N.B. sets up mar­i­juana Crown cor­po­ra­tion

The Globe and Mail (Ottawa/Quebec Edition) - - NEWS - GRANT ROBERTSON

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.

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