Quebec might not seem like the obvious place to get into the cannabis business. For the few cannabis businesses calling Quebec their home however, there is major upside and potential in doing business in French Canada.
The Canadian market spent $5.7 billion on cannabis in 2017, and, according to Marijuana Business Daily, Quebec’s recreational cannabis market could well grow to become the second largest in Canada, mirroring its status as the second most populous province. The Parliamentary Budget Office estimates that the province could consume as much as 200,000 kilograms of cannabis next year. That ties together with a potential for annual recreational sales of around $150 million in Quebec in 2019.
Because Quebec is warming to the cannabis industry at slower pace than the rest of Canada, many businesses are skeptical about the idea of operating in the province. Public opinion in Quebec is the least friendly to cannabis in the country and as a reflection of that sentiment, the regulatory framework laid out by the provincial government is among the most restrictive in the Canada. The upside to this, however, is a provincial cannabis industry that is far less crowded than the rest of the country
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As of now, Quebec has a very small pool of licensed growers and the smallest rate of license applications in the country. This means that there are only a few players around to take advantage of a massive and barely tapped market.
Cannabis in Quebec
As with the other provinces, the Quebec government is responsible for regulating and enforcing the production of cannabis as well as laying out health and safety regulations and restrictions. The provincial government unveiled its plans for regulation in November of last year and has decided that the Société des alcools du Québec, the same organization through which liquor is sold in the province, will oversee the sale of cannabis. Cannabis sales will be limited exclusively to 20 government-run stores. Growing at home is strictly forbidden in the province. As is any form of unlicensed cultivation, whether for personal or commercial use.
However, tough regulations are only one part of the story for cannabis businesses in Quebec.
Hydro Quebec provides companies with the least expensive energy in Canada. Additionally, since Quebec has 20 percent of the country’s population and only a few of the licensed cannabis producers, there is a strong pool of land, labor and technical expertise available for low cost in comparison to the rest of the country.
Since the Quebec provincial government will be supporting the retail outlets where cannabis is sold, it is likely that the government will prefer to source their product from local growers, putting local producers in a potentially enviable situation.
Another benefit for cannabis companies in Quebec is the province’s post-secondary institutions, who are eager to be involved in clinical studies and research, according to Rob Gietl, CEO of Canadian cannabis producer MYM Nutraceuticals (CSE:MYM). MYM will be opening two large growing facilities in Weedon and Laval Quebec and operate distribution and nutraceuticals manufacturing throughout Canada. Gietl says this eagerness on the part of post-secondary institutions will create a “syndicate of experts” that will help companies like MYM develop intellectual property that can be shared globally.
Still, there’s a cultural aspect that cannabis producers must contend with. In regards to public opinion, Quebec is the least enthusiastic province in the country about cannabis legalization. According to a report released by the government of Quebec last year, 60 percent of survey respondents were worried about consequences of legalization, though 57 percent of those respondents were overall in favor of legalization.
According to Gietl, data like this speaks to a need for outreach on the part of cannabis producers to encourage engagement with the communities in which they do business. To that end, MYM has launched an awareness campaign, asking users to visit www.cannafacts.ca to “initiate a conversation with Canadians.”
Quebec’s cannabis industry players
Currently there are six cannabis producers licensed to operate in Quebec; Agri-Médic ASP, Agro-Biotech, Aurora Cannabis Enterprises (TSX:ACB,OTCQB:ACBFF,FWB:21P), Hydropothecary (TSX:THCX), IsoCanMed, and Vert Cannabis. The province announced these first licensed producers in February of 2018.
Though not yet licensed in Quebec, MYM and its subsidiaries are deep in the process of acquiring licensed producer status. The company has big plans for Quebec. They’ve entered into a partnership with the municipality of Weedon, Quebec to build a 1.5 million-square-foot greenhouse facility in the town, capable of producing 150 metric tons of cannabis per year. In addition to serving as a growing center, the facility will serve as a space for research and development of cannabis products.
The Weedon facility will also serve as a means for community outreach. The facility is going to include such amenities as a cannabis museum, research facilities, an auditorium, and more. This is part of the company’s effort to get the local community engaged with the industry.
Quebec has been written off by some as too hostile to the cannabis business. Companies have been slow to move into the province, but it’s precisely because of this that Quebec presents such an interesting opportunity for cannabis producers. A market of over eight million people with only a handful of companies moving in to serve the province coupled with low hydro costs and relatively inexpensive talent suggests that Quebec could be a remarkably good opportunity for the few cannabis producers willing to move in on the underserved market.
This INNspired article was written according to INN editorial standards to educate investors.
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.