seizure of illegal cannabis, cannabis by-products and currency from large-scale illegal cannabis production sites, cannabis extraction labs and residential dwellings. The PJFCET Unit executed 19 warrants in the Province of Ontario, six of which were in the Niagara Region. Their drug seizures were valued at CAD$112,769,464 and a total of CAD$363,915 was seized.
A Cambridge OPP officer also seized 282 cannabis plants from a driver on May 14, charging the driver with possession for the purpose of trafficking. The officer was alerted to the vehicle by an Automatic Licence Plate Reading noted an issue related to the driver of the commercial vehicle in question.
Thanks to #ALPR alerting a #CambridgeOPP officer with an issue related to the driver of a CMV; the officers seized 282 canabis plants and charged the driver with possession for the purpose of trafficking. #Hwy401/North Dumfries Township, May 14, 2023. pic.twitter.com/z1zdPtR9eB
— OPP Highway Safety Division (@OPP_HSD) May 16, 2023
Summer is just around the corner, with the long weekend fast approaching. On StratCann this week we had more coverage of Manitoba retailers who are now seeking retroactive rebates for that province’s recently repealed six percent Social Responsibility Fee, as well as a story about producers who say the regulator needs to overhaul its process for vetting new products coming to market, and an in-depth look at cannabis as a promising treatment for women’s health.
Health Canada made a few updates this week to language in a public advisory from 2022 about “copycat” edibles—those legacy market edibles with, uh, “creative” names like ‘Froot Loopz’, ‘Cheetos Puffs’, or ‘Double Stuf Stoneo’. “Hospitals have seen an increase in visits to the emergency room and poison centres have seen an increase in calls,” the advisory noted. Copycat edibles like these tend to be the culprit in many of those accidental cannabis ingestion stories.
Ex-Canopy capo Bruce Linton was featured on the first episode of the Globe and Mail’s new Better For It podcast this week—a business podcast focusing on Canadian entrepreneurs and their failure stories. “What led to one of the most public business failures in recent memory? Bruce talks about how he got fired, why the cannabis sector hasn’t delivered on its colossal promise, and what’s next for him,” the podcast teases. For those still stuck in 2018, it’s a must-hear!
Canadian Underwriter—a trade publication from the insurance industry—published a story on the cannabis insurance sector this week, with comments from Tyson Peel and Rami El-Cheikh, both insurance brokers who work with the cannabis sector. With more insolvencies expected in the coming years, the insurance industry appears to be bracing for issues ahead.
Ontario police have charged a driver with drug trafficking after 416 cannabis plants were discovered last weekend in the back of a truck. A 59-year-old man from Markham has been charged after police nabbed him outside of Burlington, ON.
A new epidemiological study out of the University of Copenhagen identified a potential link between cannabis and schizophrenia, especially among young men. The study looked at nearly 7 million medical records, concluding that one-third of the total number of [schizophrenia] diagnoses could have been prevented if men aged 21 to 30 had not developed problematic cannabis use. Others have cautioned against drawing too many conclusions.
The Trillium’s Patrick Cainspoke to a couple of big cannabis names—Matt Maurer and Deepak Anand—about plateauing sales in Ontario, which is following other high-population provinces in seeing cannabis sales flatten out, suggesting that the market has reached “its natural final size.” Both still see untapped potential—but said that it would take regulatory changes to kickstart growth again.
Out west, some 40 retailers in Saskatchewan and British Columbia are planning to kick off the “Weed Pool Cannabis Cooperative,” which is launching “imminently,” reports the Kelowna Daily Courier. The Weed Pool business will function as a distributor for other independent retail stores, taking advantage of BC’s direct delivery program and offering volume pricing advantages for buyers looking to stock craft product. “The culture and the community of the cooperative model really make it special,” said CEO Brett Wells. “We want to see the independents thrive.”
A micro cultivator in Merritt, BC recently signed a deal with Manitoba’s Delta 9 Cannabis to provide them with a dozen of their grow pods. The Manitoba-based producer and retailer has partnered with a handful of micros in Canada, providing them with their grow pods, as well as assistance with licensing and operations, as well as distribution and sales.
Village Farms reported its first quarter financial results this week, recording a $6.1-million pre-tax loss. The second-largest company in terms of market share also took aim at the regulator: “The excessive, flat per-gram excise tax is handcuffing the very businesses that can ensure that this historical piece of Canadian legislation is a long-term success,” they wrote.
On the retail side, Nova Cannabisreleased their Q1 2023 figures this week, showing a 20.8 percent increase in revenues, and only a $500,000 net loss. On their recent closure of a deal with SNDL, they said that the “completion of the Nova Reorganization is expected to create a well-capitalized cannabis retail platform through a vertical integration model leveraging SNDL’s upstream and midstream capabilities.”
TerrAscend Corp released its first quarter 2023 report, with net revenue of $69.4 million. GAAP Net loss from continuing operations in the first quarter of 2023 was $19.2 million, compared to $2.0 million in the fourth quarter of 2022 and $13.8 million in the first quarter of 2022. The increase in net loss relates to the finalization of the acquisition of Gage, which was completed in March.
Another urban Indigenous-owned store, Medicine Wheel Natural Healing, opened this week in Ottawa as Indigenous retailers continue to prod at the “grey area” in jurisdiction. Dignitaries within the sovereign cannabis movement—Chief Del Riley, lawyer Jack Lloyd, store owner Anthony Tenasco, and others were on hand for a panel discussion to open the new store.
Internationally, CNBC coveredCannabis Europa in London last week and the interest in legalization from several countries, but resistance from the EU.
And finally, in cannabis-adjacent news, a Fun Guyz psilocybin mushroom store has popped up in London, ON this week, the CBC reports. Jacob Shelley, a law professor at Western University, compared it to the early days of cannabis shops. “We see the playbook has already been kind of played out with cannabis, right?” he said.
Several cannabis retailers are telling the Manitoba provincial government that they support its efforts to repeal a six percent fee charged to stores, but say the government needs to go even further.
During a meeting where the Standing Committee on Social and Economic Development discussed Bill 10—a bill that would repeal Manitoba’s six percent Social Responsibility Fee (SRF) charged to retailers—retailers discussed the often dire economic circumstances many are facing, in part due to the fee.
The SRF was originally intended to offset the cost of legalization borne by the province. The provincial government now says those expected costs did not bear out, and cannot say where the money from that fee has gone.
Retailers have been paying the fee since June 2022, and the provincial government says they now want to repeal the bill retroactively to January 2023. However, several retailers who came to share their support for the bill also said they would like to see the change made retroactively to January 2022.
“We are not big publicly traded companies with access to lines of credit and payroll loans. But we are the majority of cannabis stakeholders in Manitoba. While many businesses and industries are receiving financial help as they slowly try to recover from the pandemic, we are not.”
Shannon Sala, Essential Cannabis Company
Cliff Cullen, the province’s Minister of Finance, told retailers and other speakers that he would take their concerns under consideration as they continued to discuss the bill. The committee passed the bill, which will now be sent back to the House for third reading, along with a report.
Several of the retailers who spoke shared their concerns with many owners’ ability to pay this year’s SRF, due June 30, and said stores pay tens of thousands or even over $100,000 a year in SRF fees. Because this is taken from their revenue, not their profits, some store owners say it is very difficult to maintain profitability.
Todd Friesen, a manager at Supercraft Cannabis in Ste Anne, who was the first of about ten stores represented at the meeting, said the fee is taking money away from small business owners. Given that the government says the fee wasn’t even used for its intended purpose, he considers it misallocated.
“I would suggest that this is borderline fraudulent, and we want our money back so that we can continue to run and grow this industry as we have, year over year,” said Friesen.
Sean Stewart, the owner of Supercraft, says their annual SRF bill has been as high as $142,000, and in their first year of operation, the fee put them into the red.
Sean Stewart, AAAAA Supercraft Cannabis
Shannon Sala, the owner of Essential Cannabis Company in Selkirk, who also said the fee should be repealed back to 2022, tried to convey to the committee that the industry is not awash in cash as some might think, with the smaller independent stores most impacted.
“The Manitoba cannabis industry currently has approximately 170 cannabis retail stores, with 70 percent of those stores being independently owned and operated. We are not big publicly traded companies with access to lines of credit and payroll loans. But we are the majority of cannabis stakeholders in Manitoba. While many businesses and industries are receiving financial help as they slowly try to recover from the pandemic, we are not.”
“I would suggest that this is borderline fraudulent, and we want our money back so that we can continue to run and grow this industry as we have, year over year.”
Todd Friesen, aAAAA Supercraft Cannabis
In response to one question from another retailer, Minister Cullen also shared that the Manitoba government is in conversation with the federal government around the federal cannabis excise tax, something the provincial government has discussed in the past. Manitoba is the only government that opted out of participating in the federal excise tax, but has suggested they may revisit that agreement.
The bill will still need to pass third reading before coming into effect. No changes to the bill were added during their vote.
Cannabis sales brought in over $24 million for Manitoba in 2021-2022 (Year ending March 31) after all operating costs and allocations. This was up nearly 75% from the earnings in the previous year of $14.1 million.
Although it doesn’t break down specific cannabis dollars, the province released more than $11 million in social responsibility funding in 2021-22 and more than $12 million in the previous year.
Revenue generated by cannabis operations in the province was $113.9 million in 2021-22, an increase of $33.7 million, or 42 percent from revenue of $80.2 million in the prior year. Manitoba also launched a “cross docking” service in 2022 to address some of the challenges the province’s direct-to-retail distribution can pose.
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’sWeed 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!
The owner of an Indigenous-owned cannabis store in Vernon, BC, that was raided by the province in 2020 is now suing the BC government.
Cory Patrick Brewer, whose Tupa’s Joint in downtown Vernon was raided by the BC Community Safety Unit (CSU) twice in 2020 for operating without a licence from the province, says BC’s rules for retail sales and distribution are unconstitutional.
The lawsuit, filed on May 2 by Brewer and cannabis lawyer Rob Laurie, also argues that both federal and provincial cannabis laws ignore First Nations’ and Indigenous peoples’ jurisdiction.
The lawsuit argues that Indigenous people have a long history of cannabis use in North America, and that Section 35 of the Constitution protects an inherent right to govern the cultivation, processing, and sale of cannabis in their territories.
It goes on to argue that the lack of recognition of these argued rights has created a “grey” or “red” market for cannabis, and that the UN Declaration of the Rights of Indigenous Peoples (UNDRIP) also affirms Indigenous sovereignty of cannabis production and sale.
Brewer has made similar arguments in the past. However, one Vancouver-based attorney specializing in Indigenous law, Yvan Guy Larocque, told media at the time that Indigenous self-determination rights as set out in UNDRIP are collective rights, not individual rights, as Brewer suggests.
Brewer’s lawyer, Laurie, disagrees, with the lawsuit stating that the “exercise of these rights in relation to cannabis/hemp and the utilization of spirit plant medicines, cacti, and fungi containing restricted substances is supported by Articles 4, 20, 21, 23, 26, and 32” of UNDRIP.
Brewer is seeking the return of the cannabis products seized from his store in 2020, an order that the provincial and federal cannabis regulations are “ultra vires and of no force and effect,” and an order declaring the existing Aboriginal treaty rights of Aboriginal peoples of Canada Section 35 in relation to cannabis/hemp fungi, and other plant medicines.
The petition notes that Brewer had a letter of support from Chief Byron Louis of the Okanagan Indian Band stating that Brewer had support from the OKIB to establish Tupa’s Joint in Vernon. In addition, it references a letter from Grand Chief Philip Stewart on behalf of the Okanagan Nation Alliance that describes hemp as part of Sylix Okanagan Nation’s inherent right of trade and commerce.
The province has 21 days to respond to the petition.
The issue of jurisdiction around cannabis laws is contentious in Canada as it relates to First Nations and Indigenous authorities. Canada’s Cannabis Act and Regulations provide the authority to regulate the sale of cannabis to provinces and territories. Many provinces, including BC, along with the federal government, have said that their own respective cannabis regulations are laws of general application, meaning they apply to all areas in those jurisdictions, including Indigenous land.
“With cannabis, like a number of other issues when it comes to First Nations, our view, the province’s view, is that yes, they are laws of general application,” said the Minister. “Just as with some other issues, First Nations have said, ‘No. These are areas of our jurisdiction,’ and that’s both at the provincial level and at the federal level.”
Many Indigenous communities in Canada have disputed this interpretation, saying they have the right to manage cannabis as they see fit, either restricting it or regulating it.
The Osoyoos Indian Band (OIB) first passed a moratorium against any cannabis stores in their community in 2019. The community then adopted their own Osoyoos Indian Band Cannabis Bylaw in 2020, citing section 35 of the Constitution Act, 1982, which recognizes and affirms the existing Aboriginal self-government and treaty rights of the Aboriginal peoples of Canada.
These approaches are not unique to BC. A First Nations community in New Brunswick put a moratorium on cannabis stores in their community in 2021. A Mi’kmaw band councillor from Millbrook First Nation in Nova Scotia, arrested in a 2020 police raid of Indigenous cannabis dispensaries, is mounting a constitutional defence arguing his right to sell cannabis on First Nations land is constitutionally protected.
The Manitoba NDP’s Finance Critic wants to know where the province has spent the money received from legalization. The province says it intends to sign on to the Federal-Provincial-Territorial Agreement on Cannabis Taxation.
In a back-and-forth during a House debate on April 18, Adrien Sala, the Finance Critic for the Official Opposition, repeatedly asked the Minister of Finance, Cliff Cullen, to explain where the approximately $18 million the government has collected over the last few years of legalization has been allocated.
The exchange came about during the second reading debate of the government’s bill to repeal the 6% social responsibility fee it charges retailers, and a day after the Manitoba NDP said they want to take a “close look” at the province’s private retail cannabis program if they form government following an upcoming election this fall.
The province’s initial promise was for these fees to be invested back into social responsibility issues relating to the social impact of legalization.
The provincial government now maintains that the social costs of legalization have stabilized, justifying the repeal of this fee. The opposition, who support the measure overall, has taken the government to task about how they have actually directed those funds.
So, could the minister please offer information–I’ve asked him about this year, related to the $10 million that were collected. We know $8 million was collected in the last fiscal.Can he share how much of those $8 million were invested in social responsibility-related items?
Adrien Sala, the Finance Critic for the Official Opposition
In response, however, Minister Cullen was unable to provide specifics of how these funds specifically addressed any concerns related to the social costs of legal cannabis. In addition, he failed to respond to Sala’s question about where the province’s own application of GST has been allocated. In both instances, the Minister could only refer to the funds going back to general revenue.
“The minister has failed to be able to offer up even a single example of how those funds are being spent. So I would like the minister, as the Minister of Finance (Mr. Cullen), to clarify for the House: What happens to the remainder of those funds that were collected from small Manitoban businesses? Have they gone back and have been applied toward general revenue? Where have those dollars gone?”
Adrien SAla, Finance Critic for the Official Opposition
Yes, that money goes back to general revenue so that we can make a record and historic investment in health care. I reflect on the $668 million in health care to deal with some of the challenges we’re facing in the health-care front. I also point to record investments in mental health and addictions, and increased programming that we’ve brought forward in this year’s budget. That money can be used for those goods and services as well. So that money is going back into general revenue that can be used for programming for Manitobans facing addictions and other mental health challenges.
