Cannabis in the news April 10, 2019

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News on cannabis stocks and on developments in the industry haven’t let up in today’s volatile markets. Here are this week’s stories that we believe will mean most to you as a Canadian investor. 

1. One of Toronto’s wealthiest neighbourhoods is now home to the city’s second legal cannabis shop.

The opening of Ameri in Yorkville on Sunday attracted the same sort of lineups that greeted the first day of operations for other cannabis stores. While all 25 of Ontario’s approved vendors were expected to open their doors on April 1, many are blaming bureaucratic red tape for their failure to meet that deadline.

Only 11 of the 25 stores are currently open. In addition to two in Toronto, there are three in Ottawa, two in Kingston and single locations in London, Burlington, St. Catharines and Brampton.

Ameri’s opening on Sunday allowed it to address any operational concerns and prepare staff.

The Ontario government indicated that store licensees could face the possibility of a $12,500 penalty for failing to open April 1. A prolonged delay past the end of the month could see that penalty rise to $50,000.

 


2. Cannabis industry research firm BDS Analytics has cut its sales forecast for Canada’s pot market by about 12%.

The analytics firm now expects sales to reach $5.2 billion U.S. by 2024. While that’s up from last year’s $569 million U.S., it’s down from BDS’s earlier forecast of $5.9 billion U.S. in annual sales by 2022.

“Everybody was somewhat taken aback at how Canada hasn’t exploded the same way it did in Colorado, Oregon, and California,” said Tom Adams, managing director of BDS Analytics, who was a lead author of the report released on Tuesday. “Canada’s very cautious approach is likely to limit the revenue growth in the overall market.”

Adams and others are pointing to Ontario’s limited network of bricks-and-mortar locations, which opened more than five months after other stores across Canada. Supply challenges and the remaining black market are also likely to reduce the number of legal sales.

BDS also has better statistical data to work from.

“Given the additional data from the first few months of this year, there was a better way to evaluate Canada compared to any of the U.S. markets we track,” Adams said. “It helped us to really reevaluate our assumptions about the Canadian market.”


3. New data from Statistics Canada suggest the average cost of a gram of dried cannabis has risen more than 17% since legalization, with New Brunswick and Manitoba users seeing the biggest jumps.

The government agency says the average price per gram post-legalization was $8.04. That’s about 17.3% higher than the pre-legalization price of $6.85.

Statistics Canada bases its conclusions on price quotes gathered using the StatsCannabis crowdsourcing application between Oct. 17, 2018 and March 31. That data is submitted by consumers and sellers and should therefore be viewed cautiously.

Pre-legalization, cannabis prices in New Brunswick were among the lowest in Canada, but have increased to an average of $8.27 per gram. Manitoba’s average price per gram is now $9.14 per gram.


4. Vancouver is now considering a bylaw to limit the odour coming from cannabis production facilities, including mandating the use of powerful air filters and requiring minimum distances from homes, hospitals, schools and daycares.

The regional district, which regulates air quality within its boundaries, is working on regulations for the industry following last fall’s legalization of cannabis and the growing number of commercial cannabis facilities.

“It’s taking a look at what regulations could be brought in that would ensure that there isn’t an impact to the community,” says Metro Vancouver commissioner and chief administrative officer Carol Mason. She points to emissions from facilities whether they’re on agricultural lands or commercial sites.

The regulations would address both potentially harmful emissions but also those just deemed malodorous.


5. Health officials in the U.K. are fending off criticism that doctors have been too slow to prescribe cannabis since laws brought in last fall legalized those prescriptions.

Critics charge that National Health Services patients are being refused access to medical cannabis, although patients of private doctors are winning those prescriptions.

The U.K.’s health secretary, Matt Hancock, points to more than 80 children who have obtained prescriptions through the public health service since the law was changed in November.

However, lobby groups say that those doctor-approved medications have largely without the psychoactive ingredient in cannabis, THC. That compound is increasingly viewed as a treatment for epilepsy.

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