Unlicensed Cannabis Has Made Tyendinaga Prosperous

Tyendinaga Mohawk Territory’s dozens of dispensaries, which serve “thousands of cars on a daily basis,” have touched off an economic boom in the First Nation, where home- and business renovations are becoming widespread and several new gas stations have opened to serve nearby Highway 401.
CBC Toronto

Quick Hits

  1. A group of Chiefs from Ontario, Saskatchewan, and BC argued while legal REC industry was “a historic an tangible opportunity” for First Nations, all face a barrier to entry because the federal government handed REC retail to the provinces—none of which have governance relationships with First Nations.
    Globe and Mail

  2. At Neyaashiinigmiing First Nation in Ontario, protests from community members stopped a planned outdoor MED production facility just before Health Canada approval. Band members say the First-Nations–owned Wiisag Corp. failed to properly consult with them.
    CBC Indigenous

  3. The Nunavut government slashed its markup on dry flower from $4 to $1 per gram after REC sales decline dramatically between Q1 and Q2 of the fiscal year. Nunavut REC prices are among the country’s highest, averaging between $14 and $16 per gram against the national $10 average.
    GrowthOp
 

Couche Tard Invests $380M in Fire and Flower

Quebec convenience store giant Alimentation Couche Tard (which also owns Circle K stores) will pay $380M over 36 months for a controlling 50.1% stake of REC retailer Fire and Flower, hoping to spur “aggressive growth.”
Globe and Mail

Quick Hits

  1. The Boston Globe charted the history and present of Canadian legalization and contrasted it against Massachusetts’ ongoing legalization process.
    Boston Globe

  2. Investor’s Business Daily considered Canadian cannabis stocks in exhaustive detail.
    Investor’s Business Daily

WeedMD Partners with Bilzerian’s Ignite, Ignites Outrage

WeedMD announced its extraction subsidiary CX Industries signed an exclusive licensing deal with openly sexist canna-bro/gambler/Instagram personality Dan Bilzerian’s Ignite International Brands.

  • Bilzerian did not comment on the deal. His second most recent Twitter post reads, “Just cuz your girlfriend posts a pic of you on her IG doesn’t mean she won’t fuck other guys.”
  • In May, GrowthOp published a generous profile of WeedMD that presented the LP as “big on gender equality,” with 50% female executives, 38% female directors, 50% female managers, and a 40% female workforce.
  • Figures across the sector reacted in disgust, some calling for boycotts. Tantalus Labs’ CEO Dan Sutton said, “I was wondering who was going to be dumb enough to self nuke on that Ignite deal. The rest of us didn’t think twice on turning those dudes down. Brand suicide.”
    Twitter

Quick Hits

  1. Corporate events in Toronto now sometimes feature full-service cannabis bars, offering pre-rolls and vaporizers. It isn’t legal but it sounds like fun.
    BlogTO, Twitter—Harrison Jordan

  2. It’s hard to tell who the next wave of cannabis consumers will be, but market research firms are sure trying to figure it out.
    GrowthOp

Tobacco Giant Imperial Invests $123M in Auxly

British behemoth Imperial Tobacco announced it will invest $123M (via convertible debentures worth a 19.9% stake) in Auxly Cannabis Group, formerly known as Cannabis Wheaton, founded by Canopy‘s first ousted co-founder, Chuck Rifici. (I profiled Rifici and the company in Leafly in 2017).
The Star, Leafly

  • Compared with Altria’s $2.4B buy into Cronos last year, the investment is cautious.
    Globe and Mail
  • The deal will give Auxly access to Imperial’s vaporizer technology ahead of extracts legalization this fall
    Bloomberg
  • Auxly’s stoke rose 20% on news of the transaction.
    Financial Post
  • The British company is not related to Imperial Tobacco Canada.

Quick Hits

  1. Bruce Linton recalled RBC “firing” him as a client when he had $30M in the bank because he was a “reputational risk” as CEO of a licensed producer.
    Twitter—Max Cherney

  2. CIBC slashed its estimates on Aphria in anticipation of writedowns.
    Twitter—Amber Kanwar

At CAFE Dispensary Sidewalk Sale, Police Lay 1g Possession Charge

Toronto unlicensed dispensary CAFE chain stunned many when, after its last location was barricaded with concrete blocks last week, its employees showed up the next day to continue illegally selling REC on the sidewalk outside blocked stores. Mayor John Tory expressed outrage the dispensaries would not quit.
CTV News, The Star, CityNews, Global News

  • Consumers lined up to place orders with employees holding tablets and directed customers to pick cannabis up elsewhere.
  • Police dispersed crowds and arrested 18 over the weekend, including one 16-year-old arrested for buying cannabis then reselling it to those waiting in line.
    CBC Toronto
  • Toronto police reported that employees fled when police arrived, “leaving behind for police multiple iPads with customer names, financial information and orders, illegal product labelled for their customers along with debit machines and walkie talkie radios.”
    Twitter

Toronto police charged one customer with knowingly possessing one gram of illicit cannabis—I wrote about it for Leafly.

