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1

Ontario to Scrap Retail Lottery, Approve Unlimited REC Stores

https://www.flickr.com/photos/150938310@N02

Ontario's ministry of the attorney general announced it will scrap the REC retail lottery system and, as of January 6, and begin accepting retail license applications for unlimited potential operators across the province.
Globe and Mail

Ontario will allow each producer to open a single farm-gate store at one of its facilities, though producers may need to sell the product first to the Ontario Cannabis Store, and then buy it back from them.
Twitter—Matthew Columbro

Though the province led the nation in total sales during the first year of legalization, the $216.8M in sales pales by comparison to the $325M in business and $50M in taxes the Cannalysts estimate Ontario lost by not following Alberta's market-demand model earlier.
CTV News

  • BMO analyst Tamy Chen suggested overall industry sales volumes could increase as much as 35% if Ontario opened a total 325 stores over 2020. Unless the government begins approving more than 20 stores monthly, however, Ontario will not have more than 180 new stores by the end of 2020.
  • To equal Alberta's stores-per-person rate, Ontario would need 1,000 stores. At the proposed rate, it would take until 2024 to open that many.
    Global News

2

StatsCan Charts Retail

Statistics Canada published its report The Retail Cannabis Market in Canada: A Portrait of the First Year, charting the development of more than 400 physical stores (twice as many as four months ago) selling a combined $908M in products between online and retail sales.

Despite having no stores before April 1 and a feeble 24 stores since, Ontario sold the most REC ($216.80M) while Northwest Terroitories ($2.74M) and Yukon ($4.22M) sold the least—though not per capita.

  • Yukon sold $103 worth of cannabis per person, compared with $97 in PEI, $68 in Nova Scotia. BC, with its entrenched legacy system, only spent $10 per capita, while Ontario spent $15.
  • Monthly REC sales have increased from $39.58M in October 2018 to $121.45M in September 2019—though over that same period, online sales declined from $17.17M to $7.12M.

Also this week, new StatsCan data on MED revealed MED sales declining since legalization.
Twitter—Rielle Capler

According to new Statistics Canada data, there are only 450,000 registered MED patients, out of a total 1,086,000 people who say they use MED, leaving 60% of MED patients outside the system.
Twitter—Dan Goulet

Quick Hits

  1. Saskatoon police laid only eight charges for cannabis-impaired driving (out of 41 impaired driving charges in the city of 273,000) in the first year after legalization.
    CTV News
  2. AdCann celebrated six examples of decent-looking packaging that's Health Canada–compliant.
    AdCann

3

Don't Expect 2.0 Products Next Week

https://www.flickr.com/photos/145932970@N06

Whether you'll be able to buy legal 2.0 products before Christmas depends where you live.

Many are coming into 2.0 as slowly as possible, as Tantalus Labs CEO Dan Sutton noted, saying "2.0 rollout will take the substantial part of 2020 for full deployment in new categories."
Twitter—Dan Sutton, Bloomberg

Just in time for vape legalization, Alberta is redrafting its clean-air law to include vape products.
MJ Biz Daily

  • In an atypical moment of common sense around vaping, British Columbia announced it would not apply its new 13% vape tax to dry-herb vaporizers.
    Twitter—Matt Lamers
  • The industry has high hopes for vape products, in spite of the recent panic over vaping illness. Canopy VP communications Jordan Sinclair predicted vape products would comprise the "lion's share" of the 2.0 profits.
    Vice

On an ominous note, researchers in the US discovered that some terpenes added to extracts for vaping may turn toxic when heated.
UPI

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4

Constellation CFO Becomes Canopy Chief Executive

https://500px.com/eischsenns

David Klein, CFO of Constellation Brands and a three-time winner of Institutional Investor's "Best CFO" award, was appointed CEO of Canopy, taking over from the last remaining co-founder, acting CEO Mark Zekulin, who was installed after co-founder and CEO Bruce Linton was fired in the summer.
MJBiz Daily

MJ Biz's Matt Lamers noted Klein said on October 16, "We think Canopy is probably the single biggest value event creation within CPG [consumer packaged goods] in our lifetimes."
Twitter—Matt Lamers

  • At another point, Lamers noted, Klein said, "We have to pick through those capability sets [Bruce Linton developed for Canopy] and line up the biggest profit pools with the highest probability of success and focus in those areas."
    Twitter—Matt Lamers

Quick Hits

  1. After its share price fell below $1, CannTrust received notice from the New York Stock Exchange it was no longer in compliance.
    Stockwatch
  2. Firefighters put out a small fire at Organigram's Moncton processing facility. No one was hurt and no product damaged.
    CTV News

5

Dispensary Foe to Profit From a Dispensary

https://www.flickr.com/photos/103840818@N06

Aleafia's board chair Julian Fantino is best known for saying of cannabis, in 2015:
Leafly

In 2014, Fantino, former Toronto police chief and OPP commissioner, attacked then-MP Justin Trudeau for admitting he smoked cannabis while in office, and in 2015 Fantino said if he was offered the opportunity to be well-paid to lend his name to an LP, he said "I would never do it."

