Medical pot soars ahead of recreational legalization

Aurora’s ‘record’ sales boost segment as firms announce products, expansions

The already-legal medical marijuana market is providing brisk business for Canadian cannabis companies as they await the end of prohibition on recreational pot later this year.

Alberta-based Aurora Cannabis Inc., one of Canada’s largest licensed medical marijuana producers, said Tuesday that November 2017 had been a “record” month for sales at home and in Germany, where medical cannabis is also legal.

Aurora said it sold 354,000 grams or gram equivalents in November 2017, and reported net cannabis revenues of $3.1 million. That’s up significantly from November 2016, when the company’s sales topped 200,000 grams (then a record).

Aurora also said that its liquid assets, its cash and marketable securities as of the end of 2017, exceeded $500 million.

“Aurora begins 2018 with unparalleled financial strength to accelerate its aggressive domestic and international expansion strategy,” the company said in a press release.

Aurora’s big month highlights the importance of Canada’s mailorder medical marijuana regime to producers, as the system is one of the few legitimate avenues for revenue ahead of the Canadian government’s planned legalization of recreational pot this July.

Health Canada’s most recent market data showed that sales of dried medical marijuana by licensed producers rose from 4,037 kilograms for the quarter spanning April 2016 to June 2016 to 5,836 kilograms for January 2017 to March 2017, a 44.6-per-cent increase. Sales of cannabis oil exploded from 1,500 kilograms to 5,673 kilograms over the same period, a 278.2-percent jump.

Medical sales may be worth more to companies as well. Health Canada released its first “snapshot” of cannabis use in December, reporting that medical users usually spent around $121 per month on the drug. This was 61.3 per cent more than recreational users, who reported spending close to $75 a month on non-medical cannabis products.

“That supports the view held by a number of companies that the medical buyer is potentially worth more, from a revenue perspective, than a recreational buyer,” said Russell Stanley, analyst at Echelon Wealth Partners.

But the federal government’s plan to legalize recreational cannabis this year may also give a boost to the legitimacy of the medical market.

“One can argue that upon legalization, doctors may be more inclined to prescribe marijuana as some physicians are currently hesitant to prescribe medical marijuana,” said Martin Landry, analyst at GMP Securities, in a Dec. 22 note.

The number of authorized licensed producers of medical marijuana continues to grow as well, with the total number of cultivation and sales licences issued standing at 84, up 133 per cent from the 36 licences at the beginning of 2017, Echelon noted.

The drumbeat of announcements regarding new products and expanded operations continues, too.

British Columbia-based True Leaf Medicine International Ltd. said Tuesday it had exercised an option to buy 40 acres of land to build a 25,000 square-foot “hydroponic medicinal cannabis production facility.”

Also Tuesday, Napanee, Ont.based ABcann Global Corp. said it had received a licence from Health Canada to produce medical cannabis oils, with approval of sales expected in the first quarter of 2018.

And Saskatoon-based CanniMed Therapeutics Inc. — the target of a hostile takeover bid launched by Aurora last month — announced Tuesday that it had entered into a medical marijuana supply agreement with licensed producer Up Cannabis Inc., a wholly owned subsidiary of Newstrike Resources Ltd.

According to a press release, the terms of the 15-month agreement will see Up Cannabis supply CanniMed with up to 1,500 kilograms of marijuana, once Up Cannabis gets approval from Health Canada to sell its pot.