February 15 2020,


Ontario's Attorney General Doug Downey launched consultations into proposed new provincial approaches to cannabis, including "consumption venues," and special-occasion permits, such as festivals and concerts. (Interested parties may comment here.) Press Release
  • "We don’t have any specific policies that we’re looking at. This is a true listening exercise," Downey told BNN Bloomberg. "We want to hear what Ontarians have to say on lounges, cafes, that kind of thing." BNN Bloomberg
  • He stressed there would be no changes to the existing cannabis framework.
  • The Ontario government is not considering changing the Smoke Free Ontario Act or other laws outlawing smoking or vaping in enclosed workplaces and public places, including patios, and on any vehicle or boat in motion. Twitter—Trina Fraser
  • Outdoor smoking-patios may be possible, but only if there are no food/beverages for sale or consumed on site. (And regs would have to be changed to exclude edibles from existing definitions of "food or drink.") Twitter—Trina Fraser
The Ontario government appears to have edibles- and beverage-consumption sites in mind, rather than vape or smoking lounges. No sites exist at present where consumers could purchase and then also legally consume edibles and beverages. BNN Bloomberg, Twitter—Trina Fraser
This isn't the first time the Ford government has floated public consumption—they previously considered the option in 2018 before withdrawing a request for tenders. Meanwhile 2.8M Ontarians live in municipalities that opted out of allowing REC retail—largely in Toronto's massive suburbs. Their populations combined add up to that of all Atlantic provinces, or Manitoba plus Saskatchewan. Global News, Twitter—Patrick Cain
  • Some municipalities (like Mississauga) are rethinking opting out, others are not. Richmond Hill Mayor Dave Barrow said, "I’m not interested in seeing it in our city. There was a time when there wasn’t a liquor store in Richmond Hill, and you went to the next city." Twitter—Patrick Cain
Hashish and kief are now legally available in the Ontario Cannabis Store (though one Ontario REC retailer marvelled that "a gram of rosin costs more than a gram of cocaine"). Twitter—Jameson Berkow, Calyx + Trichomes
Aurora reported a net loss of $1.3B for Q2, on the heels of last week's news it had laid off 15% of its workforcetaken $1B in writedowns, and accepted the resignation of founder/CEO Terry Booth. NewsWire, MJ Biz Daily, BNN Bloomberg, Financial Post
  • Revenue fell 25% quarter-over-quarter, from Q1's $75.6M to the past quarter's $56.6M. The Star
  • Wholesale revenues declined 77% to $2.4M, while EBITDA [earnings before interest, taxes, depreciation, and amortization] loss doubled from $39.7M to $80.2M, quarter over quarter.
Aurora's interim CEO Michael Singer told BNN Bloomberg, "I would never say we made mistakes. The decisions we made in the past made sense at that time, but the market has changed. " BNN Bloomberg
  • Singer said there were no plans for any more layoffs, and any capital the company spends needs to show value.
Aurora's products are expensive at a time when consumers want cheaper REC. MarketWatch Terry Booth explained his departure by saying, "It’s time for more of a button-up CEO, not a growth CEO. […] You really need to have someone with their eye on the ball for positive EBITDA." BNN Bloomberg
As part of his compensation deal, Booth is entitled to two years' worth of his base salary of $525,000 plus cash bonus, etc. Twitter—Michael Miller
CEOs from the consumer packaged goods sector are interested in taking over Singer's position, regardless of Aurora's last year of struggle. Bloomberg
This week on the podcast
Amber Senter: Diary of a Superwoman
Supreme Cannabis became the latest LP to announce layoffs this week with news it was cutting its workforce of 700 by 15%. BNN Bloomberg
Former Supreme CEO and president John Fowler responded to news of ongoing layoffs at Supreme and other companies by offering to connect potential employees with recruiters and other businesses seeking workers in the sector—and he's continued to do so, seeking jobs for particular experienced workers and referring laid-off workers to media. Others in the field are also passing along news of LPs hiring. GrowthOp, Twitter—John Fowler, Chris Stone This announcement adds to the number of cannabis employees laid off in recent weeks. Last week alone, Aurora cut 500 jobs while Tilray cut roughly 140. Sundial Growers laid off 10% if their workforce in January, and Hexo cut 200 workers in October. Some expect the next layoffs will be at Canopy. Business Insider, CFO In another departure for Hexo, director Nathalie Bourque resigned from the company board. She follows CFO Michael Monahan, who resigned abruptly in October after only four weeks, and cofounder/Chief Brand Officer Adam Miron, who left in July. NASDAQ, BNN Bloomberg, Ottawa Business Journal
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Canopy's Q3 earnings report beat expectations with $123.8M in net revenue (up from $76M last quarter) and an adjusted EBITDA loss of $91.7M (down from $156M in Q2). These results were better than the analyst-expected $105.4M in revenue and $110 EBITDA loss. Canopy stocks spiked, and stocks across the sector followed. Twitter—Jeff Lagerquist, BNN Bloomberg, Twitter—David George-Cosh
Quick Hits
  1. A New Brunswick dispensary raided in November announced it would be closing its physical locations, but would continue to do sell unlicensed products via its website. GrowthOp, Digital Journal
  2. Here's a guide to applying for a REC retail licence across various provinces. Cannabis Retailer
After delaying the roll-out of REC vape-pens, cartridges, and other vaping products, Alberta announced it had ended its review of cannabis vape products and would now allow REC retailers to sell them. CTV News, CBC Calgary, MJ Biz Daily, Calgary Herald

