Canada edition / January 11, 2020
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1 2.0 ROLLOUT CONTINUES

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CHASE URICH

Beginning Monday, the first 2.0 products hit stores in Ontario, Canada's largest provincial REC market boasting 39% of the country's population. More products will arrive in stores over the next months (and years).
CTV News, Twitter—David George-Cosh, CBC Toronto

Edibles received the bulk of media attention, including the usual caution to wait a couple of hours to see if that edible's working before you eat any more. Though edibles will be capped at 10mg per package, that's plenty for a beginner. For an impatient beginner, a second 10mg would be an awful lot more.
CTV News

A variety of vape pens constituted the majority of products debuting in Ontario.
Leafly

Aphria issued the first 2.0 recall, due to leaking cartridges in its Good Supply and Solei–branded vape pens.
Smart Money Gains, GrowthOp

  • This means the regulated market is going through the same hurdles the illicit market did years ago, one longtime grower noted.
    Twitter—Kev in the Shed

PRE-ORDER "THE CANNABIS DICTIONARY!

2 ONTARIO OPENS NEW RETAIL PROCESS

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HTTPS://PIXABAY.COM/NL/USERS/ANTRANIAS-50356/

On January 6, Ontario opened applications for REC retail stores. No operator can own more than 10 REC stores until September, at which point they can own 30, and then in September 2021 they can own 75.
Government of Ontario, Trina Fraser

The fiasco of the last REC retail lottery was in August, and virtually none of the lottery winners have yet opened stores. That will change in coming weeks, with dozens of the second lottery's winners nearly ready to open.
Globe and Mail, GrowthOp

The Ontario Cannabis Store continued expanding its same-day and next-day shipping pilot program beyond Toronto's immediate suburbs to more distant burbs.
Twitter—OCS

In a piece of good news, the ministry of the Ontario attorney general confirmed micro-cultivators and licensed processors will be allowed farm-gate sales, a promising development that could dramatically cut down on obstacles micro producers face in bringing products to market.
MJ Biz Daily

This week on the podcast
Gofire Or Go Home, with Joe Hodas

3 SUPREME CANNABIS SACKS CEO FOR EX-STARBUCKS PRES

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KNOW YOUR MEME

Supreme Cannabis announced its CEO Navdeep Dhaliwal was leaving effective immediately, as Colin Moore, president of Starbucks Canada from 2002-2011 became interim CEO. The press release did not thank Dhaliwal for his service.
Newswire, MJ Biz Daily, The Deep Dive

The company says it's undergoing an executive search to replace Dhaliwal, who rose from Supreme president to CEO in September of 2018 (at the same time as founder and CEO John Fowler took over as president).
Newswire

  • The move shores up Supreme's intent to focus on delivering cannabis as a consumer packaged good (CPG), as Moore's Starbucks experience positions him to help the company better determine what Canadian consumers want to buy.
  • Dhaliwal will remain a member of the board of directors, though (as the Globe's Jameson Berkow pointed out, there was no mention of this in "the announcement of his unexpected - and immediate - departure as CEO.”
    Twitter—Jameson Berkow

Quick Hits

  1. A Kingston, ON woman is organizing a group of mothers who want to fight the stigma against mothers who use cannabis. A Saskatoon mother started a podcast with a similar theme.
    Global News, CTV News
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4 STRUGGLING AURORA SELLS OFF PROPERTY

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PUBLIC DOMAIN

Aurora listed its greenhouse facility in Exeter, Ontario for sale for $17M. MedReleaf bought the facility in in April, 2018 for $26M ($21.5M in cash and the rest in stocks), began seeking a buyer two weeks later, and was acquired by Aurora for $3.2B in stock in May, 2018.
Bloomberg, Financial Post, CBC Business

The move is part of a greater trend of struggling LPs selling cultivation, processing, and storage facilities, though in many cases companies immediately lease them back. Some analysts predict LPs will begin to sell off foreign assets in Africa, the Caribbean, and Latin America for access to cash.
MJ Biz Daily, Ottawa Citizen

A friend of mine from outside the industry visited Aurora's 11,000 square-foot REC store in the gargantuan West Edmonton Mall (rented at "far well above the ~$100 per square foot" rents paid by other West Edmonton Mall shops, so more than $1.1M monthly). My friend described it as "a monument to throwing away money."
Edmonton Sun, Twitter—David George-Cosh

  • "It's the size of a roller skating rink," my friend said. "The staff there were pleased to tell us that Aurora spent $2.5M on it."
  • It was a Saturday afternoon and my friend reported little more than a dozen customers, which he said made the ratio of personnel to shoppers 2:1.
  • The front section of the store is a room of its own, selling no cannabis but offering, among other things, a wall of Dr. Bronner's soaps, colouring books, and "an umbrella that changes colours when it rains." The smoothie bar hadn't finished being built yet, "but there was a staff member staffing it nonetheless."

5 THE BIG PICTURE—AND SOME SMALL DETAILS

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PUBLIC DOMAIN

Analyst Greg McLeish predicted more companies will defer facility building in the face of mass-cultivation capacity losing its value.
MJ Biz Daily

The coordinator of Niagara College's commercial cannabis program said LPs struggling with pest control and crop management need to stop treating cannabis as agriculturally unique and "get back to basic agronomy." He encouraged producers seeking advice to seek contacts in the tomato and vegetable industries.
Vancouver Sun, CBC Windsor

The Green Organic Dutchman's president, Csaba Reider, and VP sales, Mike Gibbons, announced they will be leaving the company.
Stockwatch

Former employees of bankrupt LP AgMedica are waiting to find out whether they will get severance or termination pay from the company.
Chatham Daily News

Lawyer Harrison Jordan charted grey-market operators' moves into the legal sector.
Leafly

6 CMAJ CONTROVERSY, AGAIN

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The Canadian Medical Association Journal waded yet again into canna-controversy with another alarmist opinion commentary about "health considerations" related to the legalization of edibles.
CMAJ

The CMA and its Journal have previously provoked controversy by calling for the end of the MED systemdismissing MED as non-medical, and expressing skepticism about legalization (predicting possible health harms that don't seem to have occurred). They've been accused of taking such divisive positions without consulting the association's member physicians.
CBC Calgary, CMAJ, Twitter—Shekhar Parmar

The Council of Chief Medical Officers of Health's statement on reducing health risks when consuming 2.0 products was a lot more sensible than the CMAJ's.

