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  • Canada’s largest province has badly lagged the remainder of the nation in opening authorized cannabis shops
  • That is having an infinite unfavourable impression on the Canadian cannabis business
  • Opening simply “a handful of shops” in April instantly triggered Ontario cannabis gross sales to greater than double
  • Ontario claims its incapacity to open extra shops is because of a “pot scarcity”, regardless of information on the contrary

 
Has Ontario been killing Canada’s (authorized) cannabis business?

Ontario is Canada’s largest province (and largest cannabis market) with a inhabitants in extra of 14 million. It additionally has the doubtful distinction of being the slowest province to start to completely implement cannabis legalization.

It took Ontario practically six months to open its first cannabis retail retailer. Symbolically, that was on April 1, 2019 – April Idiot’s Day. As The Seed Investor has reported beforehand, opening simply “a handful of shops” in Ontario instantly triggered cannabis gross sales to greater than double, from CAD$7 – eight million to $19.6 million in a single month.

Clearly, Ontario’s incapacity (refusal?) to open extra retail cannabis shops has had an infinite unfavourable impression on Canada’s authorized cannabis firm. As The Seed Investor has additionally reported, the complete build-up in Canadian cannabis inventories (from 100,000 kilograms to 150,000 kilograms) would possible have by no means occurred if Ontario had matched Alberta in opening up its cannabis business.

 

Think about the impression on the cannabis inventories of Canadian LP’s if present cannabis gross sales in Ontario had been nicely in extra of CAD$100 million monthly versus lower than CAD$20 million.

If we assume a median promoting value of roughly CAD $15 per gram, Ontario’s authorized cannabis dispensaries can be promoting an additional 5,000+ kilograms monthly of cannabis. That will have taken a big chew out of the 150,000 kilograms in whole inventories.

Put one other approach, if Ontario had totally opened up the province to cannabis commerce on Day 1 of nationwide legalization, by itself that would have accounted for the complete build-up in Canadian inventories from the preliminary 100,000 kilograms on the market final October.

Alberta has already opened up practically 100 cannabis dispensaries. The town of Calgary alone (inhabitants 1.2 million) has extra authorized shops than the complete province of Ontario (29 to 22). And Calgary has simply authorised one other 25 shops.

Fairly than besides any accountability for its failure, Doug Ford’s Conservative authorities was searching for an excuse. It selected (shock, shock) Canada’s federal Liberal authorities as its goal.

Through BNN Bloomberg, Ontario mentioned this.

 

The province says it’s going to proceed to make use of a “phased-in” method in issuing cannabis retail licences given a persistent and ongoing provide scarcity of authorized pot, in line with the province’s attorney-general Doug Downey. A authorities official informed BNN Bloomberg that Ontario stays dedicated to finally going to an open cannabis retail market as soon as provide points are solved. [emphasis mine]

Ontario made this declare regardless of BNN Bloomberg having additionally printed the next simply two weeks earlier.
 

A glut of unsold pot caught in Canadian licensed cannabis producer vaults could wind up being nugatory…

Whereas BNN Bloomberg supplied no proof to assist its declare that any of Canada’s 150,000 kilograms of cannabis “could wind up nugatory”, it did state it was citing official (federal) Well being Canada numbers on cannabis inventories.

Not surprisingly, Canada’s federal authorities has responded to Ontario’s declare, by way of Invoice Blair, Minister of Border Safety and Organized Crime Discount. That is the ministry that has been put answerable for regulating Canada’s pot business on the nationwide degree.

Blair shot again, by way of a CBC information report.

 

“With the notable exception of Ontario, the remainder of the nation has made regular progress in displacing the illicit market with licensed and controlled retail shops,” Invoice Blair mentioned in a press release Wednesday. “Whereas the remainder of the nation made progress, the Ford authorities made excuses.”

The CBC article additionally reported:
 

However in a press release to CBC Kitchener-Waterloo, Blair mentioned, “The information is evident: there stays sufficient provide to fulfill and exceed mixed retail gross sales.

Canada’s authorized cannabis business is hurting as evidenced by the unfavourable reporting and unfavourable market response that greeted the most recent earnings report from Canadian business chief, Cover Progress Corp (US: CGC / CAN: WEED).


(chart courtesy of Stockcharts.com)

Following stress from largest shareholder, Constellation Manufacturers (US: STZ), Cover’s co-CEO Bruce Linton was ousted from his place. The Seed Investor has already instructed that Linton would possible nonetheless have his job at this time if Ontario had been extra immediate (and competent) in opening up retail cannabis shops within the province.

Notably, Ontario has simply introduced plans to open one other 50 shops within the province. This may greater than triple the entire variety of cannabis retailers within the province. And it casts additional doubt on Ontario’s declare of a cannabis scarcity.

Will Ontario proceed to make the excuse that its earlier incapacity to open extra retail cannabis shops was because of a “persistent and ongoing scarcity of authorized pot” regardless of the information on the contrary? Keep tuned.

 

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