Manitoba Minister of Finance Cliff Cullen
Cullen also told Sala that the government had set aside funds to “mitigate some of the damages that could occur” from legalization, but admitted that they “didn’t see as many broad repercussions of cannabis, once it was legalized, as we thought might occur.”
In response for further clarification on how this funding is being spent, a spokesperson for the agency could only tell StratCann that Manitoba Liquor & Lotteries (MBLL) collects the social responsibility fee (SRF) on behalf of the province, deducting an amount of LGCA cannabis related regulatory costs.
“The social responsibility fees collected and remitted to the government go into general revenue and are used to mitigate the social costs associated with cannabis legalization like increased health costs, public education and addiction services,” added the spokesperson. “After four years of legislation, the cannabis market has matured, and the costs to the province have stabilized, opening the possibility of repealing the Social Responsibility Fee.”
“In addition, the province intends to sign on to the Federal-Provincial-Territorial Agreement on Cannabis Taxation and is actively engaged with our Federal counterparts on Manitoba’s participation in the agreement. Further details will be made to the public when available.”
Cullen also noted in the House debate that the Manitoba government is looking to sign an agreement with the federal government to collect their 75% share of the federal excise tax on cannabis. The province was the only one to opt out of the initial agreement that saw 75% of every dollar collected from federal taxes directed back to the provinces. Cullen shared that the federal government is currently “tweaking” its excise tax framework.
A lot of other jurisdictions are moving into agreements with the federal government. That is where we’re proposing to go as well. Then there would be–once we get to sign that agreement, there would be probably 75 cents coming back to the Province of Manitoba.So we’re having discussions with the federal government on the excise tax component. The federal government is currently tweaking the rules around that, so we’re allowing them to go through their process before we sign an agreement with them.
Manitoba Minister of Finance Cliff Cullen.
The MBLL also collects a 75-cents-per-gram tax that goes to Manitoba Liquor & Lotteries. In 2021/22, Cannabis Operations earned a comprehensive income of $24.6 million, an increase of $10.5 million or 74.5% from the $14.1 million earned in the prior year.
Revenue generated by the MBLL’s cannabis operations was $113.9 million in 2021/22, an increase of $33.7 million or 42.0% from revenue of $80.2 million in the prior year.
Retailers also pay an additional nine percent fee for the province’s management of the distribution of cannabis from growers to sellers. The province primarily takes a hands-off approach to distribution but oversees sales into the provinces and manages a cross-docking system.
The government has also said they are working on a plan to create a “craft cannabis framework designed to promote and support the development of smaller scale, artisanal cannabis micro producers.”
The Standing Committee on Social and Economic Development will meet on Wednesday, May 10th, 2023, at 6 p.m. to consider Bill 10, The Liquor, Gaming and Cannabis Control Amendment Act (Social Responsibility Fee Repealed).
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.
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.”
Cannabis NB is expected to begin releasing information on private retail store locations in New Brunswick, announced through a public application process in 2022.
One of the oldest medical cannabis clubs in Canada filed a lawsuit against the BC government.
The Victoria Cannabis Buyers Club had previously announced its plans to file an injunction and a constitutional challenge against the provincial government in response to several raids and $6.5 million in fines against the club for operating outside provincial regulations.
The club also seeks to force the federal government to change medical cannabis regulations that prevent storefronts like the VCBC from buying and selling cannabis.
“Our amazing lawyers have prepared solid constitutional arguments that should both protect our organization and force Health Canada to make important changes to their medical cannabis program.”
Ted Smith, Founder of VCBC
Ted Smith, founder of the VCBC, says the club has been preparing for this type of challenge for years.
“We are looking forward to getting our case before a competent court to resolve these issues, which not only affect our patients but impact medical cannabis users across Canada,” Smith said in a press release. “Our amazing lawyers have prepared solid constitutional arguments that should both protect our organization and force Health Canada to make important changes to their medical cannabis program.”
In 2022, the VCBC was issued $6.5 million in fines by the BC government’s Community Safety Unit (CSU) as part of their ongoing investigation into the club for their continued operation in defiance of federal and provincial cannabis rules.
The CSU issues compliance orders to unlicensed cannabis retailers that impose a monetary penalty equal to two times the retail value of the cannabis sold, possessed for the purpose of sale, or produced in contravention of the provincial Cannabis Control and Licensing Act.
The CSU raided the VCBC on two different occasions, in November 2019 and again in July 2020, seizing cannabis products, cash, and the club’s books documenting their finances.
The fines levied by the CSU were based not only on the estimated value of the products seized ($123,606.29) but also on the value of the cannabis sold in the time between the two raids (just under $1.5 million).
Ted Smith, who first began his buyer’s club in 1996, says he sees the fines and the repeated raids as an unfortunately necessary step in his desire to challenge Canada’s cannabis rules further.
The VCBC says they are still waiting for an exception from the Federal Government that would allow the club to continue to operate. Although the club has celebrated getting support from the municipal and provincial government on the exemption, this support did not translate into a change in enforcement from the provincial government.
For many Alberta producers, it’s an uphill battle trying to sell your own products into the province.
As the Canadian cannabis market slogs through 2023, producers in Alberta are facing headwinds, with some concerned that overly-thorough security clearance requirements and listing fees—among other issues—are negatively affecting the competitive landscape.
“The additional provincial security clearance process is more onerous from a paperwork perspective than the Health Canada security clearance application,” says Tim Mallett, CEO and master grower at Alberta Bud, a micro producer in Edmonton.
Applicants must pay the AGLC $3,000 for a process that can take five to six months.
“We just went through our second round,” says Jeff Karren, President of Joi Botanicals, a standard producer in Calgary. “The maximum licensing period before a registrant must resubmit due diligence info is 6 years, but for some reason, the AGLC decided that we needed to resubmit after about 4 years. You pay the $3,000 upfront, and if additional work is required, they might charge you more.”
That could happen, because the AGLC really gets into the weeds.
“They need full information on anyone with more than 10 percent ownership, plus information on all key employees and their spouses,” he says. “This includes a complete list of assets, including cash, vehicles, real estate and mortgages, and credit cards. It also includes full employment history for the past ten years and a list of all the companies in which each individual has an ownership stake or is a Director and/or Officer. It was an annoying and frankly insulting process.”
“Sales results are released weekly but only include aggregated data, so you will know that 100 of your cases sold, but you are not told who the retailers were that bought those cases. No one at AGLC can explain why this information is withheld.”
Tim Mallet, Alberta Bud
The AGLC even requires the full names and birthdays of all children—dependent or not, including step-children. (A PDF of the full 61-page Cannabis Registration Representative application can be found here.)
“It’s the same level of scrutiny that a casino owner gets,” says Mallett from Alberta Bud. “It’s painful, time-consuming, and expensive. We’ve been through it three times in two years.”
However, this isn’t necessarily all on the AGLC’s shoulders. Some market participants have told StratCann that they are aware of individuals at the AGLC who are sympathetic to their concerns, but the AGLC operates under the purview of the Treasury Board and Finance Minister, and that this is ultimately where the power resides.
Employees at Joi Botanicals discuss plant growth
An Opaque System
There are also concerns that Alberta’s purchasing system lacks visibility, which makes it hard for growers—especially micros—to conduct demand planning.
“All SKU applications are submitted at the same time, and the five category managers in the province decide which SKUs will be accepted and subsequently offered for sale to Albertans,” says Mallett. “If the AGLC doesn’t accept the strain that you’re already growing, then the Albertan sales avenue for that SKU disappears for another three months until you can submit on the next round.”
It is generally believed that the AGLC makes its decisions based on past performance and how quickly products move. If the AGLC accepts a SKU, then in another two or three months a purchase order will be issued, and the product will be available on Albertan shelves in four to five months.
“Sales results are released weekly but only include aggregated data, so you will know that 100 of your cases sold, but you are not told who the retailers were that bought those cases,” says Mallett. “No one at AGLC can explain why this information is withheld.”
Paying the Price
There is also the fact that in Alberta, cannabis providers have to pay a one-time SKU listing fee.
“The listing fee is $1,500 per SKU; we are currently reviewing our business model,” says Karin Campbell, Manager, Communications, at the AGLC.
One bright spot is that the AGLC gets top marks for paying on time. There is even an early payment option, for an additional 2 percent, which allows for payment in 15 days instead of the usual 60.
“Our quick and reliable payment for products supports profitability and business planning in the cannabis industry,” says Campbell, “and affords producers to develop further and produce new products.”
That said, on top of having the highest provincial excise tax in the country, Alberta also deducts an additional 2 percent damage fee.
“That 2 percent damage fee is arbitrarily taken on every order, whether or not there is any damage or salvage,” says Karren from Joi Botanicals. “And the $1,500 SKU charge can be on distinct gram sizes of the same flower—those are considered different products. We also get fined $1,000 for any error in an incoming shipment.”
“It takes a lot of planning, it’s tough, but it can be done. For us, it’s the good working relationship and the good people at AGLC we are thankful for.”
Travis McIntyre, Stigma Grow
If a product doesn’t move fast enough, it may be returned after four months, at the sole discretion of the AGLC.
“In this case, you’ll be required to pay AGLC back for all stock that was returned to you as part of an RTV—Return to Vendor,” says Merrett.
Some cannabis providers in Alberta, however, see the situation as no worse than anywhere else in Canada.
“Alberta’s our home province, and we have a pretty good relationship with the AGLC,” says Travis McIntyre of Stigma Grow, a standard producer in Red Deer. “As with Ontario, their SKU listing is large, and they really want to differentiate the product, and to have products that don’t sit on the shelves.”
McIntyre acknowledges that it can be tougher for smaller operations.
“Overall, it’s not an unfair system, but when you look from a micro standpoint, and you have a limited strain—say 50 kilos of a really great product—I could see where it would be hard,” he says. “The system is perhaps not set up as well for that as it should be.”
Cannabis clones at Stigma Grow in Red Deer
Given that the product call timelines can be lengthy, the key is planning.
“We have spring products with fruit flavours, as well as fall and winter products that we put out on a limited basis,” says McIntyre. “It takes a lot of planning, it’s tough, but it can be done. For us, it’s the good working relationship and the good people at AGLC we are thankful for.”
“Since these companies are out of business, AGLC can’t get its money back from them when it returns their product. This results in losses, which puts downward pressure on Category Managers to RTV product on companies more aggressively, to attempt to claw back money from companies as rapidly as possible out of fear that they’ll go out of business.”
Mallett argues that it is less financially risky for AGLC to demand payment back from an operating producer with low-volume SKUs than to allow the producer to sell that product over a longer period of time, and to realize the markup AGLC makes on those sales.
“This creates problems for micros who move lower volume,” he says. “We have had SKUs that are consistently ordered week after week for months, but the volume is not high enough to satisfy AGLC’s sell-through demands, so they RTV the product, and we are no longer able to offer all of our strains to our customers in Alberta.”
Change Afoot?
The AGLC has made changes in the past. Insurance requirements have been reduced for those companies only selling seeds, private e-commerce is now permitted, and microprocessors are allowed to sell dried flower and pre-rolls without the additional Health Canada sales license amendment.
“We have had SKUs that are consistently ordered week after week for months, but the volume is not high enough to satisfy AGLC’s sell-through demands.”
Tim Mallett, Alberta Bud
“Allowing cannabis samples gives Alberta cannabis retailers more in-depth product knowledge allowing for more informed purchasing decisions, and may help qualified cannabis workers provide customers with more information about products,” says Campbell from the AGLC.
Though the response to these changes has been generally positive, it is clear from talking to producers in Alberta, especially micros, that more needs to be done.
“We were told there were going to be substantial changes to AGLC policies this spring, but all we’ve seen is this one change allowing samples,” says Mallett. “And the wording of that rule wasn’t even discussed with us.”
That said, on the distribution side, the AGLC recently invited all cannabis licensed producers, marketing entities, and brand owners to participate in a conversation on Alberta’s cannabis wholesale model. “It was an opportunity for AGLC to understand and consider the impacts to cannabis stakeholders on implementing or transitioning to a new or modified model,” says Campbell. “AGLC is currently reviewing the input received and considering the next steps.”
Unfortunately, the numbers suggest that the market isn’t too appealing for Alberta micros. As of the end of April, there were 45 active micro licenses in Alberta, yet only eight, roughly 17 percent actually sold into the Alberta market, with micros collectively comprising only 2 percent of the ~2,500 SKUs available in any given week.
Note: In response to StratCann’s queries with regard to the AGLC’s rigorous security clearance (Cannabis Representative Registration), the AGLC responded that as Alberta is now in a general election period, the Elections Act restricts all government (and crown agency) communications. Consequently, the AGLC was unable to provide further comment beyond this statement: “Alberta’s legal cannabis industry is centered on the foundational principles of keeping cannabis out of the hands of children and youth, protecting public health, and reducing the impact of the illicit cannabis market in Alberta”
The Ontario Cannabis store, through a third party, operates the largest legal cannabis warehouse in the world.
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!
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 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.
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.
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.
The Ontario Cannabis Store has launched its Social Impact Fund to provide funding for organizations working to promote social responsibility in connection with cannabis.
The fund will go to assist with community projects and research, and encourages incorporated not-for-profits, registered charitable organizations and research teams affiliated with academic or research institutions to apply.
Funding can range from $25,000 to $100,000 for projects that are eight to 12 months in length, and organizations have until May 25 to apply.
The OCS will respond to successful applications by August 2023, and projects will need to begin no later than October 16, 2023.
The Crown agency has set aside up to half a million dollars for the first year of the project, with a goal of providing it for initiatives that are aligned with the three key pillars of OCS’s social responsibility strategy for 2021–2024: establishing a foundation for environmental sustainability, supporting a diverse and inclusive cannabis industry in Ontario and advancing cannabis knowledge and responsible consumption.
“The Social Impact Fund is part of our commitment to champion a socially responsible cannabis industry by investing in education, research and initiatives,” said OCS President and CEO, David Lobo. “The launch of the Social Impact Fund is an opportunity to support and amplify the work that many community organizations and researchers are leading related to cannabis, and we’re looking forward to enabling more of that work across Ontario.”
The Fund is a part of the OCS’ multi-year Social Responsibility Strategy, which seeks to help advance its mandate of championing a socially responsible industry, promoting the responsible consumption of cannabis, and protecting youth and vulnerable populations.
Details on the application requirements and process can be found at ocs.ca/socialimpactfund.
The OCS says this fund is rooted in their commitment to promoting responsible cannabis consumption while still adhering to their mandate of protecting youth and vulnerable populations, with a focus on funding projects and research that create shared social value and mobilize knowledge for people, communities and the Ontario cannabis sector.
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 theso-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.
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.
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.
The BC government says they are providing additional funding to support Indigenous participation in the regulated cannabis industry.
First launched in December 2022, the BC Indigenous Cannabis Business Fund (ICBF) supports First Nations communities and Indigenous businesses in British Columbia that want to increase their participation in, or join, the regulated cannabis industry.
The provincial government announced nearly $2.3 million in additional funding for the New Relationship Trust which oversees the ICBF. This funding is on top of up to $7.5 million in funding previously announced by the provincial and federal governments over three years.