Quick Hits

  1. La Presse surveyed cannabis researchers across Canada, who reiterated reports Health Canada's Office of Clinical Trials is demanding information even LPs don't have, preventing research from getting off the ground. In a subsequent editorial, the paper called the situation "Kafkaesque" and "aberrant" and concluded it was easier to research cannabis before legalization.
    La Presse—In French
  2. On a related note, the US leads the world on cannabis research and development, but they can't export cannabis (or even move it between states) because of federal prohibition. That's left the global market for Canada to fill, if we can manage not to bungle it.
    Denver Post
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7 BEER CONSUMPTION DOWN 3% SINCE LEGALIZATION

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HTTPS://WWW.FLICKR.COM/PHOTOS/7626777@N02

Following on data Cowen & Co reported last May, Canadian beer consumption has continued to decline. Though beer volumes sold declined 0.3%, between 2014 and 2018, Cowen analyst Vivien Azer reported Canadians have drunk 3% less beer in the first 11 months of 2019.
Barron's, Bloomberg

Quick Hits

  1. University of Toronto sociology professor Akwasi Owusu-Bempah talked with Halifax professor and activist El Jones on the Policy Options podcast about the continuing effects of discriminatory cannabis policing on Black and Indigenous people.
    Policy Options
  2. New Brunswick crown monopoly REC retailer Cannabis NB's lagging sales numbers improved in the second half of 2019.
    MJ Biz Daily

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8 VICTORIA COMPASSION CLUB EXEMPTED FROM RAIDS

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HTTPS://COMMONS.WIKIMEDIA.ORG/WIKI/USER:JACOB_HNRI_6

In a praiseworthy moment of common sense, Victoria's city council voted unanimously to exempt longtime compassion club the Victoria Cannabis Buyers Club from raids, though some warned the "Community Safety Unit," BC's provincial anti-cannabis squad, has not respected municipal demands to protect compassion clubs in the past.
Victoria Council, Twitter—Bryan Raiser

BC's NDP premier John Horgan is finally indicating his support for the province's legendary cannabis sector, which many accused his government of failing in the first year of legalization. The question is whether Horgan's ready to listen to the sector, and how much will the NDP government be willing to make changes to help legal BC Bud thrive.
Inside the Jar, MJ Biz Daily

Quick Hits

  1. I'm writing this from the first Lift & Co. Vancouver trade show of 2020—one of the biggest of the year. This year Lift—whose Toronto office laid off 13 in mid-December—is moving to generate revenue through user data.
    GrowthOp, Business in Vancouver
  2. A micro-growing consultant reported one of their aspiring micro clients was told by Canada Revenue Agency that until her declared live plants have been audited by the CRA, "You can only water the plants, they cannot have any light."
    Twitter—Forest Farms

9 HEMPWORX RETURNS, KEEP LABS DEPARTS (VEGAS)

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Ashleigh Brown of women-and-MED advocacy group SheCann passed along emails [see above] she received from an affiliate of CBD multi-level marketing company Hempworx encouraging her to become a part-time CBD seller from home.

Las Vegas's Consumer Electronics Show (CES) Awards finally gave its first award for a cannabis product to Kitchener, ON, cannabis-container makers Keep Labs, then banned them from mentioning cannabis. Keep Labs pulled out of the show.
TechCrunch, Canadian Business

Quick Hits

  1. "Dry January" is becoming "High January" as people ditching hootch for the first month of the new year discover that's easier when they're stoned.
    Global News
  2. Carry the Kettle Nakoda First Nation in Saskatchewan will partner with BC's Indigenous Bloom to develop an Indigenous-owned REC wholesale business on reserve-owned land housing a former tree nursery with 350,000 square feet of indoor growing space.
    CTV News

10 INSURANCE: STILL A CHALLENGE

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Getting your cannabiz property insured—especially if it's a greenhouse, or has any company exposure in the USA—is still a challenge. Many insurers are loath to cover cannabis businesses, and the approach of edibles legalization hasn't eased their concerns.
Insurance Business, Canadian Underwriter

  • Directors' and officers' insurance is a hurdle for many companies: Hexo said the inability to secure such insurance was behind their head office's move from Quebec to Ontario.
    MJ Biz Daily

Quick Hits

  1. Two Calgarians—who applied for AGLC REC retail licenses and were turned down—are on the run after their illicit online dispensary was busted. Another man, and four companies, face related charges, while the two cannabis fugitives are believed in Nova Scotia.
    CBC Calgary
  2. The Alberta Gaming Liquor and Cannabis said Alberta Cannabis Micro License Association president Kieley Beaudry was "mistakenly provided with inaccurate information" an AGLC rep told her in December, "individuals with Micro Cultivation/Processing Licenses do not produce enough product for AGLC." The AGLC said they will "consider procuring product from Micro Cultivation/Processing licensees that have a valid recreational sales licence from Health Canada."
    Twitter—AGLC