Canada edition / June 17, 2020
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1 ONTARIO RETAIL THRIVES AMID PANDEMIC

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Calyx + Trichomes

Ontario REC retail has thrived in the face of COVID-19. This owes to the AGCO's rapid pace of approvals, and the grit of plucky licensees eager to get their shops open. As Ontario tapers its lockdown, Toronto alone has 21 new REC stores that weren't there in February.
CTV News, Vancouver Courier, BlogTO

  • London, ON store Lit Cannabis, opening in August, announced a partnership with online reviewing couple WhatsMyPot to select inventory.
    Twitter--@LitCanna1

Kingston, ON REC store Calyx+Trichomes commissioned an update of Michaelangelo's Creation of Adam. It features Justin Trudeau as god, sitting atop a pile of giant cannabis seeds, and an unarguably naked Doug Ford as Adam communing with a sticky crop. GrowthOp noted Doug Ford did not endorse the mural, and some critics took issue with it.
Twitter--@calyxtrichomes, GrowthOp

A federal judge found Vancouver REC store Herbs "R" Us Wellness Society infringed upon Toys "R" Us's trademark.
Global News

Quick Hits

  1. Bidding is now open on a contract for the first and, to date, only REC store in Yellowknife, Northwest Territories. The region has one of the highest per-capita consumption rates in the country.
    CBC North
  2. Saskatoon's city council refused to cap the number of REC stores in the city.
    CBC Saskatoon
  3. An Okanagan Indian Band member believes he has the constitutional right to sell REC without a provincial license anywhere within the Okanagan Indian Band's traditional territory rather than simply on reserve. 
    Castanet
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2 BONIFY BACK AFTER BAN

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Getty Images

Products from disgraced Winnipeg LP Bonify, back after an eight-month license suspension, returned to Manitoba REC stores this month. The company quietly returned its products to Saskatchewan stores earlier this year.
MJ Biz Daily

In late 2018, Bonify was caught after procuring 210 kilograms of illegal cannabis from an unlicensed third-party middleman passing it to consumers off as the product of regulated production.
CBC Business, National Post

3 ILLEGAL FOR SOME

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Public Domain

As the cannabis sector sets its sights on the still-thriving illicit market, many critics noticed unlicensed cannabis is a lot more illegal for some people (particularly Black and Indigenous people) than it is for, say, Bonify or CannTrust.
 Vancouver Sun, GrowthOp

Cracking down on illicit cannabis (and illicit delivery services) remains a priority both among police and US border guards.
Ottawa Citizen, Vancouver Sun, StratCann,

Celebrity litigator Marie Henein--currently representing shareholders in a class-action suit against CannTrust--described prohibition of one of the means by which "the state weaponizes an unjust criminal justice system."
Globe and Mail

  • LP FIGR debuted The FIGR Fund, by which the public can nominate a different company with Black, Indigenous, or people-of-colour ownership every month for investment.
    FIGR

4 CANOPY DOUBLES CEO’S SALARY

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Free Clip Art / Wikimedia Commons

Canopy CEO David Klein received more than twice as much salaried annual pay ($1.3M) as his predecessor, interim-CEO Mark Zekulin, and more than three times the $318,000 paid to ousted co-founder and co-CEO Bruce Linton.
MJ Biz Daily

Tokyo Smoke announced its newest Toronto store would offer a permanent exhibition of art by "Banksy, the British street artist, known for his mystery, subversive subject matter, and civil disobedience."
Yahoo Finance

  • Critics said it might be a poor look for a company where there have been so many recent layoffs, and that the artist's values might run contrary to seeing his work decorating a shop.
    Twitter--@BettingBruiser, @C0URTLANDS

5 UP AND DOWN FOR HEXO

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Brigadier Chastity Crispbread / Creative Commons

Hexo's pioneering value brand Original Stash was the first to take advantage of the demand for cheap weed. It represented half of the 9,338 kg of REC the company sold in the quarter ending April 30. These sales drove an improved quarter in which Hexo announced a $19.5M net loss--down 93% from the previous quarter's $298M loss.
Yahoo Finance, MJ Biz Daily

  • Net revenue is up 30% quarter over quarter to $22.1M, with an adjusted EBITDA loss of $4.3M.
  • The company's plan to become EBITDA positive by the end of the year relies on the increasing number of REC stores in Ontario and Quebec. 
  • Hexo CEO Sebastien St-Louis called on "the private sector to provide the service that consumers demand," a clear message to Quebec's REC retail monopoly the Société Québécoise du Cannabis.
    BNN Bloomberg

Though stocks rallied on the news, not everyone was optimistic. AltarCorp Capital predicted Hexo would continue to face challenges due to share dilution and sector problems.
Technical 420, Cantech Letter

S&P removed Hexo from the the S&P/TSX Composite Index, a benchmark group of stocks, leaving only four LPs (Canopy, Cronos, Aurora, and Aphria) represented among the index's 250-some companies.
MJ Biz Daily

6 TILRAY FACES LAWSUIT OVER STOCK SALES

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TheDazDanks / Creative Commons

A lawsuit filed in the U.S. by a Tilray investor alleges senior executives breached their fiduciary duties and sold shares at "artificially inflated prices."
MJ Biz Daily

