New medical pot firm is second one in region
Hydropothecary is the first Quebec firm — and the second local one — to be awarded a licence to sell medical marijuana.
The Gatineau firm, which had previously secured the right to produce medical pot, on Wednesday joined 18 other licensed sellers across the country after satisfying Health Canada that its products met federal quality standards. The company is part of an emerging industry that last year saw a shift from thousands of licensed home growers to large commercial operations with secure, regulated facilities.
Hydropothecary shares the national capital region’s medical-pot production market with Tweed Marijuana of Smiths Falls, although both firms are selling their marijuana nationally. Tweed began marijuana production late in 2013 and started selling medical pot in May 2014.
The newcomer from Gatineau is trying to distinguish itself by offering“truly superior customer service,” according to founders Sébastien St-Louis and Adam Miron. In part, this means free after-hours delivery.
“This is a very big differentiator for us,” said Miron. “We will deliver free anywhere in Canada, evenings and weekends.”
The firm is also touting guaranteed supply for registered patients — likely in response to the industry’s early difficulties in meeting the sudden surge in demand for medical pot. However, this is a problem that may be dissipating. The Tweed site proclaims: “We have plenty of supply, lots of variety, and the best customer service around.”
Indeed, Hydropothecary has dropped its prices considerably during the past few months. When it won its production licence last autumn, the firm anticipated charging anywhere between $26 and $32 per gram depending on the marijuana strain. That was easily double the market rate. The website now promises to charge $15 per gram for each of its main product variants.
“We haven’t abandoned the high end of the market,” said Miron in reference to the firm’s previous luxury offering, “but we decided to participate in the existing market where suppliers have established prices.”
But Hydropothecary’s $15 price range is still significantly higher than those charged by rivals. Tweed, for instance, offers medical pot for anywhere between $6 and $12 per gram — and this excludes a 20 per cent discount for low-income patients.
The pioneers in this emerging business have sustained heavy financial losses due to the high costs of investing in new facilities and carrying staff despite the absence of revenues.
Hydropothecary has already spent $5.5 million — Tweed, considerably more. To help pay for its startup costs, Tweed sold 14 million shares in two separate offerings to generate $35 million through the TSX Venture Exchange.
Despite its early start, Tweed generated revenues of just $1.1 million in 2014 — and racked up a net loss of nearly $9 million. The company sold 165 kilograms of product during the first three months of this year, though it is permitted to sell up to 3,500 kilograms annually.
Even so, Tweed’s sales are expected to grow more quickly as the company takes advantage of substantially increased capacity.
Hydropothecary says it will start selling product this month by invitation as it tests its various delivery and payment systems. The company intends to open its website next month to the general public — or at least to those who have prescriptions. The Gatineau firm, too, expects to issue shares to the public on the TSX Venture Exchange through a listing it identified late last year.