The announcement comes on the same day that Mike Farnworth, Minister of Public Safety and Solicitor General, gave a speech at the BC Cannabis Summit in Kelowna, which was sponsored, in part, by All Nations, a cannabis producer owned and operated in Shxwhá:y Village in Chilliwack, BC.
In addition to providing capital for launching or expanding cannabis businesses in BC, the fund will support “business planning and advisory services” and will seek to assist Indigenous businesses or First Nations to cover the costs related to licensing and permitting.
“I am pleased that this additional grant will support Indigenous entrepreneurs in British Columbia,” said Farnworth in a press release. “It is another step forward in keeping true to our commitment to develop a robust, diverse and sustainable regulated cannabis economy that is inclusive of Indigenous entrepreneurs and First Nations communities.”
Regional Chief Terry Teegee of the BC Assembly of First Nations said the announcement is an example of the organization’s commitment to UNDRIP, which seeks to secure the rights of Indigenous peoples around the world.
“I commend the Province for enhancing its support of First Nations cannabis-related economic development through the ICBF. This fund is one example of how the BC Assembly of First Nations advocates and works collaboratively to advance First Nations rights and interests in alignment with the United Nations Declaration on the Rights of Indigenous Peoples.”
Hugh Braker, a political executive for the First Nations Summit, whose mandate is to support First Nations in conducting their own direct treaty negotiations with Canada and BC, says the additional funding can assist in the broader fight for indigenous self-determination.
The ICBF was developed by the Canadian federal government and British Columbia in partnership with the BC Assembly of First Nations and the First Nations Summit through the federal Strategic Partnerships Initiative (SPI).
“We are pleased BC is providing additional funding for the IBCF. The cannabis industry is one of many sectors where First Nations communities and entrepreneurs can work to create self-determined economies, engage in the BC economy and take a lead in the cannabis industry going forward,” adds Braker.
“We continue to see this program as a key support for the priorities of First Nations in relation to cannabis and look forward to how it will evolve as we continue to work to align provincial and federal laws with the United Nations Declaration on the Rights of Indigenous Peoples.”
The BC government has entered into agreements with several First Nations communities who have sought to enter the legal cannabis industry. BC’s section 119 agreements allow the provincial government to enter into agreements with Indigenous Nations, “providing a mechanism for meaningful government-to-government dialogue and supporting collaboration that enables both governments to achieve individual and shared goals.”
The annual report represents the agency resuming in-person inspections, which mainly had been paused due to the coronavirus, and covered 549 inspection activities, including 89 inspections of registered grows for personal and designated production of cannabis for medical purposes. (Health Canada moved to a virtual inspection model during the height of COVID-19).
Just under half of the inspections conducted were routine, 67 were targeted, 139 included compliance verifications, and 28 involved sales.
A sales inspection relates to a licence holder that intends to sell a cannabis product that they are not currently authorized to sell.
During this time, Health Canada’s Cannabis Inspection Program issued three warning letters advising licence holders of their non-compliances and requesting corrective measures.
The number of inspections conducted by inspection type under the Cannabis Act and its regulations (April 1, 2021 to March 31, 2022). Chart via Health Canada.
These inspections resulted in 332 compliance verification activities related to promotions, leading to 158 enforcement actions, including one warning letter*, 51 compliance-related emails or letters, and 106 compliance promotion emails or calls. *(Note: Health Canada’s report states at one point that three warning letters were issued, and at another point that one was issued. A request for clarification has been sent.)
Most issues relating to observations were listed merely as “Corrective actions required,” but some included reference to issues such as unauthorized activities with cannabis, good production practices and insufficient record-keeping non-compliance, physical security non-compliances, mandated destruction of product insufficient record-keeping, or the absence of key security cleared personnel.
Just under half (44) of these inspections resulted in no observations, while 45 inspections resulted in 1 to 4 observations for a total of 90 observations. Health Canada’s corrective actions take a graduated approach, from warning letters to registration revocation or refusal. Health Canada revoked or refused 16 of these registrations following inspections.
Seven inspections resulted in seven critical observations, which refer to issues “likely to result in risk to public health or public safety, or that involve fraud, including a clear risk of cannabis or cannabis product being diverted to or inverted from an illicit market or activity.” These represent the most serious deviation or deficiency from Health Canada’s Cannabis Act or its regulations.
Another 160 inspections resulted in a major observation, which also includes situations that may result in a risk to public health or public safety or may involve fraud, including the potential risk of cannabis or cannabis product being diverted to or inverted from an illicit market or activity. A major observation relates to serious deviations from federal cannabis legislation.
The majority (339) were for minor observations, which do not represent a risk to public health or safety.
Personal and designated production for medical purposes
Of the 89 inspections of personal or designated registrations, 17 were in BC, 17 were in Manitoba, 13 were in Ontario, 31 were in Quebec, and 11 were in Nova Scotia.
Health Canada has been increasing its inspections of personal and designated production licences for medical purposes. Because these require an in-person inspection, none were conducted during the 2020-2021 reporting period.
Between April 1, 2019, and March 31, 2020, Health Canada conducted 82 inspections associated with 82 personal or designated registrations. In 2019, only nine inspections were associated with such registrations.
The number of individuals registered with Health Canada for personal and designated cultivation of cannabis for medical purposes decreased by 39% from 35,754 in March 2022 to 21,673 in September 2022.
The majority of this decrease (14,081) in registrations for personal/designated production was found in three Provinces: Ontario with a decrease of 4,717 registrations, British Columbia with 3,551 and Quebec with 3,226. The full report, as well as past annual reports, is available here.
Windsor, Ontario has been known as Sin City for as long as most can remember due to a history of rum running, strip clubs, and other forms of more socially permissive entertainment in Canada than in the US. So it was no surprise that when cannabis was legalized in Canada, many entrepreneurs saw a budding opportunity.
Four and a half years into legalization, and while it took a year and a half for the first retail store to open in Windsor during COVID in 2020, today there are roughly 50 open or opening, and 20 more in nearby Essex County.
Windsor shares a border with Detroit, and with Michigan and Illinois having legal medical and recreational cannabis and Ohio with medical cannabis, there are many American cannabis consumers within a three-hour drive of Windsor.
According to a 2022 Gallup poll, sixteen percent of Americans consume cannabis, and with the 2021 populations of Illinois (12.67 million), Michigan (10.05 million), and Ohio (11.78 million), totalling roughly 35 million, there’s approximately 5.5 million cannabis users within the three states.
When COVID hit and borders closed, all non-essential visits dropped to almost zero – a significant blow to tourism from Americans, representing a 33 percent loss of the visitor market, according to Tourism Windsor Essex Pelee Island (TWEPI).
“As one of the most free-flowing routes for trade and visitation was cut off instantaneously… [tourism] essentially disappeared…” said Gordon Orr, chief executive officer of TWEPI.
Most out-of-market visitors spend twice as much as domestic customers, meaning that businesses relying on tourism took a double hit, or as Orr said, the tourism industry was hit first and hardest but will also take the longest to recover fully.
Pre-pandemic annual border crossings were 1.7 million, and when the border partially reopened with ArriveCAN and COVID restrictions, the region’s tourist visits only increased to 0.9 million. While most restrictions are gone today, the numbers have yet to return to pre-pandemic levels.
Cannabis Retailers Opening During Covid
Greentown Cannabis opened in June 2020 in downtown Windsor as the city’s second retail cannabis outlet. When cannabis was declared essential by the provincial government, owner Rob Katzman was amazed.
“Isn’t that amazing? Blew me away. But…cannabis is essential,” he said, adding that he was “glad they did.”
“…it was one lucky thing that we stayed open…[my] other businesses were closed for…twenty-four months, but they allowed [cannabis stores] to stay open like beer stores and liquor stores,” he said. “We couldn’t let people come in the store, and we had to sell through a hole in the door, which made it more uncomfortable to do business, but we were open.”
With COVID restrictions now gone and a border fully open, Windsor cannabis retailers can eagerly cater to American clients, a welcomed change.
In 2020, Windsor Essex hotel occupancy dropped to 33% and climbed to 45% in 2021 before increasing to 51% in 2022, according to TWEPI. There are hopes that number will continue to grow this year.
Most retail business in the downtown Windsor core, where there are three cannabis retail stores, depends on tourists, specifically Americans, who, according to the local chamber of commerce, provide 25% of all revenues.
The impacts of COVID were significant on all local businesses, and this upcoming summer with no COVID restrictions is important for Windsor’s business, according to Rakesh Naidu, president and chief executive of The Windsor-Essex County Chamber of Commerce.
“…this upcoming summer will be the first opportunity for our local tourism sector to get back to pre-pandemic levels. But it’s challenging because we need Americans to know that the restrictions are gone, but we are hopeful,” he said.
Hempstarz, a cannabis accessories shop in Windsor. Image via Google Maps
Serving Americans
While Katzman only had the opportunity to serve an American customer once COVID border restrictions were eliminated, he now sees his customer base expand as tourists return to Windsor.
“[American customers] just started when the border opened, and they dwindled in. We saw American dollars a few at a time, and every week it’s steadily growing,” he said. “With American customers, they’re discovering cannabis in Windsor, and they’re rediscovering Windsor, which is a real positive thing, thank goodness.”
According to Katzman, Caesars Windsor and other entertainment venues help drive business, and he explained that he notices more American currency in his cash registers on the weekends, which is when American tourists typically visit Windsor.
“It’s weekend stuff. I’ve taken to calling my controller…and [asking] how much U.S. currency we take in over the weekend,” he said. “We’re not seeing much during the week, but the weekend is getting stronger, and it’s encouraging.”
A benefit of operating businesses in a border city is the currency exchange rate when it is in your favour, says Katzman, because when Americans spend in U.S. currency, “it’s a little bit of a boost…we enjoy the American currency.”
Unlike Katzman’s cannabis retail businesses, Scott Hackney, owner and operator of downtown Windsor’s Grassroots Cannabis Store, is not seeing significant US traffic post-COVID yet.
“US traffic is here but not like it used to be,” said Hackney. “I feel like a lot of businesses went out of business during COVID, there’s not a lot of bars [or] activities [to draw tourists] …and the traffic’s not there yet.”
What’s the deal with all these SKUs?
When Americans do purchase in Windsor, they do so with a tourist mentality, according to Katzman, meaning smaller quantities that can be used and tossed if necessary at the end of a visit, but what really stands out is the quantity and quality of products to Americans.
“What the Americans don’t have that we have…is nine-hundred plus SKUs (stock keeping units),” he said, adding that Americans are “amazed” at the selection.
At Grassroots Cannabis Store, when Hackney serves American customers, they tend to purchase one single product: pre-rolls.
“Pre-rolls, that’s it, one pre-roll,” he said. “They’re not really coming in and buying huge amounts.”
More to be desired on both sides of the border
Eric Birkner is a resident of Windsor who purchases cannabis on both sides of the border and often buys in America if spending the day.
He’d purchase more cannabis stateside if he could bring it home, but because that’s illegal, he feels it’s only worth it to purchase if he’s “spending an extended time across the border.”
“Honestly, I find [the products] substantially better [in Michigan],” said Birkner, adding that they’re “all fantastic.”
Birker appreciates that there are more significant sales, bulk pricing, contests, and giveaways in Michigan.
“As far as what’s available, it’s everything we have here, but without the low THC caps on edibles,” he said. “I found most of the products that I tried to be comparable or better than the ones I’ve bought this side of the border.”
Richard C. Clement is a Detroit resident and cannabis consumer who has visited Windsor numerous times since the 1980s to consume then-illicit cannabis because it was safer for him to do so on the Canadian side of the border.
“I have been visiting Windsor…because it was safer to use my medicine there. While America was giving people long prison sentences for possession, Canada was always a safe haven and a wonderful place to enjoy the plant from God,” he said. “I am glad that there is different leadership in Ottawa, unlike what we had to deal with in America regarding cannabis reform.”
While Clement hasn’t had an opportunity to purchase cannabis legally in Canada because COVID prohibited him from visiting, he plans to soon and has been keeping apprised of what’s available.
Currently, the most significant barrier for Clement to visit Windsor to purchase legal cannabis is a concern that border services on either side might pull him into a secondary search which could result in an arrest.
At Grassroots Cannabis Store, Hackney hears from American customers that while vast product offerings are appreciated, the prices are significantly higher than in downtown Detroit, especially when it comes to vaporizers and disposable vaporizers.
All about that tourism
While it might not be obvious to those who don’t live in border communities, there is a strong reliance on the relationship.
“There’s no doubt that’s the relationship, and it’s of interest to us and good for the city,” said Katzman. “There’s a relationship between higher revenues and more American tourists, and I’m not embarrassed. I’m proud of Windsor because they’re coming over and getting really good products from businesses that are really organized.”
According to Katzman, Windsor has always had the opportunity to present services to Americans they can’t access across the river, whether it be drinking at 19 instead of 21, strip clubs that offer specialized entertainment, and now access to national cannabis in retail stores.
“People really get what they pay for in Canada, and it’s safe with every product inspected, whereas in a US state, you don’t really know what you could be indulging in,” said Katzman, adding that as more Americans visit the border cities to discover cannabis, it’s better not only for cannabis businesses but for the cities too.
Similarly, Hackney says a lot of downtown Windsor’s business is tied to tourism and “without that tourism, I don’t think there’s a lot of opportunities for sales to Americans.”
TWEPI’s chief Gordon Orr is “cautiously optimistic” of reports forecasting increasing tourism traffic but noted that to get to where we were pre-COVID, it will take “two to three more years of uninterrupted growth.”
But for Katzman today, he’s content with what he’s seeing in his cannabis retail stores.
“It’s just fantastic to see Americans discovering us,” he said.
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.
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 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.
Health Canada issued two new recalls of dried cannabis on April 18, one sold in Alberta and one in Saskatchewan.
Peace Naturals has issued a recall for their Spinach Kiwi Lime Punch pre-rolled joints that were sold in Alberta due to inaccurate THC levels.
The products were labelled as having 20 mg/g of THC and total THC of 212 mg/g while the actual figure was 17 mg/g and 287 mg/g.
Twenty units of the product were sold from March 24 to April 4. The 0.35 gram pre-rolls came in packages of 10.
Health Canada’s recall notice says that Peace Naturals received one consumer complaint based on inaccurate THC levels. Health Canada has not received any complaints.
As always, Health Canada reminds Canadians to report any health or safety complaints related to the use of this cannabis product or any other cannabis product by filling out the online complaint form.
A second recall, also issued on April 18, was for inaccurate THC levels on Medz Cannabis Inc.’s Harts Charlottes Angel pre-rolls sold in Saskatchewan.
There were 240 units sold where the THC, total THC, CBD and total CBD labelled are lower than the actual values in the product.
Neither Medz Cannabis Inc. or Health Canada have received any complaints as of publication.
The printed value of cannabinoids showed total THC of 2.9 mg/g but the actual value was 6.2 mg/g. CBD levels on the label were 1.3 mg/g but actual value was 10.5 mg/g. Total CBD was listed as 78 mg/g but the actual value was 130 mg/g.
The Manitoba NDP say they want to take a “close look” at the province’s private retail cannabis program if they form government following an upcoming election this fall.
Representatives with the provincial NDP, which is currently leading in the polls, made the comments on Monday as part of the party’s efforts to hold back the passage of two bills from the Progressive Conservative (PC) government that seek to open up alcohol sales in the province.
