Weedmaps to omit Canadian illicit operators on platform, requires formal licensing for listings

It appears that Weedmaps is finally playing nice in Canada. 

One day after the company announced plans to go public through a merger with a special purpose acquisition company, Weedmaps confirmed Thursday that it now requires any Canadian cannabis listings on its web site to include a formal retail licence number. 

That would essentially stop any illicit operators from offering their products on the company's platform, and ensure that licensed cannabis retailers are able to advertise on Weedmaps without competing with cheaper or unregulated options. 

"As the rate of cannabis retail licence (approvals) rapidly increases, particularly in Ontario, Weedmaps wants to continue to assist in creating an effective cannabis market in Canada," Weedmaps spokesperson Travis Rexroad said in an emailed statement. 

"Part of this effort has included additional steps in our onboarding process to help ensure that the businesses listed on our platform are validly licensed."

The about-face comes roughly three months after BNN Bloomberg first reported that eight Canadian cannabis retailers submitted a letter to the Royal Canadian Mounted Police urging them to enforce illicit market activity on the Weedmaps platform. 

At the time the letter was delivered, the Weedmaps site featured thousands of illicit cannabis providers across Canada, as well as some of the nation's legal pot shops. However, the site didn't differentiate between the two, creating customer confusion. Today, it appears that all illicit market operators have been removed from the Weedmaps platform, with only a select number of licensed retailers available. 

Weedmaps is looking to go public on the Nasdaq exchange via a merger with Silver Spike Acquisition Corp. at a valuation of US$1.5 billion. The merger will provide Weedmaps with US$575 million in proceeds, including US$325 million through a private placement from additional financiers. The company is on track to report US$160 million in revenue and US$35 million in EBITDA this year, Weedmaps said in a press release.

THIS WEEK’S TOP STORIES

Canopy Growth to shut down five production facilities, lay off 220 in latest cost-cutting move 

Canopy Growth, the world's biggest cannabis company, continues to shrink amidst mounting losses. The company said it will shut down indoor facilities in Newfoundland and Labrador, New Brunswick, Alberta and Bowmanville, Ont., as well as its outdoor growing operations in Saskatchewan. The moves are expected to help save the company up to $200 million annually, while it expects to take charges of between $350 million and $400 million in the third and fourth quarters of its current fiscal year. Canopy said about 220 people will be impacted by the facility closures. CEO David Klein described the facility closures as "one of our final steps towards improving the overall health of the organization" in an internal email announcing the layoffs to staff on Wednesday.

Canopy's pot drink boss to step down amidst slow beverage sales

The head of Canopy Growth's global beverage unit is leaving less than a year after he joined the company. Andrew Rapsey - who took on the role of global head of beverages in August - announced in a LinkedIn post on Wednesday that he is leaving the company and plans to return to Alphabet Inc.'s Google in 2021. Rapsey’s decision marks latest high-level departure from the pot giant as it looks to ramp up sales of cannabis-infused drinks to the Canadian recreational market. Jennifer White, Canopy's director of corporate communications, said in an email that the company recruited former S. C. Johnson executive Tara Rozalowsky last month to be vice-president of its beverage and edibles operations​. Rapsey's departure comes during a volatile time for the nascent cannabis drinks market in Canada. Pot-infused drinks and other edibles were first made available for sale earlier this year, but sales of beverage products have grown slowly. 

Ontario pot shop licensing to accelerate to 20 per week: AGCO

The Ontario cannabis retail regulator said this week it plans to authorize more pot shop licences, doubling its weekly quota to 20. The last time the Alcohol and Gaming Commission of Ontario increased its weekly licence issuances was in September, when they doubled store authorizations from five to 10. The announcement is likely to ease the concerns of some retailers who have waited months for the AGCO to approve licences while incurring thousands of dollars in rent and maintenance costs. The AGCO said that 269 stores are open in the province, while 305 store authorizations have been granted. 

Mexico kicks legalization can to next near after Supreme Court grants deadline extension

Mexico is delaying national cannabis-legalization plans after legislators failed to pass a law by a deadline imposed by its Supreme Court, MJBizDaily reports. The industry trade website said that Mexico's Supreme Court allowed the country's lower house to again debate a legalization bill when the next legislative session starts in February. The website added that upcoming elections in June could further delay any cannabis legalization plans. A recent survey cited by MJBizDaily found that a majority of Mexicans were against recreational cannabis legalization. 

Analyst Call of the Week - MedMen Enterprises

Canaccord Genuity Analyst Matt Bottomley maintained his price target on U.S. cannabis retailer MedMen's stock at zero after the company reported its first-quarter fiscal results earlier in the week. MedMen reported revenue of US$35.6 million and an adjusted-EBITDA-loss of US$11.7 million in the quarter, both generally in line with the company's previous outlook. Bottomley said MedMen "continues to operate with a cash balance that is still razor thin compared to its potential capital needs" and cautions that further stock dilution is a possibility. 

For more info on MedMen Enterprises, click here.

CANNABIS SPOT PRICE: $6.09 per gram -- This week's price is up 0.9 per cent from the prior week, according to the Cannabis Benchmark’s Canada Cannabis Spot Index​. This equates to US$2,155 per pound at current exchange rates.

WEEKLY BUZZ

"In our discussions with cannabis store managers and AGCO staff, we heard that some people prefer illegal cannabis because it is more potent and the product is fresh."

– Ontario Auditor General Bonnie Lysyk in her findings on how the province was managing its cannabis business released Monday.  

Cannabis Canada is BNN Bloomberg’s in-depth series exploring the ongoing growth of the Canadian recreational cannabis industry. Read more here and subscribe to our Cannabis Canada newsletter to have the latest news delivered directly to your inbox every week.