Canada edition / June 03, 2020
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1 CANNTRUST BACK FROM THE GRAVE, WITH LICENCE

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Getty Images

CannTrust got its Health Canada licenses for its Fenwick Perpetual Harvest facility in Ontario reinstated, to the shock of many.
NewsWire, BNN Bloomberg

  • CannTrust has been granted protection under the Companies' Creditors Arrangement Act, and acknowledges it lacks "meaningful revenues" and has "laid off a significant portion of its workforce."
  • The company said continued production of CannTrust products hinged on a Health Canada decision regarding its main facility in Vaughan, Ontario.
    CTV News, Twitter--@CannTrust

A year ago, CannTrust was the ninth largest LP in Canada by market cap, helmed by former banking CEO Peter Aceto.
Marijuana Index, Financial Post

According to Health Canada, CannTrust has made significant changes to staff, improved recordkeeping, trained all staff, and introduced "controls, processes and systems to mitigate the risks related to the original suspension."
MJBiz

 

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2 CANOPY BOOKS $1.3B Q4 LOSS

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Josephine Dorado / Creative Commons

Canopy reported another grim quarter, with its $107.9M net revenue down 13% quarter over quarter, and REC sales down 28%--despite the COVID buying surge.
New Cannabis Ventures, BNN Bloomberg

Canopy has lost REC market share (from low 20%s to above 15%), and CFO Mike Lee acknowledged "missed opportunities" in not shifting more quickly to value products.
MJ Biz Daily

Canopy's investment arm Canopy Rivers also announced plans to "optimize its organizational structure, streamline operations, and preserve and maximize cash-on-hand" by cutting expenditures 35%. As part of those cuts, they closed The Rise, the cannabis-business publication the company launched six weeks ago on 4-20.
NewsWire, Twitter--@JamesonBerkow, @BePartoftheRise

3 EXECUTIVE COMPENSATION AND OTHER FIGURES

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Public Domain

Ahead of the roughly 30% of workers in the sector who've lost their jobs in the last year, more than a third of Canadian cannabis CEOs left their posts in 2019, according to a report by executive research firm Bedford.

Some Other Numbers:

Sales of cannabis products were up 5.5% for the first quarter of 2020, with Q1 2020 household expenditure on cannabis jumping to a record $7.26B from $6.88B last quarter.
Twitter--@itsdgc

Legal cannabis (both REC and MED) contributed $2.3B to the total of Canada's realized net farm income.
Twitter--@itsdgc, MJ Biz Daily

  • Without cannabis, total farm cash receipts would have risen only 2.9% (about average). Instead, the totals increased 5.7% to $66.1B.
    Oak Bay News
  • Non-cannabis farmers, whose revenues are faltering, questioned the value of including cannabis among the category of "agriculture," which usually refers only food or fibre.
    iPolitics

4 BIG BANKS RETURN TO SECTOR

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ElPadawan / Creative COmmons

Organigram and Valens each announced deals with major Canadian banks, a signal some financial institutions are returning to the sector.

The country's major banks have been uneasy with the sector, and many were humiliated last summer when the CannTrust scandal broke mere months after major banks invested in the company.
Financial Post

Quick Hits

  1. Santé Cannabis co-founder Erin Prosk again criticized Alberta researchers for announcing MED research on COVID-19 that has no funding and no clinical trial. Prosk argued, "We have a chronic pain crisis, opioid crisis, mental health crisis and an elder care crisis- all with better evidence for cannabis treatments [than COVID-19]."
    GrowthOp, Twitter--@erinprosk

  2. Lawyer Harrison Jordan presented a "roadmap to cannabis sanity" in Canada.
    Twitter--@harjord

5 ONTARIO PORTENDS MASSIVE REC RETAIL

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Ontario Cannabis Store

At the beginning of May, there were nearly 900 legal REC stores across Canada, up 120 from late February, and more than half the total stores were in Alberta. (Canopy expects as many as 1,200 REC stores to be open nationwide within this year.) At last count, Ontario had roughly 60--but as of last week, another 392 were varying stages of preparation. Cannabis Benchmarks estimates Ontario can support some 1,500 REC stores.
Business of Cannabis, Twitter--@jefflagerquist, @AlannaSokic

