New Brunswick strikes supply deals for cannabis
Crown corporation created to oversee recreational market sales
New Brunswick has set up a new Crown corporation that will oversee marijuana sales, but not actually retail the drug, when the federal government’s planned legalization of recreational cannabis goes into effect next July
Provincial Finance Minister Cathy Rogers and Health Minister Benoît Bourque made the announcement Friday in Moncton, adding that New Brunswick has already struck deals with two licensed medical marijuana companies to help supply its recreational market.
However, the province has still left the door open to a possibly less-restrictive retail regime than the one proposed by Ontario, which is setting up a single, government-run retailer.
“In addition, the creation of this new provincial Crown corporation provides the flexibility and lays the groundwork for the eventual retail model once final decisions around that have been made,” Rogers said in a release.
While New Brunswick intends to have the government maintain “full control” over the sales of nonmedicinal cannabis, the release said that the Crown corporation “will not directly conduct retail operations.”
Rather, the new agency “will eventually engage with another entity or entities to provide that framework,” Rogers explained, according to the release.
“It is expected to take other steps in the near future to ensure the retail model is operational in order to meet the federal government’s timelines,” the government said.
The plan for actually retailing marijuana to consumers will be finalized when New Brunswick’s Liberal government is done considering the findings of a legislative committee and working group, the province said.
The working group recommended in a June interim report that a Crown corporation model be employed for retail.
New Brunswick’s announcement was preceded by news it had already struck a deal with a pair of licensed medical marijuana producers — Moncton, N.B.-based Organigram Holdings Inc. and Smiths Falls, Ont.-based Canopy Growth Corp. — to ensure ample supply for the province’s market for recreational cannabis, which the federal government is aiming to legalize by July 2018.
Organigram said the agreement would see it supply New Brunswick with at least five million grams of recreational marijuana per year, or about 25 per cent of its anticipated production.
The company claimed the arrangement has an estimated annual retail value of $40 million to $60 million.
Canopy said it had a two-year supply agreement that included four million grams of cannabis and cannabis derivates for the first year, which the company valued at $40 million.
The supply deals are “historic,” Organigram chief executive Greg Engel said in a phone interview
“These are the first agreements that any province has signed for supply from licensed producers in Canada,” Engel said. “Part of the initiative to get this supply agreement in place was they understand that there will be a supply deficiency for the first couple years of the adult recreational market, and they wanted to make sure that they were in a position to get a significant supply going forward and be the first to do so.”
Following the news, shares of both Canopy and Organigram rose Friday, closing up by 2.09 per cent and 16.74 per cent, respectively.
As part of their supply agreements with New Brunswick, Canopy and Organigram said they will help fund public education or social programs as well.
“New Brunswick has led the country in its efforts to attract cannabis jobs and investment and Canopy Growth is proud to be utilizing local trades and to hire in New Brunswick for the site we are establishing in Fredericton,” said Mark Zekulin, president of Canopy, in a release.
Friday’s announcements followed those of the Ontario government, which plans on establishing a single legal retailer of marijuana, with sales overseen by the province’s liquor control board.
The retailer would sell recreational cannabis through 150 stand-alone stores and an e-commerce site.
Ontario, however, has not struck a supply deal, a government spokesperson told the Financial Post.
These are the first agreements that any province has signed for supply from licensed producers in Canada.
Licensed medical marijuana producers Organigram and Canopy will ensure ample supply for New Brunswick’s market for recreational cannabis, which the federal government is aiming to legalize by July 2018.