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This Week in Cannabis: Top Stories From Across Canada From Dec. 29-Jan. 3

January 3, 2019

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Canadians have already spent $5.7B on cannabis in the first months of legalization, Vancouver’s first legal cannabis store finally opens for business, and Ontario’s would-be cannabis store operators will be fined $25,000 if they’re not open by April 1.

We’ve rounded up this week’s top stories from across Canada.

Top Headlines From Around the Web

Canadians Have Already Spent $5.7 Billon on Weed

The year-end numbers are in, and to no one’s surprise, Canadians spent a lot on cannabis in 2018—$5.7B in total. The obvious difference, of course, is last year was the first one in which we could keep track of legal cannabis sales, which punched above their weight by amounting to $800M in two months.

The real data has been from the provinces and territories, and many of the biggest surprises have come from the North. This week, the Yukon (population 35,874)—which had 30,000 website views and 1,000 in-person visitors to its single cannabis retailer on its first day—announced it had sold $924,000 in cannabis by December 16. This adds up to a truly impressive $25.76-per-capita spending on cannabis in the first two months of legalization (or about $3.20 per person per week). Nearby Northwest Territories (population 44,520) sold $129,600 in its first four days ($2.91 per person) before being plagued by shortages. In the first ten days, Nunavut (population 37,966) sold $33,000.

The Maritimes certainly made their presence in the market known as well. Newfoundland (population 528,817) spent $6M in the first six weeks ($1.89 per person per week), while New Brunswick (753,914) spent $945,000 within the first two days ($1.25 per person).

Ontario Retail Lottery: Big Prospects, Big Threats

Ontario announced its Expression of Interest Lottery Rules for those who hope to get one of the 25 licenses to operate recreational cannabis stores in the province. Though the entry fee is only $75, entrants must be ready to deliver a $6,000 Retail License Application fee and a $50,000 letter of credit within five days of the lottery results being announced on January 11.

When the lottery was announced last month, many commentators concluded the small number of licenses would mean whichever small companies won the lottery would almost certainly end up being bought out by larger players, but the rules respond to that concern. Entrants may not “change their applicant type, ownership and/or corporate structure in such a way that would result in a change of control of the Expression of Interest Applicant or licensee during the Lottery Process.” This may well be a victory for smaller retailers, but it comes with a threat attached: stores must be ready to open April 1, and will be harshly penalized if they do not. Any store not open on that day will be docked $12,500, followed by an additional $12,500 on April 15 if they have still not opened. Stores not open by April 30 will be fined an additional $25,000.

Separate Production Facilities Could Make Edibles Very Expensive

Though the industry generally embraced the draft regulations on edibles released before Christmas, one sticking point is “the second building requirement”—the regs’ demand that cannabis food and drinks must be prepared in a separate facility than that making non-cannabis products. Cannabis Compliance noted the practice of separating production into different buildings comes from the world of food safety, where consumers must be diligently protected from allergens.

Cannabis, they noted, doesn’t really compare with a food allergen. Major food and beverage players hoping to enter the edibles trade may well have been intending to do so with their existing production facilities, and this demand presents most of them with an expensive challenge. Molson Coors, in partnership with HEXO, was fortunate enough to have broken ground in the fall on a new facility in Montreal suburb Longueil, part of which will be used to produce cannabis beverages. Due to be finished in 2021, that production site will almost certainly be reworked to make second-building allowances for edibles production.