Expanded competition will mean stores have to work harder to build customer loyalty. Small shops believe their size may play in their favour, as some argue larger retailers made legal REC look bad. Others believe once consumers have a choice of REC retailer, many will gravitate to "mom and pop dispensaries."
Cannabis Retailer, Twitter--@LakeCityCanna, @WhatsMyPot

As new stores open, they have to figure out how much to cover their windows. Opaque windows aren't required, but many stores have chosen them, not realizing federally compliant alternatives exist.
Cannabis Retailer

Other Retail News:

6 LPS SHIFT MARKET POSITIONS

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Dan Zen / Creative Commons

As Canopy reported a decline in REC market share, Aphria and Aurora have seen their market shares increase.
Financial Post

  • A Canaccord Genuity cannabis analyst predicted companies with 10% market share or more will survive for the forseeable future--but those with 1% or 2% share who rely on wholesaling to other LPs will likely not survive.
  • Wholesaling relies on white-labelling, a far more widespread practice in the sector than many believe. Some believe LPs are also relabeling lots with older package dates.
    Twitter--@pfthurley, @dablarocque
  • The companies coming through the pandemic best are those that have been adaptable.
    GrowthOp

Other Sector News:

7 RETREAT FROM GREENHOUSES AND JAMAICA

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Public Domain

Tilray announced it will close its wholly owned subsidiary High Park Gardens greenhouse in Leamington, Ontario.
Businesswire

LPs' eager pre-legalization overspending on acquisitions led to the series of facility closures that began last fall with Hexo's shuttering of an Ontario facility.
St Catherine Standard

With facility closures come facilities for sale, and there are now a variety of cannabis production facilities available for purchase in BC. The problem, of course, is that facilities can be bought and sold, but cannabis licenses cannot (meaning anyone buying assets must apply and re-license facilities).
Vancouver Sun, Twitter--@trinafraser

Companies are also leaving Jamaica at a noticeable rate. The Green Organic Dutchman scrapped all plans in the Caribbean nation, following Aurora in exiting Jamaican operations.
MJ Biz Daily, Stabroek News

8 PEI PRIVACY COMMISSIONER WARNS ON AGE GATES

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Ontario Cannabis Store

There's a broad consensus in cannabis that age-gates requiring an entire birthdate are a pointless nuisance.

This week, Cannabis PEI got rid of theirs after provincial privacy commissioner Karen Rose said asking for visitors' birthdates was an overreach. Cannabis PEI now simply asks visitors to confirm they are over 19.
Chronicle Herald

Quick Hits

  1.  New Brunswick banned indoor cannabis cultivation on agricultural land. One of the reasons cited in refusing to allow a micro-cultivation facility was—I swear—"fear of THC getting into the water supply."
    StratCann, Twitter--@drowbb

  2. When is MED tax-deductible? Can you claim accessories? Leafly has some answers.
    Leafly

9 THE SECTOR GOES OUTDOORS

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Ganja Farm / Wikimedia Commons

This is the year licensed Canadian cannabis really goes outdoors. In the first year after Health Canada began licensing growers for outdoor cultivation, the 450 total licensed outdoor acres have already surpassed the 350 licensed indoor acres. To date, 46 LPs are licensed to grow outdoors, while 70 companies are waiting for licenses. The price makes it worthwhile--outdoor growing can be measured in cents per gram.
BNN Bloomberg, GrowthOp

  • As Canada moves toward more outdoor growing, analysts expect an October supply shift during "Croptober," during which outdoor producers harvest their crops.
  • Only two years ago, various LPs lobbied the Senate to keep outdoor growing illegal. Then-Canopy co-CEO Bruce Linton decried security risks related to outdoor growing, calling it "unregulatable" and "the dumbest thing you'll let us do."
    The Leaf / Wayback Machine

 

10 EDMONTON SEPARATES LIBRARY FROM REC, FIGHTS MOMS

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IQRemix / Wikimedia Commons

The Edmonton Public Library is suing to prevent a REC store from opening two blocks away from its downtown branch.
CBC Edmonton, The Province

In March, Edmonton Police Services began a wide campaign to shut down illicit online dispensaries (the Mail Order Marijuana sites called MOMs), and they have since made several high profile raids. But critics argue they're making little impact.
GrowthOp