May 6 2020,


mastermaq / Creative commons

Legal cannabis represented $3.96B of Canada's GDP, as of February--the last month before COVID-19 crashed into the sector. Yet the month was marked by a low increase in sales (4%).
Twitter--@itsdgc, Cannabis Retailer

One reason sales aren't greater, according to the BCMI Cannabis Report, is that Ontario and Quebec have far too few retail stores per capita. Alberta has one store per 10,000 people.
MJ Biz Daily

  • Ontario would need 1,400 more stores (beyond its present five dozen) in order to offer the same per-capita availability.
  • Quebec's 30 stores are 800 shy of one per 10,000 residents.  The SQDC has finally launched online-inventory checks, allowing consumers to find out whether preferred products are in stock in store.

Alberta-based REC retail powerhouse Fire & Flower announced it would close three Alberta stores after doubling its net losses last quarter. Some wondered whether Alberta has reached its limit for REC stores. Analysts alleged Fire & Flower's earnings report contained numerous errors.
Twitter--@drowbb, MJ Biz Daily, Twitter--@Cain, @GoBlueCDN

Five REC retail companies have "a greater store count than share price," Marketwatch's Max Cherney reported.

Rumours abound that provincial wholesalers are reducing calls and orders for new products due to a large store of unsold inventory.

Critics argue cannabis return policies offer little to consumers, who cannot generally return products based on dissatisfaction.
Inside the Jar

This week on the podcast
The Book on Jack Herer

Dan Herer’s father crashed the hemp movement into existence with his self-published 1985 book The Emperor Wears No Clothes. A new ebook edition is out, and the pioneer’s son explains why hemp’s sacred text is more relevant than ever.

  • A post-divorce convert to cannabis, Jack Herer clashed with the established legalization movement
  • In 1980, the senior Herer was cited for “violation of the sedition” act for protesting pot prohibition and served 15 days in federal prison. It was there that he wrote the book, which was published on news print.
  • When a fan developed the “Jack Herer” strain, the man himself was present.
Wikimedia Commons / Free Clip Art

Ontario--the first province to allow REC retailers to deliver their own products direct to customers, albeit on a two-week provisional basis--may have a hard time putting the genie of store-run delivery back in the bottle. The Ontario Cannabis Store, which takes retail orders online, is working to widen its own direct delivery program, announcing it will deliver to a variety of communities outside Toronto and in southern-Ontario area.
OCS, MJ Biz Daily

  • The OCS will have to compete with private delivery, which nearly every REC retailer has figured out how to operate. This week, Fire & Flower announced it would offer same-day delivery in Toronto.
  • However, delivery by retailers is only allowed under a two-week emergency order from the provincial government. Once lockdown has lifted, the province will likely end or limit retailer delivery.

Meanwhile, Ontario continues to hurry to open more stores. Last week, the AGCO approved eight Retail Store Authorizations. On Monday, six more stores received approval to open, while five more went into public notice on Tuesday. Compared with last year, the AGCO's approval process has increased to nearly breakneck speed.

The OCS has been dropping prices on many products weekly.

Public Domain

Canopy once again announced cuts (during a large Zoom meeting, some said) laying off 200 employees across Canada, the U.S., and U.K. Among those 200 were 44 employees at the company's Smiths Falls, Ontario headquarters.
BNN Bloomberg, Yahoo Finance, Bloomberg, Twitter--@ChimeraGenetics, CTV News

Two days later, Canopy's major shareholder Constellation Brands exercised warrants to buy more shares in the company, bringing its ownership stake in Canopy up to 38.6%. The investment amounted to roughly $245M.
NewsWire, MJ Biz Daily, Financial Post, Twitter--@_DeepakAnand

  • Constellation holds enough warrants and senior notes that it could increase its ownership of Canopy to roughly 55%.
    Investors Business Daily
  • Analysts encouraged investors to buy Canopy.
danielfoster437 / Creative Commons

Canopy Growth investment arm Canopy Rivers invested $2M in a 12.2% stake in Edmonton edibles producer Dynaleo, presently awaiting its Health Canada license. Once licensed, Dynaleo will produce white-label edibles.
NewsWire, Prince George Citizen

  • Dynaleo is run by Brandon Wright, former CEO of Canada's longest running commercial edibles producer Baked Edibles. That strong legacy-market pedigree means the company has a head start on those just entering the edibles space.
    Food Quality & Safety

Canopy Growth, separate from its investment arm, continued the slow process of releasing its beverage offerings, with new flavours arriving again this week (albeit in predictably excessive packaging).
Twitter--Jeff Lagerquist

Quick Hits

  1. Licenced producers hoping to do taste-tests on their products can't outsource that testing—unless they outsource to a company with a research license.

