Loblaw to sell recreational pot in tobacco shops in Newfoundland

TORONTO Loblaw Cos. Ltd. confirmed plans to sell recreational cannabis in tobacco shops across Newfoundland and Labrador, an announcement that significantly expands the grocery giant’s interest in legal marijuana.

On Monday, the Newfoundland Labrador Liquor Corp., which is overseeing the province’s private cannabis retail system, released a list of “qualified applicants” for retail licences. Ten Loblaw locations made the list, alongside 14 other stores.

“While people might imagine recreational cannabis on our grocery shelves in Newfoundland and Labrador, this is not our plan. It would be available behind the counter, in small, existing tobacco shops, adjacent but separate to our Dominion grocery stores,” Catherine Thomas, Loblaw ’s senior director of external communication, said in an emailed statement.

All of the locations identified by the NLC need to go through a further approval phase before becoming licensed marijuana sellers. “There are more steps to come and it’s premature to discuss details or outcomes,” Thomas said.

There was little indication before Monday that Loblaw planned to take a stake in the recreational cannabis market that’s expected to become legal sometime later this year.

Subsidiary Shoppers Drug Mart, has publicly expressed interest in selling medical marijuana, and has signed supply deals with a number of licensed cannabis producers in anticipation of receiving a sales licence from Health Canada. But the focus of these deals appears to be on medical distribution.

“This is separate and distinct from our efforts to distribute medical cannabis through our pharmacy business, which remains our focus,” said Thomas.

Loblaw’s choice to enter the Newfoundland and Labrador recreational market is intriguing, said Deepak Anand, vice-president of government relations with consulting company Cannabis Compliance Inc., who has worked with Shoppers in the cannabis space.

“I don’t know why they would choose Newfoundland, because Newfoundland, unlike the other provinces is going to have a cap on the pricing of cannabis sales for non-medical purposes, and they’ve announced that they will only allow retailers to make an eight-per-cent margin,” said Anand. “The fact that they’d choose Newfoundland at the eightper-cent cap, clearly tells me that this is not a business play, this is more an optics play,” he said. Financial Post