Legalized cannabis in Quebec is drawing interest from investors as the province adopts a new landscape for recreational cannabis.
In the lead up to Canada-wide cannabis legalization, Quebec wasn’t exactly seen as the epicenter of cannabis opportunity. The province has historically been among the most conservative in the country when it comes to popular opinion on cannabis use and provincial government policy throughout the process of preparing for legalization day reflected that.
When October 17 2018 finally arrived, however, the demand for legal cannabis in the nation’s second largest consumer market was made clear. With lines winding down the streets around government-run Société québécoise du cannabis (SQC) outlets, the first 15 hours of legal cannabis in Quebec saw 12,500 in-person sales according to the retail network’s own data. In the weeks since, demand has continued to overwhelm the province’s retail setup.
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While it’s clear that further development is needed for Quebec’s cannabis industry laws and retail scheme to effectively serve its market demand, the situation shows clear opportunity for the province’s licensed growers who are producing a product that retailers literally can’t keep on the shelves. On top of the benefits of growing market demand, Quebec is also quietly offering licensed producers some important advantages.
Legal cannabis in Quebec so far
After two years of preparing policy for cannabis legalization, the Quebec provincial government unveiled its plans for regulation in November of 2017. The regulatory scheme was and still is among the most restrictive in the country. The Quebec government has set up 20 provincially run retail stores across the province as well as government run online sales to act as the sole points of sale for Québécois consumers to buy cannabis. The province has only issued licenses to 12 companies for cannabis production and personal home growing is strictly prohibited.
In the summer of 2018, Deloitte Canada released their 2018 Cannabis Report, projecting the Quebec cannabis market to be worth anywhere from $42 million to $1 billion in a total Canadian market worth between $1.81 and 4.34 billion.
The massive rush of Quebec consumers looking to buy legal cannabis and overwhelming the province’s retail system have subsided somewhat in the months following legalization. However, the SQC is still not able to keep up and has resorted to cutting the operational hours of retail locations due to an inability to hold enough stock on shelves.
On the regulatory side of things, further development is underway. The federal and provincial governments are working on regulations that will allow for the sale of edible cannabis products by October 2019. Further regulation on topical cannabis products are also underway. The Quebec government has also been mulling legislation to raise the legal age to purchase cannabis products from 18 to 21.
Advantages to cannabis production in Quebec
With only a few licensed producers in the province and cannabis supply extremely limited, the Québécois cannabis consumer might have a fair bit to complain about regarding Quebec’s legal cannabis landscape. For those few producers that are licensed in the province, however, the situation is actually quite ideal. Quebec’s cannabis producers face an uncrowded market for a product in extremely high demand. When coupled with a strong post-secondary education system, an uncrowded cannabis industry also means that Quebec producers have a proportionally deep skilled workforce compared to the rest of the country.
Quebec offers the lowest energy costs of any Canadian province, a benefit enjoyed by all types of commercial operations in the province. For cannabis production in particular, this is a huge selling point since between grow lighting, ventilation, climate control and more, indoor cannabis growing operations can be extremely energy intensive.
Perhaps the greatest advantage for licensed cannabis producers in Quebec is the province’s loyalty to its own domestic production industry. The government of Quebec owns all cannabis retail in the province, and the government has made clear that it intends to source all of its product from within the province rather than buying from other provinces. By sourcing the entire province’s cannabis supply from its handful of domestic growers, the SQC has effectively guaranteed its producers that they will never have leftover supply. Everything Quebec cannabis producers grow they will sell.
Landscape for legalized cannabis in Quebec
Among the handful of licensed cannabis producers in Quebec is Matica Enterprises (CSE:MMJ,FWB:39N,OTC Pink:MQPXF). Matica is building greenhouses and planning outdoor growing on a 181-acre property in Hemmingford, south of Montreal. The company plans to build 1 million square feet of greenhouse space in five stages over the next several years with 400,000 square feet to be completed by the end of 2019. The property also includes 30 acres of land set aside for outdoor growing. According to Matica, the Hemmingford municipality is fully supportive of the operation. Matica’s Quebec partner, RoyalMax Biotechnology Canada Inc.’s has recently received a cultivation license from Health Canada. The new, state of the art, growing facility is situated in Dorval, on Montreal’s west island.