Quick Hits

  1. A Jimmy’s Cannabis Shop franchise in Cranbrook BC thought they were paying the RCMP a compliment when they covered one window with a large photo of historic Mountie Sam Steele, who “brought law and order to the West” in the 1800s. The RCMP asked them to remove it, but ultimately relented.
    CBC British Columbia, Rossland News
  2. The North Vancouver RCMP caused a brief social media sensation by Tweeting an account of stopping a driver who smelled of cannabis, finding a bag of cannabis in his car, giving the driver a sobriety test that he passed, and giving him back his cannabis, “Because those are the laws.”
    GrowthOp, Twitter—North Vancouver RCMP

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6

Sector Roundup

https://commons.wikimedia.org/wiki/User:OTFW

In an assessment of 2019, Cronos co-founder Paul Rosen said the lesson of the last six months of struggle, " is that building a new industry from scratch is hard and you’re going to have some skid-outs, you’re going to have some blood spilled. It’s natural. […] Some of these companies don't have a future."
Bloomberg

  • Arcview Group CEO Troy Dayton said to expect opportunities for distressed-asset deals, "collecting companies for pennies on the dollar.”
  • At MJBIZCON's Investor Intel Conference, Cowen Research told the room, "On a revenue basis, the U.S. [multi-state operators] trade at a 40% discount relative to Canadian LP's."
    Twitter—Deepak Anand
  • A CIBC World Markets report called this year's cannabis stock plummet an inevitable "rationalization" of over-inflated prices, and predicted the sector would improve in 2020.
    MJ Biz Daily

Zenabis shuffled off its CEO Andrew Grieve and replaced him with Kevin Coft.
Press Release

Grizzle released an infographic explaining their understanding of oversupply, naming one culprit as "too much ditch weed."
Grizzle

7

Manitoba Bans Pocket Cannabis

Manitoba's Conservative government passed a new cannabis law mirroring federal bans on possessing more than 30 grams of dry flower in public, and banning public possession of cannabis not in an approved container.
CBC Manitoba

Quick Hits

  1. A MED patient, who smelled of cannabis, was refused beer by a cashier in an Ottawa Loblaw grocery store. The patient said she hadn't used MED in over a day, but her jacket smelled like it. Loblaws defended the cashier's hard line.
    CTV News
  2. As promised, Miss Universe Canada, Alyssa Boston, made legal cannabis the central focus of her appearance at the Miss Universe pageant, beginning with her fluffy green pot-leaf festooned “Canadian Cannabis Queen” costume.
    Inside the Jar

8

Industry Unimpressed with Ministers' Mandates

Executives around the sector expressed concern about the new government's mandate letters to cabinet ministers, which prime minister Justin Trudeau sent out this week following his Liberal party's re-election victory in October.

Organigram VP Public Affairs & Stakeholder Relations Cameron Bishop lamented the mandates' lack of mention of MED exports, tax reform, or facilitating craft entry into the sector.

  • Bishop said the "mandate letters […] wrongly assume they got everything right the first time out, have nothing to learn from real world experience."
  • Bishop's whole thread is worth a read.
    Twitter—Cameron Bishop

Quick Hits

  1. Adolfo Gonzalez, cannabis trainer, argued LPs should respect breeders' work and use original cultivar names—which become associated with more verifiable information about the plant.
    The Straight

9

In the West...

https://commons.wikimedia.org/wiki/User:Xicotencatl

BC solicitor general Mike Farnworth is optimistic about REC sales growing in coming months. insiders warn it'll be hard to sell BC cannabis consumers on legal REC, which is often significantly poorer quality than the small-batch products available on the illicit market.
Vancouver Sun

Alberta's online crown retailer—the only REC retail in Alberta operated by the province—announced it was lowering its prices on all products, and reducing shipping fees.
CTV News

Quick Hits

  1. Chefs from abroad are visiting Vancouver to learn how to cook with cannabis.
    CBC British Columbia
  2. Inuit stoners have told me how the introduction of unlicensed Mail Order Marijuana websites (MOMs) dramatically changed cannabis consumption in remote Northern Inuit hamlets, introducing southern variety and pricing to fly-in-only communities used to paying premiums for schwag. The revolution may not last. Last week, Nunavik police working with Canada Post seized $1M worth of drugs (primarily cannabis) (and more than $700,000 worth of alcohol) from mail coming into the Inuit communities of northern Quebec, but they can't charge anyone.
    Nunatsiaq News

10

Unlicensed Market Getting Ticked Off

Public Domain

Frustrations continue to simmer following the BC Community Safety Unit's raid of beloved (and tacitly approved) Victoria Cannabis Buyers Club. The conflict has fired up rhetoric from unlicensed operators eager to change the increasingly corporate face of cannabis.
Inside the Jar

  • The "Community Safety Unit," is separate from the RCMP and the Vancouver police, created to bust post-legalization illicit growers and sellers, and empowered to enter premises without warrants and seize evidence.
    Inside the Jar
  • Longtime unlicensed grower and legalization advocate Travis Lane wrote a thread balancing the merits and perils of illicit growers entering the legal market, while Jamie Shaw wrote a thread about the effect of the busts on MED patients who prefer unlicensed compassion clubs to the federal LP system. Both are worth reading.

In an article about the battle between legal and unlicensed dispensaries, REC store-chain CEO William MacLean came out aggressively in favour of police busting unlicensed shops.

Quick Hits

  1. A Centre for Addiction and Mental Health study found stoned drivers tended to be inappropriately slow and have difficulty keeping their vehicles centred in their lanes. But the research also tested the same drivers 24 and 48 hours later, during which they showed no signs of motor impairment. Some believe the research proves zero-tolerance-within-24-hours driving rules are unscientific.
    Global News

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