Canopy Growth CEO: Marijuana bill will make it more difficult to be a criminal in black market
MONTREAL -- Quebec's cannabis reserve will contain at least 62 tonnes of product in the first year of recreational marijuana legalization, the province's liquor board said Wednesday after it reached deals with six companies to supply cannabis and related products.
The companies individually announced they had signed letters of intent with the Crown corporation, which is overseeing marijuana sales in the province through a subsidiary when the drug becomes legal this summer.
"We had estimated the need at about 50 tonnes," said liquor board spokeswoman Linda Bouchard.
"It's a rapidly changing market, and we've gone beyond that target to avoid stock shortages."
The selection process and the financial details surrounding the deals were not made public.
The biggest supplier will be Gatineau-based Hydropothecary Corp. (THCX.V), which will provide at least 20,000 kilograms of cannabis products in the first year.
News of the announcement boosted the company's stock on the TSX Venture Exchange, where it gained 17 cents by midday to trade at $4.13.
"It's an important order for us," president and CEO Sebastien St-Louis said in a phone interview.
"It's 20 million grams. It's unlikely there has ever been an illegal sale in Canada of this magnitude."
Aphria will provide at least 12,000 kilograms of products in the first year, including cannabis oils, other derivatives and several strains of high-quality dried cannabis flowers grown in Ontario and British Columbia.
Canopy Growth (WEED.TO) also announced a deal to provide 12,000 kilograms.
MedReleaf (LEAF.TO) will supply the Quebec market with a minimum of 8,000 kilograms of cannabis products, while Aurora Cannabis (ACB.TO) and Tilray will each provide 5,000 kilograms.
The province expects to open 15 marijuana stores across the province next summer and will control sales online.
When asked if that number of stores was sufficient, Canopy Growth CEO Bruce Linton said he was optimistic the province seemed to be developing a strong online sales platform.
"I would say that they appear to be one of the provinces most strong on IT and technology for delivery," he said in a conference call.
"So, if you end up being a bit light on physical, maybe you'll be outstanding on an e-commerce model."
Finance Minister Carlos Leitao said more than 42,000 kilos of cannabis would be produced in Quebec, even if five of the six companies named in the deals are headquartered in other provinces.
Bouchard said it is possible the liquor board could also add other suppliers in the future if demand increases.