MYM Nutraceuticals (CSE:MYM) is developing a 1.5 million-square-foot facility in Weedon with the stated goal of making the town “Canada’s Cannabis Capital.” Hydropothecary (TSX:THCX) is the largest licensed producer in Quebec and is set to provide the province with 20,000 kilograms of cannabis product within the first year of legalization. Other producers in Quebec include Agri-Médic ASP, Agro-Biotech, Aurora Cannabis Enterprises (TSX:ACB,OTCQB:ACBFF,FWB:21P), IsoCanMed and Vert Cannabis.
Quebec’s historical conservatism towards cannabis is no reason to count the province out as a source of opportunity as Canada becomes the world leader in legal cannabis. For the companies that gain licenses in Quebec, the province offers some of the lowest-cost production in the country and the assurance that the product will certainly be sold right there in Quebec.
CanBud Distribution Corporation Closes 2M Second and Final Tranche of its Oversubscribed Private Placement Offering
CanBud Distribution Corporation (CSE: CBDX) (FSE: CD0) (“CanBud” or the “Corporation”) is pleased to announce that it has closed the final tranche of its oversubscribed non-brokered private placement for aggregate gross proceeds of approximately $4,730,000 (the “Offering”).
The Corporation issued a combined total of 39,409,346 units (each a “Unit“) at price of $0.12 per Unit, with each Unit comprised of one common share in the capital of the Corporation (each a “Common Share“) and one common share purchase warrant (each a “Warrant“). Each Warrant entitles the holder to purchase one additional Common Share at an exercise price of $0.22 within 24 months of the closing of the Offering (the “Warrant Term“), provided, however that if the closing price of the Common Shares on the Canadian Securities Exchange (the “CSE“) (or any such other stock exchange in Canada as the Common Shares may trade at the applicable time) is $0.25 or greater per Common Share for a period of five (5) consecutive trading days at any time after the closing date of the Offering, the Corporation may accelerate the Warrant Term such that the Warrants shall expire on the date which is 30 days following the date a press release is issued by the Corporation announcing the reduced warrant terms.
Thoughtful Brands Inc. (CSE:TBI)(FSE:1WZ1)(OTCQB:PEMTF) (the “Company” or “Thoughtful Brands) announces that the letter of intent with Franchise Cannabis Corp. (“FCC”), previously announced in January, has been terminated. The previously announced European joint venture with FCC will continue and allow the Company to launch and tailor its products to European consumer demands
In connection with termination of the merger transaction with FCC, the Company has agreed to pay FCC $100,000 in cash and to issue FCC 5,000,000 common shares of the Company at a deemed value of $0.05 per share. The common shares will be subject to a four-month-and-one-day statutory hold period in accordance with applicable securities laws.
Mergers and acquisitions (M&A) in cannabis space have helped boost the industry to new levels.
Strategic sale of non-core assets by Lobe adds non-dilutive capital and shareholder value
Lobe Sciences Ltd. (CSE: LOBE) (OTC Pink: GTSIF) (“Lobe” or the “Company”) is pleased to announce, further to its press release dated February 23, 2021, that it has completed the sale to Ionic Brands Corp. (“Ionic Brands”) of Lobe’s non-core cannabis assets relating to Washington-based Cowlitz County Cannabis Cultivation Inc. (“Cowlitz”) held by Lobe’s subsidiary vendor, Green Star Biosciences Inc. (the “Transaction”).
Seattle Area Grocery Chain Metropolitan Market to Begin Carrying KOIOS and Fit Soda on March 22, 2021
Adding to its existing presence on the west coast of the United States, all five KOIOS™ flavours and all four Fit Soda™ flavours will be carried in Metropolitan Market stores beginning on Monday, March 22, 2021. Serving the Seattle-Tacoma area (population 3.87 million), Metropolitan Market is one of five chains under its parent firm Good Food Holdings, which has a total of 51 stores in California, Oregon, and Washington State.
Koios Beverage Corp. (CSE: KBEV; OTC: KBEVF) (the “Company” or “Koios”) is pleased to announce that beginning on Monday, March 22, 2021, Koios’ entire line of canned beverage products will be sold at all locations of Metropolitan Market, an urban format supermarket chain in the Seattle-Tacoma area of Washington State. In Q1 2021, the Company announced multiple placements of its beverage products with regional grocers in markets on the west coast of the United States including Market of Choice in Oregon Jensen’s in Southern California and major natural grocery chain Sprouts Farmers Market which has a substantial west coast presence with over one third of its locations (360+ stores across 23 states) in California as well as Washington State 1 . The Company has also recently announced other developments relating to its expansion efforts being undertaken in 2021 such as an in-house beverage canning facility and distribution agreements with regional and national wholesale partners.