Raids also occurred in Vancouver—where police busted two major extraction labs that were producing multi-million dollar yields of “shake, shatter, oils, balms, and edibles.”
Vancouver Sun, The Straight, Twitter

Quick Hits

  1. Ahead of the lottery for Ontario’s next 42 REC retail licenses on August 20, the major REC retail firms are trying to get as prepared as they can to partner with winners.
    Globe and Mail

  2. BMO charges business owners wishing to enter Ontario’s REC lottery $3,000 to review their financial documents plus $1,000 for “monitoring and maintenance,” making entry into the sector even harder for small businesses.
    MJ Biz Daily, Reuters

Quebec: Ban on Sweet Edibles, Extracts Could Cost $300M

The government of Quebec’s aggressively anti-cannabis Coalition Avenir du Québec government tabled stringent draft legislation designed to clamp down even further on edibles than Health Canada’s regulations. The regulations will stand for public consultation for 45 days before taking effect.
CBC Montreal

Health minister Lionel Carmant said the limits “will also allow us to reduce [the consumption] of cannabis products in general.”
CBC Montreal

  • Topicals will be banned in Quebec, for no reason given. Santé Cannabis founder Erin Prosk said, “Likely the existence of topical products conflicts with their mandate that cannabis is a harmful drug and people who buy them just want to be high.”
    Twitter
  • Carmant was at pains to explain who would decide which products were “attractive to children,” first saying it would be left up to the SQDC, then saying it would be the SQDC and the Ministry of Finance, then the SQDC and the Ministry of Health.
    TVA Nouvelles—In French

Deloitte estimated the ban would cost the sector $300M per year.
Globe and Mail

Quick Hits

  1. New research by Quebec alcohol NGO Éduc’alcool found 21% of Montrealers consume cannabis (compared to 18% throughout Quebec). English-speakers use the most cannabis (30%), ahead of French-speakers (25%), and “Allophones,” those raised speaking both languages (15%).
    Éduc’alcool—In French

  2. The Globe mapped the density of access to REC retailers for communities across Canada, finding great density in some places and many areas where there’s no retailer for hundreds of kilometres. It’s impressive, check it out.
    Globe and Mail

CannTrust; CEO Sacked, Chair Resigns

Emails revealed CannTrust CEO Peter Aceto knew as early as mid-November that his company was growing in unlicensed rooms.
Globe and Mail

  • CannTrust director of quality and compliance, Graham Lee, wrote to Aceto and others on November 16 to report Health Canada did not snoop around the “unlicensed rooms currently full of plants.” Lee mentioned “current risks,” which also included a “large number of lost bottles [of product] we have not reported.”
  • “Although serious, on their own, each of these can be talked through with [Health Canada],” Lee’s email reads. “The concern is that together they will paint a picture with the regulator of a company not in control. We have dodged observations for items 1 and 6 despite having HC in the building.”
  • Minutes of weekly production meetings between November 14 and 28 show seven employees including three vice-presidents discussing illicit growing. Lee reported he had told Aceto about growing in unlicensed rooms and was told to “continue as planned.”
    Bloomberg

Aceto was revealed to have appeared in a CannTrust promotional video filmed in early 2019 directly in front of unlicensed cultivation room RG8 (identified by five employees), clearly full of plants. This is the same room in which former employee Nick Lalonde alleged he was directed to install fake walls.
Financial Post

Quick Hits

  1. Toronto seed-to-sale software company Ample Organics cut its staff from 120 to 102, across departments. CEO John Prentice said “capital is drying up in this space.”
    Betakit

  2. As stocks have declined in the wake of the CannTrust scandal, capital has been harder to get. This owes in part to CannTrust, which recently closed its April USD$200M offering with established financiers, whom the scandal humiliated.
    Globe and Mail, Financial Post

  3. Flowr withdrew its plans to make a $125M offering and list on Nasdaq due to market conditions.
    Nasdaq

Newest Micro Grower Says You Too Can Get Licensed

Canada’s newest micro-cultivation licence holder, Joël Lacelle, said it took him nine months from application to the license he needed to get his company Hearst Organic Cannabis Products up and running.

  • Though Lacelle didn’t hire consultants, the process still required roughly $700,000 investment—far more than the average legacy operator hoping to go legit may have on hand. But Lacelle tells other aspiring micro-growers, “”Start small. Start with what you have.”
  • However, delays are still widespread and many feel Health Canada has failed to meet the needs of micro-cultivation applicants.
    Leafly

Quick Hits

  1. BC Compassion Club Society–founder and longtime MED activist-turned-Canopy-executive Hilary Black said the lack of diversity in the cannabis sector was directly related to how fast the industry grew.
    Bloomberg

  2. Angry produce farmers in BC’s Delta region want cannabis growers to be forced onto areas in which soil quality is lower.
    The Tyee

  3. Cannabis remains the substance Vancouver police seized most frequently, though they rarely charged anyone with simple possession of drugs (21 charges out of 5,000 drug seizures in 2018).
    Vancouver Sun

Extractor Valens’ Revenues Beat Expectations

Extraction powerhouse Valens GroWorks reported its Q2 revenue increased to $8.8M, surpassing analyst expectations. Valens’ gross profits were $5.1M and the company posted a net loss of $10.5M.
NewsWire

  • Ahead of the extraction boom this fall, Valens is among the industry’s most connected extractors, boasting partnerships with the Green Organic Dutchman, Hexo, and Tantalus, as well as a multi-year extraction deal with Canopy signed last December.
    NewsWire
  • The Deep Dive identified a questionable transaction from late April in Valens’ numbers—Deep Dive authors highlighted a share-based purchase of Wyoming-based Straight Fire Consulting (a company with no assets or liabilities) for roughly $5M. Valens has not yet commented on the reasons for the
    Deep Dive

Quick Hits

  1. The process to launch new products for Legalization 2.0 began on Tuesday, meaning manufacturers had better hurry with their extract/edibles preventive control plans, said Cannabis Compliance’s Brenna Boonstra. Such legally required plans lay out how food producers plan to address food-safety hazards.
    Twitter

  2. Hexo announced its cofounder, Adam Miron, is stepping down as Chief Brand Officer, though he will remain on the board.
    Globe NewsWire