The NDP used procedural rules to delay the two votes, while also saying they may want to revisit the province’s retail cannabis model if elected. In response, the PCs accuse the New Democrats of favouring a “nanny state” approach.
Lisa Naylor, NDP critic for liquor and lotteries, told the house that the private system for cannabis sales may not benefit the province.
“I think it’s safe to say that’s something we need to look at closely,” Naylor said.
“We understand that private sales of cannabis were brought in under the PC government, and I know that that’s not the norm across the whole country,” she added. “So I think it’s safe to say that if we’re elected, we’ll take a close look at all of the decisions that were made regarding cannabis when we weren’t the ones at the table making those decisions.”
Manitoba currently lists more than 175 private retail stores, most of them located in Winnipeg. The private retail model was put in place by the Manitoba PCs in 2018.
Most provinces and territories in Canada have a private or mixed retail model that also includes government-run stores, as well as distribution. BC has had a mixed model in place since the beginning of legalization, while New Brunswick began the process of accepting applicants for the process of adding privately owned stores to their public retail model.
Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland and Labrador, as well as all Territories have private retail models. Quebec, Nova Scotia, and PEI have public-only models run by the provincial government.
Manitoba and Saskatchewan are the only provinces that currently allow all producers to sell directly to private retailers in each province.
A 2017 survey showed that around 21 percent of Manitobans reported using cannabis in the past year.
In late 2022, the Manitoba government announced plans to repeal the 6% social responsibility fee it imposed on retailers. The bill has not yet moved beyond first reading.
The fee was originally put in place to ensure cannabis stores contributed to the social costs that were expected by some to come with legalization, such as increased health costs, public education, and addiction services. The government now says they want to remove it to better help cannabis retailers compete with the illicit market.
In the three years that the fee has been in place the province has brought in around $2.4 million to pay for these kinds of services. Since then, the cannabis market in the province has grown significantly.
“After four years of legalization, the cannabis market is maturing, the regulatory costs to the province are well known, leading to the repealing of the social responsibility fee and the transition to a new taxation regime for the long term,” said provincial Minister of Finance Cameron Friesen. “Repealing the social responsibility fee will continue to reduce the cannabis cost to consumers looking to switch from the illegal market.”
Manitoba also launched a “cross docking” service in 2022 to address some of the challenges the province’s direct-to-retail distribution can pose.
The Supreme Court of Canada has ruled that Quebec has the right to ban residents from growing their own cannabis at home.
The landmark case, which had worked its way through the courts since 2019 when it was raised by Quebec resident Janick Murray-Hall, argued that such a ban was unconstitutional.
The Quebec government had argued that they had the right to ban growing cannabis at home entirely, and were doing so to protect young people. The Supreme Court dismissed the appeal of that ruling, concluding that the provincial government’s ban on growing cannabis at home was not in conflict with the federal law that allows Canadians to grow up to four plants at home.
While Murray-Hall’s legal team was initially successful, the provincial government appealed and, in September 2021, Quebec’s Court of Appeal reversed that ruling, saying the province did in fact have the right to ban growing cannabis at home. His legal team appealed that ruling, which then led to the final Supreme Court ruling.
Federal regulations allow Canadians to grow up to four cannabis plants per home. Provinces are allowed to place restrictions on that allowance, such as limiting the number of plants and/or requiring them to be grown in a secure area, or out of view of the public.
However, in the development of the Cannabis Act and Regulations, the federal government argued that limiting the number of cannabis plants to zero, or banning them outright, would be out of the scope of their powers.
This is similar to how there is a federal age limit of 18 for access to alcohol, but provinces can raise this amount. All provinces and territories in Canada except Alberta and Quebec have established 19 as the age of access for cannabis. Alberta’s is 18 and Quebec’s is 21.
Quebec and Manitoba were the only two provinces to challenge that authority, banning home growing entirely. The ruling could potentially impact another case in Manitoba seeking to overturn that province’s own ban.
Murray-Hall’s lawyers argued that the provincial ban, specifically sections five and ten of the provincial cannabis act, was in conflict with the federal act.
In the reason for judgement, Justice Richard Wagner wrote:
“I conclude that [sections] 5 and 10 of the provincial Act do not frustrate the purposes stated in the federal Act, including that of reducing the presence of criminal organizations in the cannabis market, and that they are operative under the doctrine of federal paramountcy. The provincial Act’s public health and security objectives and its prohibitions are, to a large degree, in harmony with the objectives of the federal Act, and there is no basis for finding a conflict of purposes.”
Despite the implications the case could have on the issue of provincial and federal jurisdictional authority, the federal government did not intervene in the case. Five provinces did intervene: BC, Alberta, Saskatchewan Manitoba, and Ontario.
Quebec’s ban on home-grown cannabis does not apply to those authorized to grow cannabis for medical purposes. The fine for being caught growing cannabis at home without a medical licence is a fine of up to $750.
Jack Lloyd, lead counsel in a similar case challenging Manitoba’s ban on home-grown cannabis says that while he is disappointed by the Supreme Court’s ruling on the Quebec issue, he doesn’t feel it undermines his case.
“While we are disappointed for Quebec we are not of the view that Manitoba’s law is valid simply because of this ruling.”
“Quebec’s goal was to strengthen their Provincial monopoly and sales, like R v Comeau,” he continues. “Manitoba’s goal is to issue penal sanction against cannabis growers, which is a purely criminal issue and thus outside of the Province of Manitoba’s jurisdiction.”
The Supreme Court of Canada rules that Quebec’s ban on possessing and cultivating cannabis plants for personal purposes is constitutional. Read our plain-language summary here: https://t.co/55PC0fbhdS#cdnlawpic.twitter.com/zzV2fgyOYS
A Manitoba cannabis processor and an Ontario cannabis grower are teaming up with a cannabis retailer in Saskatchewan and Manitoba to show their support for the local LGBTQ+ communities.
Manitoba’s TobaGrown and Ontario’s Safari Flower Co. are partnering up with Farmer Jane Cannabis Co to bring a cannabis product to market for Pride in Manitoba and Saskatchewan.
TobaGrown will be donating $1.50 from every sale of 4Pride pre-rolls to three LGBTQ+ support foundations in June in recognition of Pride Month. The pre-rolls, sold in a three pack, are made with flower from Safari, then processed and distributed by TobaGrown.
Brigitte Simons, the president and CEO of Safari, says the crossover and parallels between the LGBTQ+ community and cannabis users made the campaign seem worth supporting. She also notes that Safari’s management team is predominately female.
“Cannabis culture and the LGBTQ+ community have a history of similar social and judicial injustices that I have lived through myself personally,” says Simon. “Because of this, there exists a relationship of compassion and understanding behind cannabis brands that demonstrates inclusion and community support but carries impact if backed by authentic representation.
“Safari Flower’s…support of this initiative is grounded by our values to give back to marginalized identities that turn to cannabis for community and wellness. This is a community that we operate in as an insider all year long.”
Jesse Lavoie, the owner of TobaRolling, which processes Safari’s flower into the TobaGrown pre-rolls and distributes them to retailers, says his company was very happy to take part as well.
“TobaRolling is beyond thrilled to be working hand-in-hand with Safari Flower and Farmer Jane in raising donatable funds for multiple LGBT2SQ+ charitable organizations in both Manitoba and Saskatchewan with our new 4PRIDE Pre-rolls,” says Lavoie.
The 4PRIDE pre-rolls, sold in a three-pack, are exclusively available at Farmer Jane locations in Manitoba and Saskatchewan.
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.
Quebec’s annual survey that follows the evolution of cannabis consumption in the province shows no increase in cannabis use in the province from the previous year.
Young people are also less likely to use cannabis than prior to legalization, and those who do use it are waiting longer to start.
However, the number of young people vaping cannabis is on the rise, despite the products being banned in the province.
The 2022 Quebec Cannabis Survey shows that 19 percent of Quebecers used cannabis in 2022, about the same as the previous year. However, previous surveys do show a small increase from 14 percent to 19 percent following legalization.
Men in Quebec are more likely to use cannabis compared to women, with 23 percent of men and 16 percent of women reporting their use.
In 2022, younger Quebecers aged 21-24 were the most likely to use cannabis, with 40 percent of those surveyed reporting their use of cannabis. This was followed by 25-34 year-olds at 37 percent.
Although use has been increasing slightly among adults in Quebec, there has also been a decrease in the proportion of consumers aged 15-17 reporting their use of cannabis since 2018 when cannabis was legalized.
Cannabis vaping on the rise
Despite not being a legal product in Quebec, the report shows an increase in residents vaping cannabis, from about 19 percent in 2021 to 24 percent in 2022. For young people aged 15-17 who reported using cannabis, the number who vaped was about three times higher, from more than 24 percent in 2019 and almost 44 percent in 2021 to 70 percent in 2022.
As in other provinces, smoking cannabis remains the most popular mode of consumption, but has declined slightly from 85 percent of use in 2021 to 82 percent in 2022.
Almost half of respondents (42 percent) who used cannabis did so less than once a day, and around 19 percent did so only about one to three days a month. About one-quarter (24 percent) used cannabis one to six days a week, and 14 percent said they used cannabis on a daily basis.
Around 30 percent of consumers reported using edibles or ingestible oils or capsules.
Black market is shrinking
Around two-thirds of cannabis users (67 percent) in Quebec said they bought cannabis at least once from the Société québécoise du cannabis (SQDC), about the same as the previous year.
Only about 8 percent reported getting cannabis from an illicit source, down from 11 percent in 2021 and 32 percent in 2018. Another 40 percent reported getting cannabis from a family member, friend, or acquaintance.
Quebec’s efforts to educate people about health concerns related to cannabis use are also proving successful. Around 79% of Quebecers aged 15 and over say they have seen or heard of such campaigns in 2022.
Ninety-one percent of young people aged 15-17 reported seeing such messaging, followed by 88 percent of 18-20 year-olds and 86 percent of 21-24 year-olds.
The parents of a six-year-old girl in Nova Scotia are lobbying the provincial government to cover the cost of using cannabis oil for the treatment of seizures in children.
Kaylee and Nick Jones, along with their daughter Sophie, were at the Nova Scotia House of Assembly on April 11 to present a petition with 1,368 signatures in support of Nova Scotia covering the cost of CBD-based medicines for children with life-threatening conditions.
Chris Palmer, a Progressive Conservative MLA in the Nova Scotia House of Assembly read the petition after introducing the family to the house, explaining that six-year-old Sophie was born with a rare chromosome abnormality called Malan Syndrome.
Several years ago, the Jones’ neurologist recommended that Sophie use CBD oil to manage symptoms, which the family says has cost them around $400 a month. Kaylee Jones, Sophie’s mother, says the CBD oil has more effectively helped to reduce her daughter’s seizures than other more conventional medications.
The petition calls on the Nova Scotia government to cover the cost of CBD use by children with similar conditions by adding it as an exception-status drug to the Pharmacare program.
In a recent interview, Sophie’s parents explained that she has been using CBD oil for more than three years, which has reduced the number and length of her seizures. Her seizures began shortly after her third birthday, coming in clusters that lasted several minutes.
The longest seizure was up to 45 minutes. MLAs routinely present petitions in the Nova Scotia House of Legislature on behalf of their constituents, which are usually presented and then tabled in the House during the daily routine. Once filed with the Clerk, petitions become part of the public record of the House.
The full petition reads:
WHEREAS Cannabis-based therapies have been used for millennia to treat a variety of diseases including epilepsy. Up to 30% of children with epilepsy are treatment resistant regarding standard anticonvulsant medications. Several studies have shown that CBD-enriched cannabis herbal extract is beneficial in decreasing seizure frequency in children with treatment-resistant epilepsy.
WHEREAS Treatment-resistant epilepsy leads to an increase in expensive prescribed medications and frequent trips to already overburdened emergency rooms while being transported by Emergency Health Services, also an overburdened component of our Health Care system.
WHEREAS Veterans Affairs Canada established a Reimbursement Policy for medical cannabis in accordance with Section 4 of the Veterans Health Care Regulations that does not require a Drug Identification Number. The Province of Nova Scotia could do something similar for children with life-threatening illnesses, such as epilepsy.
THEREFORE we, the undersigned, residents of Nova Scotia call upon the Nova Scotia Legislative Assembly to cover the cost of cannabidiol (CBD) based medicine for children who have life-threatening diseases and specifically to remove the financial barrier to accessing CBD based medicines for children with epilepsy by adding it as an Exception Status Drug to the Pharmacare Program.
Sophie’s parents run a Facebook page that can be found here.
The BC Government will soon have new tools to apply civil forfeiture rules against illegal cannabis growers.
Once passed, Bill 21, the Civil Forfeiture Amendment Act, 2023, will allow the government to begin legal proceedings against property connected to illegal cannabis grow operations.
BC’s Civil Forfeiture Act allows the government, through BC’s director of civil forfeiture, to begin legal proceedings against property linked to unlawful activity. The rule change is part of several new proposed amendments to the provincial forfeiture laws.
The section relating to cannabis plants is an amendment to the Civil Forfeiture Act’s part four which deals with “proceedings, presumptions and proof” and is intended to give more weight to efforts by the province to address illegal commercial growers.
The bill passed committee on April 6. It now needs to pass third reading and be passed into law.
The rule change will take two different approaches. For property associated with a lived-in home, known legally as a “dwelling house,” any property that has more than five times the legal number of plants would be considered for forfeiture.
Since federal and provincial rules allow for up to four plants to be grown on a property where people live, any property with 20 or more plants could be considered the proceeds of or connected to unlawful activity.
Federal regulations also allow for personal and designated production of cannabis. Any cannabis plants found to exceed five times the number of plants allowed under a medical authorization would also be considered for forfeiture.
The number of plants a personal or designated medical grower can have at any given time is based on the grams of dried cannabis a person is authorized to use by a healthcare practitioner. An authorization for one gram a day allows someone to grow up to five plants inside, two outside, or a mixture of the two.
The average daily amount authorized by health care practitioners for individuals registered with Health Canada for personal or designated production was over 40 grams per day as of March 2022, a number Health Canada, as well as provincial and municipal governments, law enforcement, and politicians, have said is an example of abuse of the medical program.
In response to questions from the opposition during second reading of the bill, Mike Farnworth, BC’s Public Health and Safety Minister, said the number was chosen to ensure they are targeting those growing well outside of any allowable limits.
“The number is in place because it is significantly more than what the grower may be…. Let’s say you have a medicinal licence to have, let’s say—I don’t know—20 plants or 40 plants, five times is a significant increase, and that’s the target,” said Farnworth. “It’s that significant increase over what you’re licensed to be growing.”
Farnworth also clarified in debate with Mike Morris, the opposition’s Shadow Minister of Public Safety and Solicitor General, that the amendment would not apply to property on federally-held First Nations’ lands due to provincial civil forfeiture rules not applying to federal land. However, if law enforcement does seize property from First Nations land that is no longer on First Nation land, such as a vehicle or a trailer used to grow or sell cannabis, it could be subject to forfeiture.
Minister Farnworth also noted that civil forfeiture laws are separate from property seizure laws, which allow law enforcement to seize property.
The rule change, once passed, will not apply to a proceeding that began before the date it came into force or begins within 12 months after it comes into force.