  • A Tilray spokesperson declined to comment to MJBiz.
  • Apparently separately, In March, Tilray sold discounted stock in a lock-up deal that expired last week. Tilray's stock price is now double the discounted rate at which it sold stock in March.
    Bloomberg

In Other Corporate News:

Organigram inked a deal to export 3,000 kg of "indoor-grown dried flower" to Israeli MED company Canndoc.
MJ Biz Daily

Aurora announced president and director Steve Dobler will retire at the end of June. Dobler's held those positions since December, 2014.
Globela

CanAccord Genuity suspended cannabis coverage after laying off its sector analysts.
Twitter--@_deepakanand

REC retailer Fire & Flower increased Q1 fiscal revenue 142% year over year.
New Cannabis Ventures

Following on a similar statement from Valens last week, Neptune Wellness Solutions stressed it's more than just an extractor--it's a "wellness brand."
NewsWire, Twitter--@BettingBruiser

7 INDUSTRY WANTS FEES SCRAPPED: OTTAWA ONLY DEFERS

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Joreldray / Wikimedia Commons

Health Canada responded to industry demands to cancel a regulatory fee equal to 2.3% of companies' annual revenues by offering to defer the fees until a later date.
BNN Bloomberg, MJ Biz Daily

One of the most frequent problems aspiring licencees and licence holders alike face when dealing with Health Canada is "confusing" or "unclear" material and information, according to feedback from an industry round table in February.
Twitter--@C0URTLAND

 

Quick Hits

  1. Join in the fun as licensed micro-cultivator 40 North Cannabis clears airport security while declaring 2.5kg hash rosin en route for testing.
    StratCann
  2. Canadians for Fair Access to Medical Marijuana changed its name to Medical Cannabis Canada. Update your rolodex.
    Twitter--@VJsapps

8 SQDC BOOKS $26.3M PROFIT FOR 2019

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Jesse Staniforth

The Société Québécoise du Cannabis, Quebec's REC retail monopoly, recorded $26.3M profit during its first full fiscal year of operations, according to its annual report. It is the most profitable Crown REC retailer in the country.
La Presse--In French, SQDC--In French

  • The SQDC sold $311M, and believes it captured 30% of the market from unlicensed operators, leaving 70% of Quebec cannabis purchases unlicensed. The figure is 30% higher than CEO Jean-François Bergeron predicted it would be.
    Journal de Montreal--In French
  • The SQDC bought from 14 suppliers, and sold products at a 29% markup, much lower than the 102% profit the Société des Alcools du Québec takes on wines and spirits. This is to undermine the illicit market.
  • Brock University professor Michael J Armstrong said the small number of stores helps profitability.
  • The company plans to achieve maturity in three years, with roughly 100 REC stores.
    Journal de Montréal--In French

The SQDC is launching same-day home delivery on the island of Montreal by the end of June. The rest of the province will have it within six months.
Montreal Gazette, Huffpost

9 CONSUMERS LOVE 2.0 PRODUCTS

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Deepak Anand

Ontarians spent $20M on 2.0 products in the first three months they were available. Sales of 2.0 products in the province have increased monthly-- with new offerings available by the week. Between February and March alone, sales of beverages tripled from $82,100 to roughly $242,600. The modest figures suggest plenty of room for growth. 
Cannabis Retailer

  • Vape pens were the most popular product by far, representing $14.8M worth of those sales. Consumers bought $3.8M worth of edibles, $410,000 worth of beverages, $300,000 worth of concentrates, and $40,000 worth of topicals.
    The Star
  • In a Twitter thread, Canopy Rivers CEO Narbe Alexandrian argued that we shouldn't consider beverages' price-per-mg of THC, though many disagreed.
    Twitter--@Narbe87

Ridiculous Health Canada "equivalency" rules limit the amount any person can possess publicly to five canned drinks (total 10mg THC), or 73 bottles of concentrated THC drops (63,510mg THC).
GrowthOp, Castanet, Twitter--@_deepakanand

 

10 SEX, WEED, AND SCIENCE

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Rupert Ganzer / Creative Commons

A new study found cannabis might be a safer way than other street drugs to enhance sex. Some queer men use crystal methamphetamine during sex and the study, by the BC Centre on Substance Use, suggested cannabis could present a safer alternative for the same purposes.
The Conversation

The majority of young people (71%) treated for cannabis poisoning at BC Children's Hospital intentionally consumed cannabis along with alcohol and other drugs, while 28.9% of those treated used cannabis alone.
UBC, CBC British Columbia, CTV News

Legalization is expected to expand the scientific research and development sector by $11B in the next five years.
Canadian Packaging

Researchers at the University of Toronto are looking into the effects of cannabis on the oral health of Indigenous populations in Northern Manitoba and Ontario. 
The Province, University of Toronto

Quick Hits

  1. The Alberta government refuses to say whether or not Albertans are consuming more alcohol and cannabis since the pandemic.
    CBC Calgary
  2. Shoppers Drug Mart's Medical Cannabis by Shoppers launched same-day MED delivery in the greater Toronto area.
    Twitter--@MattPMaurer
  3. Cybersecurity expert Ivy Zmuda animated bar-charts to show the history of cannabis licensing in Canada since 2013.
    Twitter—InfosecIvy