  2. Canadian scientists can legally study 939,575 kg of cannabis, compared with the US, where scientists only have access to 3,200 kg.




Organigram received good news when Nova Scotia's Court of Appeal, dramatically tightened the scope of the class-action lawsuit against the company over tainted MED sold in 2016.
Torkin Manes Blog, CBC New Brunswick

More LP News:

After news broke that RavenQuest BioMed was to lose its final Health Canada license after being yet again locked out of its facilities for non-payment of rent, CEO, president, CFO, and director George Robinson resigned, and the company accused him of taking the company's financial documents and other paperwork hostage and "holding all records in lieu of pay." RQBM's remaining director "sees no prospect for the company's survival."
The Deep Dive, Equity Guru

48North joined other LPs in launching a budget flower brand, called Fleur du Jour.

Following Auxly's release of its Q4 and full-year 2019 financials, the Cannalysts alleged the company's accounting left $17M worth of inventory unaccounted for.
Globe NewsWire, Twitter--@thecannalysts

public domain

Months before COVID-19 arrived, the industry has braced for bankruptcies. Analysts warned those bankruptcies are still coming.
Yahoo Finance

  • CIBC John Zamparo said, "The pandemic will likely serve as an accelerant."
  • Using an NYU business professor's scale to measure which companies are at risk of bankruptcies, analysts said (in order of severity) Sundial, Hexo, Tilray, and Aurora were rated as facing risk of bankruptcy.
  • In an extensive reflection on insolvencies in the sector, McMillan LLP lawyers warned "We anticipate the current trickle of cannabis companies seeking creditor protection [...] will build to a steady flow."

Quick Hits

  1. Amnesty advocates continue to call for cannabis offenders and other non-violent inmates to be set free from prison before they're sickened with COVID-19.

  2. McGill University awarded Dr. Gabriella Gobbi the Principal's Prize for her research linking cannabis and depression in young people that helped raise the legal age for cannabis from 18 to 21 in Quebec. The research found an association rather than a causal relationship between cannabis and depression.
    McGill Reporter, Montreal Gazette, CBC Montreal, Globe and Mail

KylaBorg / Wikimedia Commons

Health Canada announced it will extend until June 30 its plan to modify regulatory enforcement. As such, the regulator paused site-inspections--first until May 1, and now until the end of June.

  • Applicants seeking Health Canada licenses will be assessed in "compliance promotion sessions" and may also be required to undergo virtual and/or "paper" inspections.
  • The move also affects requirements pertaining to on-site destruction of waste cannabis, and off-site antimicrobial treatments.

Quick Hits

  1. Craft Depot CEO Calan Aldred pointed out companies buying high-demand new genetics will only set themselves apart if they make sure not to buy the same genetics as every other LP is buying.


Michal Klajban / Wikimedia Commons

New Brunswick crown REC retailer Cannabis NB is finally looking healthy.The company posted its first quarterly profit, thanks in part to COVID-19-related sales surges.
CBC New Brunswick

After Cannabis NB shifted focus to lower-cost offerings, however, its sales began to increase.
CBC New Brunswick

sigmaration / Creative Commons

Canadians who've shopped at U.S. dispensaries often comment on the expanded variety of products available. I personally hope for more Canadian LPs to embrace the 0.3 gram personal mini-joint--widespread in the US, but harder to find at home. As the market develops, producers are trying to figure out which delivery methods will entice consumers to buy.

Mezzero/Cannmart offers several strains by Apothecary Botanicals in a new 0.25 gram "glass taster"--essentially a loaded one-hitter. Owner Ryan Roch of Alberta's Lake City Cannabis called the 0.25-gram tasters "a game changer."
Reddit, Twitter--@LakeCityCanna

A variety of LPs offer extracts in a pod compatible with Pax's Era oil-vape system, but compared with the ubiquitous 510-thread vape-oil cartridges and batteries, many found the Pax products more expensive. Others argued the question was less about the delivery system and more the quality of oil it contained.
Twitter--@LakeCityCanna, @BeanBoBean, @Dan Sutton

Public Domain

Every company in the sector wishes it could sell products based on how they make consumers feel, but because cannabinoids have different effects at different levels and across different users, many believe such products would be impossible to design.
Inside the Jar

In a series of articles, WeedWeek founder/editor Alex Halperin dove deep into Colorado company Ebbu--acquired by Canopy for roughly $327M in 2018--that was developing predictable cannabis products. They were never released.
Pando, WeedWeek