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)
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.
With roots going back to the pre-legalization online dispensary scene, the team at Herbal Dispatch is now bringing their legacy savvy to the legal market with a suite of services designed to bring craft cannabis to their medical patients and industry customers alike.
“We recognized the need for a better way to connect people with the products they wanted, and we wanted to provide a secure and reliable way for them to access those products quickly.” Says Herbal Dispatch’s Chester Sam. “That’s why we created a marketplace platform that allows medical patients and industry partners access to high-quality craft cannabis from top producers across Canada.”
With our BC Direct Delivery service, we are helping dispensaries differentiate themselves by providing exclusive BC craft cannabis products to their customers
Chester Sam
Their expertise spans three main services: providing a carefully curated selection of medical cannabis products from various producers to patients through their medical sales platform; providing this same selection to licensed retailers in BC through the province’s direct delivery program; and providing contract manufacturing services for craft producers.
“With medical, we provide a robust marketplace of over 600 quality craft cannabis products,” says Sam. “Our customer-centric approach ensures that our members have access to the best quality cannabis available in Canada through an easy, secure, and reliable online ordering system.
“Our BC Direct Delivery service allows us to deliver exclusive craft cannabis products directly to dispensary partners throughout British Columbia, ensuring safe and efficient distribution. We offer a selection of premium cannabis products from top producers and craft cultivators, with a focus on quality, consistency and affordability.”
Finally, their new contract manufacturing services “are designed to help producers and brands scale-up their operations quickly and affordably.” They provide everything from NNCP filings, packaging and labelling services, shipping and distribution, flower trimming, secure storage solutions, and more.
With years of experience curating high-quality cannabis through its online platform, Herbal Dispatch is uniquely positioned to help industry partners distinguish their brands from the competition with access to the best products the legal market has to offer.
“With our BC Direct Delivery service, we are helping dispensaries differentiate themselves by providing exclusive BC craft cannabis products to their customers,” says Sam. “The need for this service has been growing steadily as dispensaries are looking for new ways to stand out in a competitive market.”
Their producer-oriented contract services also aim to streamline and simplify what can be a complex and resource-intensive process for smaller companies. As Sam puts it: “We also recognize that many cannabis businesses lack the resources needed to properly comply with all relevant regulations while also trying to scale up their operations. At Herbal Dispatch, we are striving to fill those gaps by providing reliable and affordable solutions for contract manufacturing services. Our team is dedicated to helping producers and brands grow quickly and securely so that they can focus on what matters most: their business.”
And finally, on the medical side, their platform allows patients registered with Herbal Dispatch to access over 600 medical cannabis products from more than 50 vendors. Their mandate is to offer an ever-changing variety of unique craft cannabis products to keep curious connoisseurs engaged and well-medicated.
On the flip side, Herbal Dispatch offers a unique service to BC craft producers, allowing them to access dispensaries across BC and medical patients across Canada. “This provides an added level of convenience, as these producers can now access a much larger market with ease,” says Sam. “We are constantly innovating, and releasing new products and services on a regular basis to ensure that our members are getting the best cannabis experience possible.”
Established in 1976 and emerging as the largest independent third-party testing company of nicotine containing products in the world, Labstat International first began providing analytical testing of cannabis in 1982 under a joint program with Health Canada.
By 2015, the company began offering cannabis testing services under the MMPR and then ACMPR before receiving its Analytical Testing license under the Cannabis Act in December 2018.
Labstat offers full-service testing such as cannabinoid potency, pesticide residues, residual solvents, mycotoxins, aflatoxins, heavy metals, and microbials, as well as smoke and vapour testing for all types of consumable cannabis, hemp, and natural health products.
“We have a deep commitment to the continuous improvement of our quality systems, and we’ve invested considerably in our state-of-the-art instrumentation parks in Edmonton, Kitchener-Waterloo, and Knoxville, Tennessee, to increase the reliability and accuracy of our cannabis testing catalogue,” says Michael Bond, President of Labstat. “Our teams are equipped to provide solutions for the analysis of cannabis-infused products such as gummies, chocolates, beverages, waxes, budders, and shatters.”
Bond explains that with several decades of experience testing an array of products, including cannabis, Labstat brings forward a wealth of knowledge for cannabis producers of all kinds. Although many larger producers often do much of their own testing in-house, he says that the smaller producers often need to rely even more on a full-service lab that can provide everything they need in one place.
Our experts have developed a comprehensive testing protocol specifically for cannabis vape devices to help mitigate risk and protect customers.
Peter Joza, Chief Science Advisor
“Larger producers often have access to internal resources such as regulatory and scientific affairs that they can leverage,” says Bond. “Smaller producers will need to select a laboratory that has the full capability and capacity to support not only their analytical needs, but also to help support them in other ways such as understanding regulations and troubleshooting if results are out of specification.”
In addition to their full array of analytical testing, Peter Joza, Labstat’s Chief Science Advisor, notes that Labstat offers smoke and vapour testing of products like pre-rolls and vape pens/cartridges and other types of extracts, from the development stage to finished products.
While the number of players is expected to decline, the number of emerging novel products will increase. The complexity of testing these products will likely increase as novel products often create unique challenges for analytical methods.
Michael Bond, President
Joza says this is an important step of the product development process and corporate responsibility for cannabis product manufacturers—to really understand what their products are delivering, and to convey that information to the consumer. Without heavy oversight from Health Canada, he says it’s up to companies making products like vape pens to take it upon themselves to provide this information associated with good product stewardship.
“Health Canada has yet to establish aerosol testing standards for cannabis vaping devices,” explains Joza. “In fact, there are little to no regulatory requirements for the analysis of aerosols emitted from cannabis vaping devices anywhere in the world.” However, we anticipate this will change as the industry and regulations continue to evolve.
Forward-thinking product makers, he says, need to demonstrate to customers that their vape products meet the highest quality and safety standards while delivering a consistent experience by implementing standardized testing protocols.
“Our experts have developed a comprehensive testing protocol specifically for cannabis vape devices to help mitigate risk and protect customers,” he explains. “Whether you’re just beginning the product development phase or your products are already on the market, we partner with your internal teams to meet your unique needs.”
Ultimately, whichever lab a cannabis cultivator or processor chooses to use, the team at Labstat says it’s important that they understand what services are available and what Health Canada requirements, as well as market requirements, will be.
Growers should choose an experienced and accredited laboratory that has a long-standing reputation for providing timely and reliable results, according to Bond.
“It’s important for growers to develop a collaborative partnership with their chosen laboratory. That way the laboratory can develop and provide the specific services that will be required to support the grower through their opportunities and challenges. A laboratory partner will have deep industry and regulatory knowledge along with the experience and capability that supports the growers’ success in both the short and long term by investing both in the success of the grower and in the success of themselves through the development of their people, processes, and infrastructure.”
Over time Bond expects that the cannabis industry will evolve to a place of consolidation among many of the larger producers. Beyond dried cannabis and ingestible oils, an array of new products continues to emerge, such as nano emulsions for beverages, more complex vape pens, topicals, and much more. Labstat International predicts growth in analytical testing services to support the growing array of product types hitting the market.
“We expect to see growers, producers and laboratories amalgamating over the coming years so that there are fewer, but larger, players in the marketplace. While the number of players is expected to decline, the number of emerging novel products will increase. The complexity of testing these products will likely increase as novel products often create unique challenges for analytical methods. This is why it is important to collaborate with a laboratory partner that has a history of servicing the industry in a sustainable and scalable fashion.”
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 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.
“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?”
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’.
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 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”.
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.
A BC company says they recently completed the first shipment of legal cannabis from Canada to Jamaica.
Pistol and Paris, a BC cannabis brand with products for sale across Canada say they completed a historic first shipment of 20 kilograms of BC-grown cannabis to Jamaica on February 13.
The indoor cultivar, Tranquil Elephantizer, is one not currently available in Jamaica, says Kris Walton, who assisted Pistol and Paris with the shipment, through a BC-based partner, Cannaviva.
It’s not as easy as just filling out a simple application and throwing it in the mail. There’s a ton of logistics.
“We’re looking at this as an opportunity,” says Walton. “We’re taking Canadian product down there, but we also want them to send (Jamaican) product up here. Canada is a very mature cannabis market, but we really only have Canadian cannabis. So there are other countries that are on the map, that do a very good job producing product. It’s like going into a wine shop and seeing wine from Chile or France or California.”
The process was not easy, says Dylan King, owner of Pistol and Paris, with more than six months from first starting down the path of getting their authorizations from the relevant Canadian and Jamaican authorities. Although larger, often publicly-traded Canadian cannabis companies have made news in the past with shipments of cannabis to different countries around the world, Pistol and Paris are a first of sorts, as such a small, locally owned business.
“We had to jump through a ton of hoops to get product down there,” says King. “It’s not as easy as just filling out a simple application and throwing it in the mail. There’s a ton of logistics.”
The issue has made some waves in the island nation in the past week, with some local politicians and other local figures raising concerns about a foreign country sending cannabis to a country so well-known for the product.
The cannabis touches down in Jamaica. Image via Pistol and Paris
King and Walton say they both understand the concern from local growers, and hope to help extend similar opportunities to bring Jamaican cannabis to Canada, as well.
“I’ve spent a lot of time there, growing up,” says King. “I’ve been there six or seven times over the years, and gone into many plantations. I know the growers and the culture and the families. I’ve always thought it would be great one day to bring back some great Jamaican weed here, too.
“We want to go down there and spend some time with the growers and see if we can help them with all the steps it takes to send something up here to Canada,” he adds. “Because it is a difficult, consuming process.”
Walton, who personally escorted the shipment to Jamaica recently, agrees.
“Canadians do want a variety. To be able to allow (recreational) imports, which is what we’re hoping Canada eventually goes to, will be huge for Canadian consumers. Sungrown product from down by the equator is different from sungrown product here in Canada, you know? So I hope Canada takes note and recognizes that, and we get more liberal in the rules that are in place to allow that.”
Part of the controversy stems from concerns that while the Jamaican Cannabis Licensing Authority (CLA) approved this import from Canada, local growers are still seeking licenses to grow, and Canada does not allow for similar imports. Although Canada has rules in place that allow cannabis to be imported, it is only for relatively limited medical and research purposes.
In response to those local concerns in Jamaica, the country’s CLA says it is unaware of any restrictions on the importation of Jamaican cannabis into Canada. It also confirms that the agency has approved 224 export permits for Jamaican ganja and only four import permits.
“The Authority wishes to clarify that it is unaware of any specific restrictions on importing Jamaica cannabis into Canada. Canada was the first country to which local entities requested and received export authorizations, and those have been followed by other export authorizations over the years, with a total of nine authorizations for export to Canada being granted. Should there have been a refusal by Canada to import permits for product from Jamaica, the Authority is not aware of these proposed consignments or reasons for refusal, as no requests for permits to export to Canada have been received since 2020.”
The CLA was created in 2015 under Jamaica’s Dangerous Drug (Amendment) Act (DDA) “with a specific role to establish and regulate Jamaica’s legal ganja and hemp industry.”
It issues three different tiers of cultivator licences, two tiers of processing licences, a transport licence, three kinds of retail licence, as well as a research and development licence.
The CLA currently lists three cultivation licences, although one expired in February 2023, and the two others are set to expire on March 16 and June 12 of this year. It also lists three processing licences, but two expired in 2022. The third is set to expire in 2025.
The authority also lists 13 cannabis retailers, only two of which are currently expired, one research and development licence that expired in 2022, and one active transport licence.
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?
“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.
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.
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.
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-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.
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.
The Surrey Board of Trade released a report today calling on the local government to begin allowing cannabis retailers to operate in the municipality.
Surrey Mayor Brenda Locke says the city is working on developing a plan to potentially allow just that.
The trade association, which says it represents over 6,000 member contacts and 60,000 employees, also calls on several policy changes from the provincial and federal government, from province-wide zoning rules for cannabis retailers that would prevent cities like Surrey from directly or indirectly banning them, to changes to federal excise duty rates and practices.
“There is an opportunity for Surrey to create a structured, strategic, and responsible policy to allow cannabis operators to exist in Surrey,” said Anita Huberman, President & CEO of the Surrey Board of Trade.
“This includes implementing an efficient cannabis regulatory framework, including amendments to zoning bylaws, business licence bylaws, bylaw notice enforcement bylaws, and municipal ticket information bylaws. This type of framework will provide regulations on the locations and operations of cannabis production and processing facilities and retail stores for Surrey.”
The report suggests that the BC government should create province-wide allowable zoning rules for cannabis retail for communities that have no retail cannabis policies in place, and also require communities that do have retail cannabis rules to permit private cannabis retail if it’s disallowed. It also calls for an end to the cap on the number of cannabis retail locations by one owner, currently limited to eight in BC.
Federal regulations and taxation, law enforcement
The report also calls on the federal government to better align the needs of the industry with the policy goals of legalization, highlighting challenges with federal excise taxes, vape taxes, and more.
It calls for an end to provincial and federal sales tax on medical cannabis and the creation of a single federal excise stamp for non-medical cannabis. It also calls for an end to BC’s 20% vape tax.
Lastly, the report from the Surrey Board of Trade also calls on the federal and provincial governments to address issues cannabis businesses face when dealing with lending institutions, and for law enforcement to address the ongoing activities of illicit cannabis operators.
BC currently lists more than 460 private cannabis retail licences issued in the province. Surrey, which has not allowed cannabis retail locations, is the province’s second-largest municipality by population after Vancouver, covering a large portion of the Lower Mainland. Residents of Surrey who want to purchase legal cannabis either have to order from the online provincial store or purchase from retailers in nearby municipalities.
Surrey Mayor Brenda Locke—who, as a candidate for mayor, called for a “measured approach” to cannabis in the run-up to the 2022 mayoral election to address residents’ desire for legal cannabis stores—says she has now asked city staff to work on a report to develop a plan along those lines.
“This new Council will consider allowing Cannabis stores in Surrey,” Locke told StratCan via email. “I have asked staff to work on a report to develop a measured approach for the potential introduction of retail cannabis locations in Surrey. Once completed, the report will be brought forth to Council for consideration.”
Richmond BC, located west of Surrey and home to more than 200,000 people, also does not allow any cannabis retailers.
A representative for Richmond told StratCann via email that they have not yet reviewed the proposal, nor will they provide comment on a report from another jurisdiction.
“Cannabis regulations allow local governments to decide if they wish to permit the retail of cannabis within their boundaries. Richmond Council decided that a prohibition of retail is in the best interests of the community, especially when cannabis products are readily available across Metro Vancouver,” said Clay Adams, director of corporate communications and marketing for the City of Richmond. “Businesses are also permitted to deliver cannabis from Vancouver to properties in Richmond as long as that business is allowed to deliver and the courier/delivery company is licensed to operate in Richmond.”
Adams also pointed out that the City of Richmond has policies and zoning regulations in place that limit and regulate commercial cannabis production and cultivation activities licensed through Health Canada under the Cannabis Act and Regulations. The city only allows cannabis production facilities and related activities in designated “industrial” and/or “mixed employment” land use areas.
BC’s recently released Budget 2023 includes approximately $21 million to support cannabis licensing operations, including the cannabis licensing system, streamlining service delivery, and strengthening compliance and enforcement.
