Cannabis Weekly: Canada’s Post-Legalization Blues

While a lot happened in Canada of interest last week, let’s start right here in the USA.

The Farm Bill Gets Its Day in Congress

Congress

The Farm Bill, with its legalization of the farming of hemp, finally got its vote in the Senate Tuesday, where it passed 87 - 13, sending the issue to the House, which also voted “yea” Wednesday, 369-47. As of today, Congressional staffers expect the President’s signature by the end of the week.

The road to passage eased once leaders on the Republican side backed off of their demand for more stringent work requirements on the food stamp program.

Cannabis News in Canada

Life for sellers of cannabis in post-legalization Canada isn’t all wine and roses. Here’s a quick summary of what I’ve caught in this week’s news cycle.

Canada’s largest retailer, National Access Cannabis, the owner of 18 shops in Alberta and Manitoba, sold C$3.95 million of product in the first fifty days after legalization of recreational use.

Great right? Sure, except it could have sold more.

As Bill Kaufmann writes in GrowthOp, the industry in Canada was caught flat-footed in its estimates of where on the scale of THC potency market demand would be. Kaufmann quotes an industry exec saying that suppliers were prepared for more of a market for less-potent products, the 6 to 7% THC range, and were surprised that demand manifested so heavily toward flowers at 20 to 25% THC.

Canada

Exporting from Canada - Aurora’s Buy

The Canadian marijuana market exists not just for domestic consumption. It is an export industry as well.  One company that may be in a very good position going forward is Aurora Cannabis, which has recently entered into a letter of intent to buy its Mexican distributor, Farmacias Magistrales SA.

Farmacias is Mexico’s only federally licensed importer of raw materials containing THC. This means it has a monopoly not only on the lawful import of materials containing THC, but that it can also manufacture, store, and distribute medical cannabis products containing more than 1% of the stuff.  

That’s it for the week folks. Hope everyone is enjoying their day to day. Would love to hear your thoughts on what’s happening in the industry or beyond.

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Sources:

Axiom Foods, “Axiom Foods, One of the Largest Makers of Plant Proteins in the US, Debuts First Neutral-Flavored Pea and Hemp Proteins for Food Formulators,” PRNewswire, December 12, 2018.

Max A. Cherney, “Canada’s Struggle to Supply Legal Weed Described as ‘National Shortage’ that Could Last Months,”  MarketWatch, November 28, 2018.

Ellyn Ferguson, “Final Farm Bill Would Make Hemp Legal, Other Details Revealed,” Roll Call, December 5, 2018.

Bill Kaufmann, “Cannabis Seller Rakes in $4 Million in Sales; Could Have Been Much More with Better Supply,” TheGrowthOp, December 7, 2018.

Ciara Linnane, “Aurora Cannabis Stock Fails to Hold Gains After Company Unveils Plan to Buy Mexican Partner,” MarketWatch, December 11, 2018.

Kristen Nichols, “Hemp Legalization Clears House, off to President for Final Approval,” Marijuana Business Daily, December 12, 2018.  

Humeyra Pamuk, “Senate Approves Farm Bill Compromise that Avoids Food Stamp Cuts,” Reuters, December 11, 2018.

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