The Bis Weekly News Update – January 21 to 25

January might be coming to an end, but that’s not slowing Canadian cannabis down at all. While Ontario gets ready to open retail storefronts, more than half of the province’s municipalities has chosen to allow pot shops in their borders, supply shortages are such a problem in Quebec that the provincial seller has cut their expansion plans, and more. 

Find out what you need to know about what went down this week with The ‘Bis weekly news roundup.

Canada’s cannabis shortages of cannabis could last for years

According to a recent report by the CBC, Canada’s shortage of legal cannabis could persist for years. 

While companies are scrambling to catch up, the coming legalization of edible pot could divert more product away from already under-supplied retails across the county.

“If it was just the current product set, I’d say a year to 18 months,” Chuck Rifici, CEO of Auxly told the public news agency.

“But because we have edibles and a bunch of new product types coming in October, I think it’ll be the better part of three years before we have true equilibrium and oversupply in the space.”

Licensed producers have been adding capacity in droves. Millions of square feet of new greenhouse space has been built since last summer. But for every new gram produced, new demand is piling up as well.

“The medical cannabis market still grows by about five per cent a month,” said Rifici. “We have about 300,000 Canadians accessing medically, so that’s a drain on the system, as well as international exports that are starting to amplify.”

More than half of Ontario municipalities say yes to cannabis retail

The Ford government chose to give Ontario’s municipalities a one-time option to opt-out of having cannabis retail stores in their communities. They were given until January 22, 2019 to inform the Alcohol and Gaming Commission of Ontario (AGCO) of their decision, in writing. Those that send no notification to the commission will by default be allowed to have private cannabis retail.

While regions like Markham and Richmond Hill made their decision all the way back in August 2018, many have waited until the past few weeks to make their decision. Municipalities that choose to opt out can opt back in at any time — but once they’re in, there’s no switching back.

Of Ontario’s 414 local municipalities, a total of 279 have chosen to opt-in. Only 77 have chosen to opt-out, according to the AGCO’s website. A further 58 are marked as “unknown” — meaning they didn’t inform the AGCO of their decision — meaning they will be considered open for business when it comes to pot.

Quebec slows its roll out of more cannabis stores

Quebec’s cannabis agency generated about $40 million of sales in its first three months of operation, but supply shortages are forcing the public retailer to reduce its expansion plans, according to CTV.

The province expects to have 40 points of sale in March 2020, 20 per cent less than the 50 outlined in the original expansion plan.

Retail store shelves became empty soon after recreational cannabis was legalized on Oct. 17, a situation observed across the country.

The subsidiary of the Societe des alcools du Quebec cut back its hours of operation so that its 12 stores were open four days a week.

Aphria fields bid from Green Growth Brands

Green Growth Brands formally announced its takeover bid for Aphria late Tuesday, offering 1.5714 of its shares for each share of the beleaguered Leamington, Ont.-based cannabis producer, according to a recent report in Bloomberg

The bid is the same exchange ratio presented in late December when the company announced its intent to make an offer for Aphria, but will not be adjusted to account for changes in its stock price. 

Aphria Chair Irwin Simon said it will review Green Growth’s offer, but added in a statement the company’s leadership is “determined to protect Aphria shareholders from opportunistic offers that fail to reflect the substantial value.”

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