Featured image of Inspired Cannabis, a retail store located just outside Surrey Municipal boundaries in Delta BC.
The Nova Scotia Liquor Corporation (NSLC) says cannabis sales were $27.6 million for the third quarter of 2022/23, an increase of 9.2 per-cent from the same reporting period in the previous year.
The NSLC saw $27,556,889 in sales from October 3, 2022–January 1, 2023, compared to $25,229,592 for Q3 2021/22.
The increase in sales can potentially be attributed to the addition of a new modular retail outlet in an existing store in Inverness, bringing the total number of NSLC cannabis stores to 46. The province has just under one million residents. The province has also seen the average price per gram decline just over 1% to $6.30 compared to the same time last year.
Locally-produced cannabis products now account for 31% of all cannabis sales in the province at $27.6 million, an increase of 9.2% from the same time period last year, and the largest percentage the province has seen so far.
“We continue to support local producers by collaborating with local supplier and industry associations, providing marketing support, research, and in-store promotions,” said Greg Hughes, president and CEO of NSLC. “In addition, we increased the number of local products we offer our customers this quarter compared to the same time last year.”
Retail customer transactions for cannabis were also up 13.8 per-cent, while the average dollar value of each transaction decreased by 4 per-cent to $38.29.
Although Q3 sales represented an increase from the same quarter in the previous year, they represented a small decline from the NSLC’s Q2 report for July 4, 2022–October 2, 2022. Sales in that time period were $28.8 million.
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 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.
The Ontario Cannabis Store (OCS) will be reducing its margins and moving to a fixed markup pricing model later this year.
The announcement comes after the provincial wholesale distributor completed a review of its pricing structure. In the organization’s 2021–2022 annual report, the OCS posted $184.4 million in income.
The change comes as part of a commitment to improving process transparency in its 2022–2025 Business plan, which includes a review of OCS pricing structure.
With this new change, the OCS projects that margin reductions will contribute approximately $35 million into the marketplace in 2023–24.
Although the 3% reduction in markup means Ontario will still have one of the highest margins for all provincial cannabis distributors, these reductions are expected to grow, with a full fiscal year reduction in 2024–25 for an estimated $60 million, and expected increases to the marketplace in the following years.
The OCS says the move to a fixed pricing model, rather than a variable rate, will also help cannabis producers and retailers to better plan out their own wholesale and retail pricing to meet market demands.
David Lobo, President and CEO of the OCS, says the changes will help the legal industry compete with the illicit market:
“As the exclusive wholesale distributor for legal recreational cannabis in Ontario, OCS is doing its part to support a vibrant cannabis marketplace that helps to displace illegal operators while promoting social responsibility in connection with cannabis. The OCS is pleased to use its growth in scale to establish a more balanced share of product margins to help enable a vibrant cannabis marketplace.”
These changes are expected to begin in September 2023, which the OCS says will give cannabis producers time to adjust any existing products or products expected to launch into the Ontario market in the future.
Provinces like Ontario have received some criticism from the industry for raking in profits at a time when much of the industry is failing to realize similar financial success. First criticized for not being profitable, provinces like New Brunswick, Quebec, and BC are all cash-positive for their provincial distribution and/or sales outlets.
As with other provinces, Ontario’s profits from cannabis are paid into the province’s Consolidated Revenue Fund and made available to the Ontario Government for allocation.
The details of the fixed markup structure are not available as of press time, but the OCS will be holding a call with licensed producers in March to walk them through the changes.
New margins will be based on incentivizing the purchase of non-combustible products for health-related reasons, but the margin on dried flower will be the lowest of all product categories in order to better allow direct competition with the illegal cannabis market.
Meanwhile, several in the industry say the change, even if small, is welcomed.
Omar Khan, chief communications and public affairs officer at High Tide Inc—which operates the largest non-franchise cannabis retail chain in Canada, Canna Cabana, with more than 150 locations across the country and 49 in Ontario—says the changes are needed to allow the industry to better compete with the illicit market, but he wants to see even more to achieve that goal.
“We welcome the fact that the OCS and the Ontario Government are putting $60 million back into the cannabis industry through these reduced markups. Returning this money to the industry will help Ontario’s legal cannabis retailers and producers re-invest in their businesses and better compete with a well-entrenched illicit market.
“While today’s announcement is a positive first step, much more needs to be done, especially by the federal government, to ensure the sustainability of Canada’s legal cannabis sector, which employs tens of thousands of Canadians but is struggling to succeed under the current regulatory and legislative environment,” adds Khan. “We look forward to further discussions with the OCS, regulators, as well as the federal and provincial governments about additional concrete measures that can be taken to ensure our industry continues to grow and create jobs while protecting public health.”
Janeen Davis, VP of sales at Joint Venture Craft Cannabis Inc (JVCC), which has about a dozen SKUs available in Ontario, says it’s a step in the right direction. JVCC is a BC-based processor that focuses on bringing micro and craft flower to market.
“We feel so hopeful that the OCS has heard that many producers are struggling and have responded by reducing provincial distributor margin in Ontario. This kindness is a collaborative step in the right direction to create a sustainable cannabis industry, and we look forward to working with our distribution partner to bring value to consumers in any way we can.”
Mandesh Dosanjh, President & CEO of Pure Sunfarms, a BC-based greenhouse producer with around 50 SKUs in Ontario, says the federal government needs to now make similar changes.
“We welcome the change Ontario is making to lower and standardize markup. A predictable structure gives producers the ability to strengthen their pricing models and provides much needed transparency. This comes at a critical time for producers, who have never been more challenged with overly burdensome excise taxation and fees.
“Ontario is doing its part to help sustain a healthy supply chain for the cannabis industry. Now it’s time for the federal government and other provinces to follow suit.”
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.”
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.
Eco Canadian Organic Inc, a New Brunswick cannabis producer, has teamed up with Green House Seed Co to offer exclusive seeds through Canada’s medical cannabis program.
The winner of dozens of High Times Cannabis Cups, Green House Seeds Co (GHSC) is a well-known name in the world of cannabis genetics and has operated Cannabis and Coffee Shops in Barcelona, Spain and in Amsterdam, Netherlands, since 1985.
The collaboration with Eco Canadian Organic (ECO) is on brand for the New Brunswick cannabis producer, explains Kevin Clark, director of operations and QAP at ECO.
“ECO has separated itself from the competition by focusing on being corporately responsible by becoming Certified Clean Green Organic,” says Clark. “Our unique cultivation and vision dedicated to our ‘One Strain at a Time’ approach with emphasis on quality control produces premium organic non-irradiated cannabis for the Canadian market.”
Brent Hannay, the VP of ECO, agrees.
“ECO’s philosophy on how we cultivate resonates with consumers, but also because we have found creative ways to collaborate with like-minded businesses to increase our product offerings.”
“With world-class breeders such as GHSC, ECO will be working with the best, in order to bring the best possible cannabis products for our customers in Canada.”
Eco Canadian Organics Inc. notes it is one of a few Certified Clean Green Organic facilities in Canada, putting a high emphasis on sanitization practices and protocols.
Located in Rexton, New Brunswick, ECO is privately owned and operated under a Health Canada standard license. ECO is also one of three cannabis farmgate stores in New Brunswick.
Alberta’s labour relations board has found that Calgary-based Sundial Growers attempted to intimidate employees attending a union information session.
Teamsters Local Union 987 brought the complaint after two managers with the cannabis producer attended an information session at a public library in Olds, Alberta, in July 2022.
The union was providing information to employees. The board agreed with the union’s complaint that Alan Corrales, Scheduling Manager at the Sundial facility in Olds, and Latifa Dewji, Operations Manager for Extraction, Label & Excise, and Packaging & Processing at the Olds facility, visited the meeting for the purpose of interference or intimidation.
“The actions of Mr Corrales and Ms Dewji have the natural impact of making employees reticent to engage with the Union given the Employer’s apparent interest in who might do so,” writes Jeremy D. Schick, Vice-Chair in the board’s ruling. Indeed, the Board received evidence, which it accepts, of the actual chilling effect this event had on the Union’s organizing effort.”
However, the board also ruled that the actions of the two managers were not at the direction of company ownership, but instead of their own volition.
Preston Quintin, an organizer for the union, told the board that he had conversations with Sundial employees, leading him to set up the meeting at the Olds Public Library on July 13, 2022. A handful of employees attended.
Quintin says one of the managers appeared outside the meeting, where they were recognized by one of the attending employees. As the manager in question attempted to enter the room, Quintin closed the door to prevent their entry and asked employees present to warn any other employees not to attend.
Quintin then explained to the board that he had gone outside to see if the person was still in the parking lot. He testified that he noticed some people sitting in a vehicle right outside the door, and was confronted by one of the people in the vehicle after he took a picture of their licence plate.
Corrales, the scheduling manager at the Sundial facility in Olds, admitted to trying to attend the meeting and to confronting Quintin when he took a picture of the car he was in. While Quintin characterized this as yelling, both Corrales and Dewji characterized the exchange of words as conversational.
Although Sundial argued that the union was not yet representing its employees and that the two managers were free to attend the meeting, the board ruled that interrupting a meeting “intended for the purpose of organizing before it formally begins is as disruptive to organizing” and was in violation of the protections intended by the Labour Relations Code.
In their submission, the union asked the board to allow them access to Sundial employees for a mandatory meeting to address the managers’ previous intimidation tactics.
Although Sundial opposed this request, the board ruled the company must provide the union access to its employees “for the purpose of engaging in a paid mandatory meeting of one hour’s length, with one meeting for each of the two shifts of the Employer,” and also required Sundial to post a copy of the board’s decision “on a bulletin board or bulletin boards to which employees have regular access sufficient to ensure that all employees will have access to the decision,” to remain posted for 14 days.
Unions and cannabis in Canada
This is not the first interaction between unions and cannabis companies in Canada.
The same year, workers at BC cannabis producer Potanicals Green Growers also voted to join the union. This was the first cannabis production facility to unionize in Canada.
At the time, UFCW 1518 Secretary-Treasurer Johnson described cannabis store owners like Oana Cappellano, owner of Eggs, with three locations in BC, as “profiteers.” Cappellano, who opened the first Eggs Canna as a “legacy” retailer in Vancouver in 2014, took offence at the accusation at the time.
“We were very disheartened and concerned to see the union make statements such as ‘The workers want their pay, benefits, respect, and overall working conditions to reflect this high-level training,’ and ‘ultimately, they [the staff] want fairness,” wrote Cappellano in a press release.
She said she felt the union’s statements did not reflect the sentiments held by the majority of their staff.
“Further,” she added, “characterizing hard-working entrepreneurs as simply ‘profiteers’ creates a further division between unions and employers, with the employees being caught in the middle.”
The BC Budtender Union also says it is welcoming workers at Yaletown Cannabis Store in Vancouver to its ranks.
The SQDC, which manages cannabis sales in Quebec, has been dealing with an ongoing strike, which continues in 22 of their 90 branches. Although these branches are still open, they are operating at reduced hours and face picket line pressures.
In June, members of a different union, the Confederation of National Trade Unions (CSN), voted to accept an agreement with the SQDC for increased wages, hours, and better working conditions.
In 2020, a court ruled a BC cannabis company had unfairly penalized workers for trying to unionize. In September 2020, the union began organizing and soon applied to be certified for 17 employees at a Peachland, BC, operation.
Then, on October 5, the company laid off nine employees at the same Peachland operation, citing “the Company’s financial circumstances.” The union argued these employees were laid off for seeking to unionize. The court agreed.
In 2016, UFCW tried to organize workers at a MedReleaf facility in Ontario, but the Ontario Labour Relations Board ruled the workers did not have the right to unionize. The union has appealed that ruling.
A Community College in New Brunswick had to cancel a cannabis cultivation course this winter due to a lack of enrollment.
The program was first launched in December 2017 in partnership with cannabis producer Zenabis and the Government of New Brunswick, and with the assistance of Moncton-based Organigram. It was initially well received, with the provincial government even paying full tuition for the first 25 students.
Le Collège communautaire du Nouveau-Brunswick (CCNB) was the first post-secondary institution in Canada to offer training for cannabis grow technicians.
However, as the cannabis industry enters a contraction period following several initial years of rapid expansion, interest in the cannabis cultivation program at CCNB has been declining, Radio Canada reported recently.
Gérald Losier, the dean and director of CCNB, told Radio Canada that they are now considering offering more short-term “micro-credential” training to more efficiently address current industry demands.
“The industry’s needs seem minimal or, for all intents and purposes, ad hoc needs. So we can easily respond with micro-certification,” he said [translated].
According to a media report in January 2021, more than 50 students had already completed the program. The community college was also designated as a cannabis research establishment by Health Canada in 2021.
New Brunswick has seen several large cutbacks in its cannabis industry since the heady days leading into legalization. In June 2022, Hexo, the new owner of the former Zenabis facility in Atholville, laid off 142 employees—over half of its workforce. Hexo inherited the facility when it purchased Zenabis in 2021.
Despite some setbacks, other aspects of the province’s cannabis industry continue to grow.
Kent County cannabis producer Greenherb Farms recently launched their own rosin into the New Brunswick market, and Moncton’s Organigram is one of the few public companies in Canada actually reporting profits.
Cannabis NB will be taking part in Cannabis East in February, a consumer-focused industry event offering cannabis education and non-infused product sampling.
A Vernon cannabis grower says they have addressed some neighbours’ odour concerns with the installation of new air filtration equipment.
Avant Brands, a parent company behind cannabis brands like BLK MKT and Tenzo, tells StratCann that it has faced some odour-related complaints following an increase in production at their facility in 2022.
In response to these community concerns, David Lynn, COO of Avant Brands, says 3PL Ventures Inc. (the company that operates the facility, a subsidiary of GreenTec Holdings Ltd., which in turn is owned by Avant Brands Inc.) purchased 19 additional HVAC air filtration systems and that the company has “been able to satisfactorily address all inquiries from the City of Vernon and Health Canada with respect to odour at the facility.”
“Accordingly, we don’t believe that there are any ongoing issues with respect to odour,” continues Lynn. “We would also highlight that 3PL operates in an industrial area on the outskirts of Vernon; thus, it is mostly surrounded by commercial and industrial operations—not residences.”
In June 2022, a representative with the city of Vernon told media that they had received 23 complaints about “intermittent cannabis odour” from the company’s new cannabis production facility since January.
“Bylaw Compliance continues to monitor the situation, and should the filtration system not be effectively upgraded to address cannabis odour concerns, Bylaw Compliance will proceed with progressive enforcement of Zoning Bylaw regulations,” reported the oz at the time.
Any licensed facility must satisfy Health Canada’s requirements for adequate air filtration systems to prevent any odour. However, complaints of odour at licensed facilities are not uncommon and are often difficult to prove, one way or the other. Other cannabis production facilities in BC have, at times, been the target of similar community complaints, as have locations in other parts of Canada.
Such air filtration systems can be costly for producers, as Lynn explains.
“The exhaust system keeps the facility at a slightly negative air pressure compared to the outside. All air that leaves the facility passes through multiple carbon filtration filter banks. Air is exhausted out of each individual cultivation room through either air return ducts in the lower section of the wall or through a purge exhaust fan. All purged air is filtered through filter banks that hold six charcoal filters per bank.”
