Delta producer first to secure cannabis supply agreement
A B.C.-based, licensed producer of cannabis has reached a deal with the New Brunswick government to grow 4,000 kilograms of marijuana annually for recreational users in that province, in the first supply arrangement of its kind.
Zenabis, a Delta pharmaceuticalgrade cannabis firm with a 30,000 sq. ft. growing and processing plant on Annacis Island and two more facilities on the East Coast, signed a memorandum of understanding with the province to provide cannabis and derivative products with a retail value of up to $50 million a year.
The federal government intends to legalize marijuana possession for personal use next July.
The contract will eventually create 450 new jobs at a 393,000 sq. ft. plant in Atholville, New Brunswick.
The company is also working to secure a licence for a 380,000 sq. ft. facility in Nova Scotia. This would make it “the only coast-to-coast licensed producer in the country,” according to a media release.
Locally, it will bring about 60 new jobs to the Annacis Island facility, according to Delta councillor Sylvia Bishop, who in an email congratulated Zenabis on the “significant contract” it had secured.
Last year, the New Brunswick government announced it would lend $4 million to Zenabis for the construction of its Atholville facility. Shortly after, the Listuguj First Nation invested $3 million in the facility.
Zenabis business manager Mai Nazair said the supply agreement with New Brunswick is a “huge” deal for the firm. She believes the province is leading the way in legalization planning, and anticipates other governments will seek such arrangements with licensed producers so they’ll have enough cannabis on hand by July.
“Definitely, there is a shortage of supply to meet the demand once the recreational market becomes legal,” Nazair said. “However, the New Brunswick government was very proactive in making sure that they are able to meet that demand.”
Derek Ogden, president of the publicly traded National Access Cannabis and former director general of drugs and organized crime with the RCMP, is also certain demand will outstrip supply. He predicts a scramble by provincial governments in the next seven months to enter supply agreements, and for licensed producers to build and expand facilities, meet Health Canada regulations, and cultivate healthy crops.
By June this year, about 200,000 patients had been registered to receive medical cannabis, consuming about 50,000 kilograms of dried cannabis and oils annually, according to Health Canada data. Recent estimates predict that between 655,000 and 795,00 kilograms will be required to supply the recreational market, but Ogden said production capacity is expected to reach only 100,000 kilograms by the end of 2017.
“That’s if everything goes really well,” he said. “There’s no doubt that as soon as they open up adult recreational, the supplies will be drawn in an instant.”