Quick Hits

  1. Now that Cannabis NB's sales are emerging from the toilet, New Brunswick might not be in such a hurry to privatize the crown REC retail monopoly. GrowthOp
  2. An Edmonton man who killed his mother during what doctors called a period of cannabis-induced psychosis will spend 45 months in prison. Times Colonist, Edmonton Journal
BC LP Invictus—best known for its short association with KISS-bassist Gene Simmons, after whom its stock ticker was named GENE—was granted creditor protection in relation to a $10.6M security it owes to lender ATB Financial. Globe Newswire, MJ Biz Daily

Quick Hits

  1. Water-themed Toronto sex-club Oasis Aqualounge (fresh from two years in a row on Canadian Business's Growth 500 ranking of Canada's fastest growing companies) is cannabis-friendly, with an outside smoking deck. It's a clothing-optional club so I presume the smoking deck is more popular come summer. Leafly
  2. A Montreal MED consultant is telling Quebeckers between 18 and 20 to sign up for a MED access in order to circumvent the new provincial age limit of 21 to consume cannabis. Journal de Montréal—In French
A study by Ello Capital determined Canada's largest LPs average less than a year's worth of cash left. Aurora has less than three months of cash left, and Canopy has less than eight. Marketwatch
  • Canopy disputed this accounting and said if cash-equivalents and marketable securities were included, they'd have more than twice as much.
  • Ello Capital concluded Tilray had 3.7 months' worth of cash left, The Green Organic Dutchman had 3.9 months' worth, and Hexo had 6.5 months' worth. Twitter—Max Cherney
Ello CEO Hershel Gerson said LPs will have to raise capital or merge, though investors are still willing to put money into the right deals. Bloomberg

Quick Hits

  1. A Saskatoon doctor who wrote an impressive 1,000 MED prescriptions in six weeks in 2017 will be fined $24,000 for professional misconduct. Saskatoon Star-Phoenix
  2. Aleafia Chief Medical Officer and MED advocate Dr. Michael Verbora reported witnessing a hospitalized child who needed CBD oil for treatment-resistant epilepsy could not get any because hospitals do not stock MED products. Twitter—Michael Verbora
High profile litigator Marie Henein, whose firm Henein Hutchison is one of those representing shareholders waging a class-action lawsuit against CannTrust executives, directors, and auditor KPMG, said she expects the suit should be certified "relatively quickly"—within two months. Global News, BNN Bloomberg
  • Torkin Manes Cannabis Law Group chair Matt Maurer called Henein "arguably the most talented litigator in the country," and added "she has the most accomplished Canadian class action lawyer of all time riding shotgun." He concluded, "CannTrust is in trouble and the case hasn't even started." Twitter—Matt Maurer
CannTrust appointed Greg Guyatt Chief Executive. Guyatt was previously CFO. NewsWire LPs are just beginning to learn how to process returns—mainly products that didn't sell, but also recalled products, undeliverable shipments, damaged products, etc. Since 2018, LPs have reported an average of 11,152 kg of cannabis destroyed per month. CTV News
  • Lawyer Trina Fraser noted provincial supply deals "permit the return of product for any reason whatsoever," rather than just defective/recalled product. But at least non-defective products can be resold to other provinces provided excise stamps are re-applied. Twitter—Trina Fraser
Molson Coors' year-end results included a $14.3M loss on 11.5M warrants that Hexo gave to Molson at $6 per share as part of their beverage joint-venture Truss. Twitter—David George-Cosh No beverage producer is happy to hear aluminium can liners leach cannabinoids out of drinks. Yahoo Lifestyle Cantor Fitzgerald analyst Pablo Zuanic said Canada adopted "the worst of each [US] recreational state, and little of the good." Yahoo Finance Calling the grim months of November and December 2019 "the first bottom," Raymond James analyst Rahul Sarugaser predicted a coming "second bottom in February or March 2020," followed by a "sector rebound beginning around May 2020." Cantech Letter A University of Waterloo study found few consumers understood the THC amounts listed on edibles packaging well enough to identify whether the dose was "low" or "high." SciTech Daily
Craft growers and advocates are pushing Health Canada to speed up the process of licensing micro-cultivators. To date, Health Canada has received 219 applications and approved 25. Calgary Herald
A grower told Vancouver Island's Islands Agricultural Show how Sea Dog Farm got an outdoor micro-cultivation license in roughly eight months for less than $15,000. That speaker's slide deck explains how you can do it too. Twitter—David Brown, Youtube
  • At the same Agricultural Show, Health Canada representative Jacqueline Oddi said the regulator is developing a security-preclearance program that prospective licencees could complete prior to application. Such a move would be useful for every aspiring LP, but because the notorious wait for security-clearances is hardest for small companies to budget for, the change would be best for micro-level applicants. Twitter—Adam Carmichael
The general manager of a chain of eight Trees unlicensed dispensaries in Victoria said the controversial BC Community Safety Unit held him personally responsible for the now-closed stores' sales, and fined him $1.5M. Inside the Jar, Vancouver Sun
  • Alex Robb was given 30 days to decide between accepting and paying 50% of the fine, or contesting it in a process overseen by the CSU's director.
  • Robb, who said he was "actually an employee of the company" and "never sold the cannabis" predicted "this could essentially cause my financial ruin and follow me for the rest of my life."

Quick Hits

  1. The Ontario Workplace Safety and Insurance Board rejected an application to cover MED for a patient who wished to stop taking opioids for pain, saying MED isn't "necessary, appropriate, or sufficient health care treatment for most medical conditions." GrowthOp
  2. Canadian Students for Sensible Drug Policy published position statements on youth incarceration for cannabis, criminal records for possession, and several other matters. CSSDP