Cannabis in flower inside the 3PL facility. Image courtesy of Avant Brands
Concerns with cannabis in the air go beyond just odours. In 2021, Metro Vancouver began exploring regulations for even greater control of emissions from cannabis growers and processors, focussing on concerns of volatile organic compounds, or VOCs.
Metro Vancouver’s concern is the volatile organic compounds (VOCs) produced by cannabis itself, as well as nitrogen oxides produced from heating and lighting associated with indoor cannabis facilities. Their intention is to create a set of regulations for more than a dozen cannabis production companies operating in the region (cultivation, processing, etc). Volatile organic compounds are emitted from all plants.
Health Canada, which licences such production facilities, says it encourages provinces, territories, and local governments “to use the tools at their disposal to ensure cannabis production meets all requirements,” including zoning bylaws, building codes, laws and policies on agricultural and industrial land use, and laws and bylaws about noise, odours and other nuisance related issues.
The federal regulator notes that local governments can also put in place laws and bylaws for cannabis odours and can issue a notice of violation to a legal cannabis production site because it doesn’t comply with these laws or bylaws. A guidance document from the regulator also points out that cannabis odours that may be attributed to a cannabis facility could in fact be coming from a different source. It encourages individuals to reach out directly to the business in question to discuss their concerns.
Feature image of 3PL’s Vernon Facility. Image courtesy of Avant Brands.
An error in Ontario’s new ordering system for cannabis retailers experienced a glitch in recent weeks that led to 115 retailers getting access to 94 different SKUs weeks in advance of the official release date.
The orders were inadvertently shipped to retailers due to an error in the OCS’ new online B2B portal, launched late last year. The portal allows retailers to review available products and place orders, and also allows retailers to download a spreadsheet with similar information.
While several new products were listed as “coming soon” until January 18, the OCS says an error in their system allowed any retailers who ordered via spreadsheet to successfully place an immediate order. The error was addressed last week after the OCS was made aware by some retailers, and the remainder of these products were not available until January 18.
“For a window of time, some products with the “Coming Soon” status had an available quantity associated with them, allowing retailers to add these products to the cart using the “import order function,” the OCS said in an email sent to retailers on January 16.
Although the import order function is available to all retailers, it’s more commonly used by retailers with more than one location. Orders were inadvertently sent to both “independent and corporate stores,” adds the OCS.
Because of this, some smaller retailers who didn’t utilize the import order function say they are frustrated that some larger chain stores were able to get an advantage by being able to sell products a week or more before they were.
Sasha Soeterik, the owner of Flower Pot on Dundas in Toronto, says she became aware of the issue when she found at least two new high-THC 28-gram offerings listed on two chain-store competitors’ websites and shelves.
To Soeterik, this gives another advantage to these large, well-funded chain stores, given the demand for low-cost, high-THC ounces like those she identified (a Spinach Sonic Lemon Fuel 28g Flower SKU and the 3Saints Kush Cookies 28g flower SKU). StratCann also confirmed the availability of these two SKUs.
Soeterik says her biggest question is why the order was allowed to go through once identified, and that she is concerned the apparent error gives an unfair advantage to those stores who purchased it early.
“Everyone is looking for high THC ounces, and they have to be cheap,” she says. “And that’s the two SKUs I could identify that they got an advanced receipt of.”
“I know I’ve placed orders on Monday morning, and by Monday afternoon they’ve told me things I couldn’t have. So why they couldn’t do that in this instance is beyond me. There’s like five or six points in the supply chain where they could have caught that order, and they didn’t.”
A representative of the OCS says the products were sent out before they realized the error, noting that they are currently launching 600–800 SKUs every quarter.
“We are currently piloting enhancements to our ordering process, and these products were able to be ordered and shipped to retailers before we were made aware of the error,” says Daffyd Roderick, Senior Director, Communications and Social Responsibility at the OCS. “The error has been fixed, and we are working diligently to improve our internal operations and processes so that the right safeguards are put in place to ensure errors like this don’t occur again.”
Omar Khan, the Senior Vice President of Corporate and Public Affairs at High Tide Inc., the parent company of Canna Cabana, shared this statement with StratCann.
“Some weeks ago, we noticed that the OCS errantly made some products available for the January release early on the order form. We were one of several retailers that alerted the OCS to the error they made, which they subsequently corrected. It is our understanding from the OCS that this error allowed for the early purchase of SKUs by all retailers. We look forward to more communication from the OCS on how they plan to prevent this from happening in the future once they have completed their internal review.”
Amber McGuire, the CEO of Hippies Next Door, an independent retailer in Wiarton, says she understands why some in the industry might suspect foul play, but that she suspects the reason was more benign.
“There’s going to be a lot of paranoia surrounding corporate stores getting favoured until these unfair kickbacks get cancelled,” explains McGuire. “The fact that corporate stores are receiving kickbacks from licensed producers for “data sales” has created an atmosphere that lacks trust. Kickbacks have nothing to do with the Ontario Cannabis Store, so it really isn’t their fault, but that is the climate we are existing in right now,” adding that “because they explained the distribution of these sales that were made in error it leads me to believe they are very aware of the lack of trust.”
Alberta’s cannabis regulator and the OCS have both launched new campaigns to encourage responsible cannabis use.
Alberta
Alberta Gaming, Liquor, and Cannabis (AGLC) recently launched the Find Your Moderation program as part of their ongoing CannabisSense campaign, with two videos intended to highlight that cannabis can affect consumers differently.
In a post titled “Same cannabis product, different user experiences,” the two videos briefly show a group of individuals after they consume either edible cannabis or cannabis beverages, with each person displaying different effects such as laughter, sleepiness, ‘munchies’, and anxiety.
“The scenario emphasizes the importance of finding your own moderation and invites Albertans to consider how personal factors like age or how much they have eaten interact with factors related to cannabis use, products, and potency,” notes an AGLC press release.
The new campaign comes as the market for edibles and cannabis beverages continues to increase following their legalization in 2019. Although still a much smaller market share than dried flower or extracts, edibles and beverage sales have been steadily increasing as producers offer a growing array of options.
“The Find Your Moderation campaign is sparking a conversation with Albertans about the differing effects of cannabis for different people,” says Kandice Machado, CEO of the AGLC. “As part of that conversation, we’re also providing a resource for how adults can use cannabis in a lower-risk way, which is an important part of AGLC’s commitment to social responsibility and consumer education.”
The AGLC’s CannabisSense launched in January 2022 with the goal of providing Albertans with information and resources related to non-medical cannabis.
Ontario
Ontario’s OCS also recently launched their own cannabis education program, Cannabis Made Clear. The campaign will direct users to the OCS’ Cannabis Made Clear website, which hosts “expert-reviewed articles about responsible consumption, legal usage, potential health effects, cannabis and youth, as well as access insightful resources to advance their cannabis knowledge.”
The OCS says the goal is to create an unbiased, evidence-based education model for cannabis consumers.
“As an enabler of the legal cannabis marketplace in Ontario, the OCS is prioritizing educating consumers on socially responsible consumption,” said David Lobo, President and Chief Executive Officer at OCS. “Cannabis Made Clear demonstrates our commitment to supporting consumers and the industry by advancing cannabis knowledge across the province. This education hub exists to serve as a trustworthy source of unbiased information.”
Cannabis Made Clear is expected to be updated over time as new research emerges.
Efforts to bring more affordable cannabis options to people in Vancouver’s Downtown Eastside are so far proving successful, says one of Vancouver’s longtime community activists.
Sarah Blyth is the founder of the High Hopes Foundation, a community group that helps provide people in the Downtown Eastside with cannabis for medical purposes.
High Hopes received their medical sales licence in the first half of 2022 and, after a long search, Blyth says they were recently able to secure their first supply partnership with Canna Farms, a cannabis grower located just a few hours outside Vancouver in Hope, BC.
The cannabis producer has been supplying two varieties, a Pink Kush and a Wappa, to those registered through High Hopes, which are then distributed to patients within the community.
High Hopes uses a community liaison to both get feedback on patients’ specific needs in terms of cannabis strain/varietal and distribute patients’ orders.
Once registered with High Hopes, orders are available within no more than a few days, and they work with the community to provide access to any additional programs that can assist with payment.
Orders can be placed online or, for those without access to the internet, High Hopes can order for them. As their licence is for medical sales only, they cannot store large quantities of product on hand, but instead, receive individual orders. Those orders are then available for pickup at different locations set up each day in the neighbourhood.
Their cannabis is currently around $3-4 a gram and comes in ounce and half-ounce offerings. Pink Kush is currently their main seller, with Wappa serving as a second option.
“This is the beginning,” says Blyth. “We’re not only going to have just one product. Eventually, we’re going to expand to different things, but we want to make sure that we have the same mandate as the people we’re working with and there’s some understanding of the unique population (we serve). The most important thing is to get affordable cannabis to people that otherwise can’t afford cannabis.”
Although there are many others in the community who have been providing access to cannabis through more extra-legal avenues, Blyth says she chose to work within the federal regulations because she sees this as representing the best option for those she serves.
“People are really happy to be able to get something legal in the Downtown Eastside. A lot of times people are going into the illegal market to get what they need, which is not always a great situation for people. This way they can get their prescriptions filled. It’s a legal process to get what they need. We’re hiring people from the Downtown Eastside to help each other so they know which community members need help.”
Blyth says she sees value in both approaches: working within and outside of the law, but she feels that working within the legal system, while still pushing those boundaries, provides a more long-term, secure source for those who truly benefit from cannabis.
“They’re both important, but I think right now what we’re trying to do is work within the best we can. With all the troubles that are going on with… more of a crackdown on even the Blue Door and all of the other sources of cannabis are really drying up. So…getting something legal up and running was really important.
“It’s obvious that doing things legally is really the only way that is going to be sustainable at this point. (We’re) just trying to work within the legal realm to get people what they need. You don’t want to be shut down for a week. Then where are people going to go? So we’re just trying to come in and get people something that they know can help.”
High Hopes also expects to announce some new suppliers and varieties in the coming months, and Blyth says she looks forward to being able to provide more legal options for the community.
“In a lot of ways we are trying to duplicate how they are already getting their medication, except doing it legally. So they know what they are getting. They know that it’s been tested. It’s something that’s reliable. We don’t run out, that kind of thing.”
Spencer Charlton, who goes by Cratercrater online, says he was inspired to do something with a growing collection of cannabis packages he came across. Trained as an artist in sculpture and installation, Charlton got his first break when he was able to display his first sculpture of a raccoon at a cannabis expo in Ontario in the first half of 2022, giving him the motivation to pursue the idea further.
StratCann recently caught up with Charlton to learn more about his work.
What’s your background with art and cannabis?
“I currently work as a supervisor/budtender in downtown Toronto. I was born and raised in Scarborough, Ontario. I grew up as a creative kid who enjoyed building and making things. Art class was one of my favourite subjects in school. I was in the sculpture and installation program at OCADU (Ontario College of Art & Design University) from 2010 to 2015. I chose to go into sculpture because it gave me the opportunity to work in all of the fabrication studios and learn about the different tools and materials.
“My artistic practice has gone through many different focuses like painting, lutherie, furniture making, ceramics, and more. Cannabis plays an integral role in my creative process. I come up with most of my project ideas when I smoke a couple of joints and go on a long walk. I also use it as a tool to help me focus and relax while I execute these project ideas.”
Two pieces shared on Cratercrater’s Instagram account
Tell us about showing your first piece, “Trash Panda”.
“Showing my piece at the Lift Expo was a big milestone for me! I was putting the finishing touches on my project, “Trash Panda” when I saw the call for artists on The Budtenders Association Instagram page.
“By this point, I had been creating art in private for at least 10 years but had never shown any of my work publicly because of low confidence. I got my sculpture in the show, and the reception of my piece was overwhelmingly positive. Even as I was leaving the expo with my sculpture, people would stop me to take a picture with it. The experience showed me that the cannabis community is very supportive and welcoming and that I should expand on this idea because it resonates with so many people.”
What made you want to first take this on as an art project?
“I started collecting the packaging as a way to keep track of the products I’ve consumed. I had the unrealistic goal of trying all of the good dried flower and pre-roll releases. I was inspired to turn my packaging collection into sculptures when I came across a dope local artist on Instagram who goes by remixedbytal. She creates sustainable apparel and items by repurposing discarded materials.
“The raccoon was chosen as the subject of the first sculpture because I felt it would express the negative environmental impact of excess packaging and the need for sustainability in a playful manner that is easily accessible for the viewer.”
How many pieces have you made so far?
“I started making these pieces in March of 2022 and have made about 7 so far.”
Charlton with his Trash Panda sculpture and Traffic Calming Zone digital media print at the Lift Expo in Toronto
Have you sold any?
“Not yet. I’m just working on creating pieces until I’ve made enough to display the collection.”
What do they run, price-wise?
“It varies based on the time it took to make, the complexity of the design and the application of the piece.”
How long do they take to make?
“So far, (they take) anywhere between 12 And 50 hours, including sourcing the labels. I plan on increasing the scale of these sculptures eventually and one would end up taking much longer to complete.”
F1NE Cannabis Cultivation, located in St Catharines, Ontario, is working hard to bring unique, quality craft cannabis to the market through its own micro cannabis facility, as well as a team of local micro partners.
The goal, explains Josh, the founder of F1NE Cannabis, is to bring his and his partners’ experience with growing and regulatory compliance to other growers who are looking to enter the legal market. (Josh asked that his last name not be used).
“There are so many good growers in this region, and the market wants high quality, local craft products,” says Josh. “We’re just doing our part to help show that there is a way to do this legally.”
A coordinated effort between micro cultivators, led by F1NE Cannabis, works to cultivate the high-quality cannabis demanded by the Ontario market. With Ontario Micro Growers as the processor, products are brought to market as a team—because after all, teamwork makes the dream work.
F1NE will also sell these products through their own medical platform online which was just launched in early December 2022. Part of the medical platform is a focus on health and wellness. F1NE Cannabis supports these pillars through the planned Spring/Summer opening of Mary Jane’s—the adult-friendly park located right on Lake Ontario.
Josh & Ron inspect mother plants
The goal, says Josh, is to primarily sell F1NE and their partners’ products, rather than operating as a traditional retail store.
“We really want to play off regional tourism and incorporate cannabis into the local landscape, especially wine tourism.
“We have barbecues. We’re on the lake. There’s a trail. There’s a place to play with the dogs. It’s a whole feeling and experience. It’s a fun spot.”
Starting small
F1NE was first licensed for micro-cultivation in February 2021, and then received its micro-processing licence in December of the same year, along with its dried/fresh sales licence a few months later. In spring 2022, F1NE received its medical sales licence.
They initially partnered with Manitoba cannabis producer Delta 9 Bio-Tech, which has a program that assists micro producers with licensing and provides an avenue into the Manitoba market through their own network of Delta 9 stores and other retailers.
While F1NE continues to work with Delta 9, Josh says they have also begun to supply products into the Ontario market through Ontario Micro Growers (OMG), a third-party processor.
“It’s really just about the size of the market,” Josh explains. “Working with Delta 9 is great, they helped us install several grow pods that provide product for Manitoba, but the Ontario market is just so much bigger, and it’s where we live, so we wanted to make sure we had a presence here too.”
