N.B. sets up marijuana Crown corporation
Province inks supply deals, including with pot producer in pesticides probe
New Brunswick became the second province to start unveiling plans to sell recreational marijuana next year, when the federal government expects to lift nearly a century of prohibition on the product.
The province announced on Friday that it has created a Crown corporation to oversee sales of recreational marijuana, and has signed agreements with two cannabis-producing companies to supply a portion of its retail network.
However, the New Brunswick government stopped short of releasing specific details on how the product will be sold – such as the legal age for consumption and the number of retail sites that will be permitted. The new Crown corporation will not directly conduct retail sales but will work with other entities to operate the stores, the province said.
Ottawa introduced federal legislation in the spring to legalize recreational cannabis by July 1, but has left decisions on how it will be sold, and the rules governing consumption, to the provinces.
Last week, Ontario became the first province to detail its plans for selling marijuana, which will involve a combination of government-run retail stores and online sales. Roughly 40 storefronts will open across the province at the outset of legalization, expanding to 150 by 2020.
Ontario will make it illegal for anyone under the age of 19 to purchase the product, an age that New Brunswick has also been considering. However, New Brunswick Finance Minister Cathy Rogers said the province has not made final decisions on the age of consumption or the size of the retail network.
New Brunswick said it signed agreements with two federally licensed marijuana producers, Canopy Growth Corp. and Organigram Inc., to supply cannabis to the province when the market is opened. Similar agreements with other companies could be reached in future. Ms. Rogers said the province wanted to lock up supply in advance so that it isn’t short once legalization arrives.
However, the Organigram announcement comes at a time when the Moncton-based company is embroiled in controversy over the discovery of harmful banned pesticides in its products, which have prompted mass recalls.
Late last year, Organigram was caught selling medical marijuana that contained two illegal pesticides, prompting the recall of virtually all of its 2016 production because of concerns over product safety.
A subsequent investigation by The Globe and Mail last month found three additional banned pesticides in recalled Organigram products that were independently tested at a Health Canada certified lab. Numerous Organigram patients have reported falling seriously ill after consuming the tainted marijuana, with symptoms that range from dramatic weight loss to searing abdominal pains, painful cyst-like rashes and persistent breathing difficulties, among other health concerns.
Health Canada has yet to get to the bottom of the problem; Organigram conducted an internal investigation this year and said it did not know how the banned pesticides involved in the recall got into the product. Organigram also denies that additional banned pesticides found in The Globe investigation were used. Meanwhile, some of the patients have since sought medical treatment in the United States at facilities specializing in toxicology and pesticide poisoning.
In a news release issued on Friday, Organigram – which billed its product to consumers as organic prior to the recalls – said the deal to supply the New Brunswick government was worth between $40-million and $60-million a year, representing about a quarter of its production.
“We applaud the New Brunswick government’s efforts to foster an innovative, forwardthinking economic climate that supports cannabis as a driver of growth for New Brunswick-based businesses,” Organigram chief executive officer Greg Engel said in a statement.
Canopy Growth, the largest of roughly 50 government-sanctioned marijuana producers in Canada, also reached a supply agreement with the New Brunswick government, which is worth about $40-million.
It’s not the first time the government has signed a deal with Organigram. Last spring, the province gave Organigram $990,000 in financial incentives to expand its medical-marijuana operations in advance of legalization of the substance as a recreational product. The money came in the form of payroll rebates to hire new staff.
Organigram employed 43 people at the time, but the rebates would help the company add more than 100 jobs, the government said. The move was criticized by the province’s Progressive Conservative and Green parties, which said the financial stimulus was awarded without proper public debate.
The recreational cannabis market in Canada is expected to be worth billions of dollars and licensed cannabis producers have been lining up to supply the new industry. A report by Deloitte last year estimated recreational marijuana could be worth more than $22-billion to the Canadian economy, including jobs and spinoff businesses.