From their experience working with Delta 9, Josh says he and F1NE COO, Eleanor Pineau Levman helped form U Cann Grow, a consulting firm that helps provide a path to market for other micros. U Cann Grow supports clients in property acquisition, municipal approvals, facility design and build, licensing, staffing, and consulting.
Devil Driver in flower
Expanding, while keeping it craft
Josh says that with the increased demand for their small-batch craft cannabis in Ontario, they realized they needed to expand their footprint. Rather than expanding to a standard cultivation facility, it made more sense to have a second micro facility. They partnered with another local grower who was ready to transition to the legal market.
That facility, Handicraft, located across town in St Catharines, received its cultivation licence in December 2021. It will sell under the Handicraft brand but will use F1NE Cannabis genetics that will be processed by OMG.
They then began working with a legacy brand, Hidden Herbs, and will be bringing them to market in 2023. One of the owners of Hidden Herbs, Chris Ash, is working closely with F1NE to bring other legacy growers/breeders to market. One of these breeders available through F1NE Cannabis is Thug Pug Genetics—the infamous Michigan breeder of the Meatbreath cultivar.
One of the benefits of adding new micros rather than expanding to a standard facility was cost, explains Josh. Their first F1NE facility cost a little over $1 million to build out, while their second cost around $800,000. He estimates the third may run around $250,000, with cost-savings in part from experience and re-purposed equipment.
A big part of the savings in their additional facilities was also the knowledge that they somewhat overbuilt for their first, following templates for SOPs or security requirements made for much larger producers that weren’t efficient for small-scale micros.
“You’re definitely not getting in super cheap because there’s certain quality equipment that you just have to buy in order to be compliant with the regulations. If you’re putting sixty, eighty lights in, you’re going to end up putting in a couple-hundred-grand. You need to have that if you want a quality product. But you don’t need to be spending the outrageous amounts of money we all thought we did when we first got into this.
“I think the biggest mistakes and costs are security systems and copying the standard LPs security or SOPs. As long as you follow the regulations, keep it sanitary, and set reasonable SOPs that you can actually follow, you don’t need all that. Keep it simple stupid.”
“Just remember that you’re a small mom-and-pop business, and you can adapt that way. That’s how we’re making it work, at least, and how we’re saving every dollar we can right now.”
F1NE is now accepting private clients through its medical platform where customers have access to products before they hit the retail stores! F1NE’s first Ontario recreational offering is dropping in January 2023 with OMG—Devil Driver—and expects an additional three products for Spring 2023 after approval from the OCS.
Josh and Eleanor show off their first micro licence
BC Indigenous Cannabis Business Fund launched, creating new opportunities for First Nations in the cannabis industry.
The federal government and BC government are investing up to $7.5 million in a new BC Indigenous Cannabis Business Fund to help increase representation in the cannabis industry.
This Indigenous-led fund was announced today by Regional Chief Terry Teegee, BC Assembly of First Nations; the Task Group for the First Nations Summit; Jean-Yves Duclos, Federal Minister of Health; Patty Hajdu, Federal Minister of Indigenous Services; and Mike Farnworth, British Columbia Minister of Public Safety and Solicitor General.
The goal of the BC Indigenous Cannabis Business Fund is to support First Nations communities and Indigenous businesses in British Columbia that want to take part in, or increase their participation in, the legal cannabis industry in the province.
The fund will also support the development of information and planning workshops for First Nations communities and Indigenous entrepreneurs to learn more about the cannabis industry, regulations, business opportunities, and how to apply for funding. These supports are intended to help create jobs and economic opportunities for Indigenous businesses and First Nations.
The B.C. Indigenous Cannabis Business Fund will be administered by the New Relationship Trust and Aboriginal Financial Institutions in British Columbia. The Government of Canada and the Government of British Columbia are investing up to $7.5 million over three years in the Fund.
The BC government has been working to facilitate First Nations participation in the legal cannabis space in the province for several years now. In 2020, they announced $500,000 in funding in partnership with the federal government to assist one First Nation to transition to the legal market.
Terry Teegee, Regional Chief of the BC Assembly of First Nations, says the group has been advocating for these changes for some time now, and is looking forward to future progress.
“Developing economic opportunities through cannabis-related initiatives is a priority for many First Nations in British Columbia. BCAFN is pleased to partner with the B.C. Indigenous Cannabis Business Fund, providing much-needed capital and support for capacity building, community planning and decision-making.”
“This fund is an example of the positive results of our efforts to ensure First Nation participation in the B.C. cannabis industry,” he continues. “At the same time, we urge further partnership among all levels of government to address outstanding issues regarding jurisdiction, and implement the economic component of reconciliation, which involves new fiscal relationships.”
Hugh Braker, a Political Executive with the First Nations Summit, says the new program could assist with efforts to adhere to the United Nations Declaration on the Rights of Indigenous Peoples, or UNDRIP.
“Our partnership with the Provincial and Federal governments on this initiative demonstrates the value of meaningful collaboration. We also deeply appreciate the expertise and community connections that the Aboriginal Financial Institutions and the New Relationship Trust will bring to this work. We intend for this program to support the priorities of First Nations in relation to cannabis and look forward to how it will evolve as we work to align provincial and federal laws with the United Nations Declaration on the Rights of Indigenous Peoples.”
StratCann is bringing our Growing Relationship industry event to Calgary, Alberta on Saturday, April 29, 2023.
Following on the success of our sold-out event in Kelowna, BC, we’re bringing it to Alberta’s community of small-batch and micro producers, retailers and other professionals in the cannabis industry.
This event is specifically designed to create opportunities to build relationships and socialize with the community as we bring retailers and producers together for a day of networking, discussion and learning.
Growing Relationships ~ Kelowna, BC
We’re passionate about bringing growers, processors, and retailers together to get to know each other and share ideas. An important component of the Growing Relationships events is to engage the community in discussion and brainstorming on industry issues from a variety of perspectives.
Attendees will enjoy time for networking, engaging panel discussions, a delicious catered lunch, and exclusive access to the Sunalta patio at the Calgary Marriott Downtown Hotel.
As the BC event was sold-out, we recommend you sign up here to be notified as soon as tickets go on sale in January!
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.”
Newfoundland and Labrador is looking to expand their retail network with several new cannabis store locations in the province.
Cannabis NL says they recently issued a request for proposals for the following communities: Clarenville, St. Anthony, Pasadena, Rocky Harbour, Springdale and Twillingate. Cannabis NL will also be reviewing other opportunities throughout the province in Q4 of this fiscal year.
The province currently regulates and distributes to 40 licensed cannabis retailers across the area through the Newfoundland Labrador Liquor Corporation (NLC), which oversees Cannabis NL.
The province also began allowing the sale of cannabis vape pens in September, a move the government says will help its legal stores better capture market share from illegal cannabis operators, noting that such products represent about 20% of total sales in other legal markets.
Cannabis sales through licensed cannabis retailers (LCRs) in Newfoundland and Labrador totalled $17.7 million in Q2 of 2022, an increase of 10.2% over Q2 2021. Online sales brought the total to $17.8 million.
Effective October 1st, 2022, the NLC also increased commission rates paid to Tier 1 and Tier 2 LCRs from 15% to 20%. The province has four different retail “tiers” of cannabis retail licences, with Tier 1 stores operating as stand-alone cannabis-only locations, while Tier 2 stores are cannabis-only stores that are located in an existing non-cannabis retail location.
Tier 3 stores operate within non-cannabis retail locations but have their own separate counter, while Tier 4 stores sell cannabis at the same counter as other non-cannabis products. For example, the island of Newfoundland currently has 11 “C Shop” cannabis stores located inside larger shopping centres.
The provincial regulator hopes the new commission rate will help these stores to “mitigate the specific challenges of this store format compared with other tiers and improve the viability of these specialized stores in our local cannabis industry.”
In October 2021, in order to better manage a growing number of retailers and demand, the NLC began warehousing and selling cannabis to LCRs. Prior to this, cannabis producers sold and distributed cannabis directly to retailers.
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Cannabis sales increased in BC and prices dropped in the second quarter of 2022 compared to the same time period in 2021.
These figures increased from the previous quarter as well, despite the shutdown of the province’s central distribution warehouse from August 15 to August 31 due to a strike.
The BCLDB’s newest quarterly cannabis sales data shows an 18% increase in wholesale cannabis grams, an 8% increase in wholesale sales, and an 8% overall price decrease, while the number of cannabis stores increased by nearly 18% in Q2 2022 compared to Q2 2021.
The report covers July, August, and September. The LDB began sharing these quarterly results in October, with their Q1 2022 release.
Despite these sales increases and price drops, overall sales of dried flower in the province declined in Q2 compared to last year by 13% and nearly 9% in gram totals. These declines were offset by increases in beverages (7%), edibles (27%), inhalable extracts (62%), pre-rolls (13%), and seeds (59%).
Ingestible extracts (16% of total sales), and topicals (20% of total sales) also declined compared to Q2 2022.
Carbonated beverages saw a 37% increase in sales compared to Q2 2021, while all other beverage categories declined.
In the cannabis edibles category, increases were in the “other edibles” (49%) and cannabis chews (33%) categories, while baked goods declined by 20%, chocolate by 10%, and hard candy by 91%.
The biggest increase in the inhalable extracts category was “other inhalables”—which includes infused pre-rolls—at 571%. Disposable pens increased by 235%, wax sales increased by 148%, carts by 24%, hash by 21%, resin and rosin by 19%, and shatter by 12%.
Image via LDB
Direct Delivery
Direct Delivery sales, which launched in August of this year, saw $704,978 in sales, with $285,633 coming from dried flower and $279,240 in pre-rolls, $133,448 in inhalable extracts, and $6,657 in edibles and beverages.
The Government of Saskatchewan has introduced new legislation that, if passed, will allow First Nations in the province to licence and regulate cannabis distribution and sales on-reserve.
The Cannabis Control (Saskatchewan) Amendment Act, 2022, introduced on December 6,establishes a provincial legal framework for First Nations to licence and regulate the distribution and retailing of cannabis on-reserve.
The legislation requires First Nations to establish their own regulatory framework for cannabis sales and distribution that mirrors provincial rules, with stores sourcing their products from federally licensed and regulated cannabis producers.
The province says the goal with these proposed changes is to create more of a level playing field for First Nations communities.
The proposed change began with an order in council signed on July 28 that said First Nations in Saskatchewan would no longer need to get a permit from the Saskatchewan Liquor and Gaming Authority (SLGA) in order to operate on-reserve cannabis stores. The SLGA is the provincial agency in charge of regulating the liquor and cannabis industries.
The change in legislation also came with additional changes giving First Nations a legal framework to enforce laws and bylaws on reserve.
Darcy Bear, the Chief of the Whitecap Dakota First Nation, says the changes will give them the ability to better enforce the law in their communities.
“First Nations assert their jurisdiction and maintain community safety by creating laws under the Indian Act, land codes, and other federal legislation, but there have been difficulties in enforcing these laws in the courts,” says Bear. “Through our work with the provincial government, the amendments to SOPA will give us access to prosecution and enforcement tools that will give force to our laws in areas such as environmental protection and community safety, and strengthen the place of our laws alongside federal and provincial law.”
The provincial government notes that these amendments follow a Memorandum of Understanding that was signed by the Government of Saskatchewan, Muskoday First Nation, and Whitecap Dakota First Nation on October 18, 2019, and seek to address longstanding issues around the enforcement of First Nations’ laws.
“The Government of Saskatchewan is proud to take this important step as part of our ongoing work with the Muskoday and Whitecap Dakota First Nations,” says Justice Minister and Attorney General Bronwyn Eyre.
“These amendments will allow these and other First Nations communities in the future to use the more simplified summary offences procedure, instead of the long-form process under the federal Criminal Code, to issue tickets and fines such as those issued for traffic violations and other provincial offences.”
A retail cannabis store operating within Zagime Anishinabek First Nation
Not everyone is happy with the possible changes, though. Chief Derek Sunshine of the Fishing Lake First Nation told CBC earlier this year that he had no intention of pursuing an agreement with the province or SLGA.
“They have no say in my nation,” he said, noting that the band created its own licensing system, and its store is operating under that authority. “They have no right to say to my nation that we need a licence.” Numerous First Nation communities in the province, and across Canada, have opened their own cannabis stores, operating outside of provincial and federal regulations, with at least eight communities creating their own bylaws.
Located in Niverville, MB, about 20 km south of Winnipeg, Rogue Processing offers state-of-the-art co-packing services to Canadian cannabis companies looking for a client-focused, eco-friendly, cost-effective, and tech-savvy alternative to current service providers.
Their 1,600 sq ft facility received its processing license this past September and is now ready to offer an array of services to cannabis businesses in Manitoba and across Canada.
From their home base in Niverville, Rogue is offering a diverse set of services targeted at different segments of the industry. Presently, they are perfectly positioned to offer producers, both out-of-province and local, a cost-effective entry into the Manitoba retail market with their centrally located packaging and distribution services. They hope to also service retailers in neighbouring provinces Ontario and Saskatchewan soon.
It’s sustainable not only because we’re using more environmentally friendly packaging, it’s also a more financially sustainable model where customers keep more profits in their pocket allowing them to…grow their business.
Graham Taylor, Rogue Processing
For out-of-province distributors, they offer in-province storage and distribution solutions. And for processors across the country, their systems offer an excellent option for packaging bulk product to be returned to its home province for wholesale.
“We’re really trying to support the growers who are facing challenges as they try to get a foothold in the industry,” says Graham Taylor, Rogue’s President and CEO. “That’s why we’ve created this friendly, sustainable business model for small growers.
“It’s sustainable not only because we’re using more environmentally friendly packaging,” he adds, it’s also a more financially sustainable model where customers” keep more profits in their pocket,” allowing them “ to stay in business and grow their business. And we hope to grow along with them.”
Graham Taylor, President and CEO
Taylor says that typical co-packers often lock their clients into long-term agreements that can be challenging to navigate and often prove more beneficial to the service provider rather than the customer.
Rogue defies this trend, offering their services for a low-cost, per-unit service fee, allowing producers the freedom and flexibility to control their products without being bound to long-term agreements that might sound better in the beginning but become more burdensome over time.
Rogue uses recyclable peel-top tins packed with nitrogen gas to preserve product quality by both preventing oxygen exposure to the packaged goods and preserving the structural integrity of contents in a rigid, hermetically-sealed container. They are currently packaging flower, pre-rolled cones, and milled cannabis.
Their centrally located facility also provides the opportunity for clients to save big on shipping fees throughout the province.
Ease of use for both producers and retailers is also front-of-mind for the team at Rogue, who has developed a user-friendly but highly functional website to complement their physical operations.
“Rogue’s website will communicate all steps of the processing procedure to all appropriate stakeholders,” says Taylor. “Growers need only provide the cannabis and the necessary information, and Rogue Processing will then handle all the work.”
Retailers will also benefit from Rogue’s services, including the enhanced shelf life of nitrogen-packed SKUs, environmentally conscious recyclable packaging, and their online processing system, which offers rapid purchase order filling, shipping notifications, and order tracking.
“Retailers know us and know a lot of the brands we represent, they like our eco-friendly and nitrogen-flushed packaging. So any new brands that work with us can benefit from our developed relationships. And as we get approved to sell into other provinces like Saskatchewan and Ontario, that network only grows.”
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