Ontario Locks Down Cannabis Supply Deals

- August 21st, 2018

The province has signed deals with 26 licensed producers, with 19 either in the public market directly or associated with a Canadian company.

Following its decision to privatize a network of retail cannabis shops, Ontario awarded supply agreements for adult-use cannabis to 26 licensed producers (LPs) on Monday (August 20).

“These agreements will allow us to safely and securely provide a broad variety of cannabis products to adult customers when online sales begin,” Patrick Ford, president and CEO of the Ontario Cannabis Store (OCS), said in a statement.

The OCS announced that it’s also finalizing deals with cannabis accessories suppliers for a variety of products that will be available after the legalization of recreational cannabis on October 17.

The provincial agency will be tasked with overseeing online sales of legal cannabis. The province has revealed that will be the only way to acquire legal adult-use product until spring of next year.

According to the OCS, the online portal will have a verification system to guarantee at-home deliveries for products. As dictated by Health Canada’s regulations, the OCS will only offer three product categories: dried flower, cannabis oil and cannabis seeds.

Outside Ontario, provinces announcing supply deals have revealed how much cannabis product in kilograms each company will provide. Ontario has instead elected to announce the number of strains or products that producers will provide.

Canopy Growth (TSX:WEED,NYSE:CGC) and Aphria (TSX:APH) were quick to reveal a supply agreement worth “over 100 cannabis SKUs,” or stock keeping units. Twenty-five of them will be from Hiku Brands (CSE:HIKU), Canopy’s latest acquisition.

Another producer with an Ontario agreement, VIVO Cannabis (TSXV:VIVO), confirmed it will be supplying 16 cannabis products to the province.

The Supreme Cannabis Company (TSXV:FIRE) revealed its supply agreement with Ontario will last two years, with renewal options available.

Nick Dean, CEO of Ontario-based LP Emblem (TSXV:EMC), said he anticipates Ontario will represent 40 percent of total cannabis sales in Canada. Emblem will offer its products in Ontario under the Symbl brand name. “Our partnership with the OCS opens up an important distribution channel to get Emblem’s brands and products to market in Canada’s most-populated province,” Dean said.

Public markets react to supply deals with Ontario

The Horizons Marijuana Life Sciences Index ETF (TSX:HMMJ) enjoyed a quick spike in Tuesday’s trading session, increasing 3.49 to reach a price of C$18.41 at the closing bell.

The Canadian Index from the Marijuana Index also saw a jump in its value following the news from Ontario. The index, which tracks 17 Canadian cannabis stocks, went up 3.06 percent.

After the public markets closed on Tuesday, some of the biggest gainers of the day thanks to the Ontario deals were Newstrike Brands (TSXV:HIP), Beleave (CSE:BE), Cronos Group (TSX:CRON,NASDAQ:CRON) and Aurora Cannabis (TSX:ACB).

Respectively, each producer gained 21.82, 15.67, 12.57 and 7.23 percent, and closed at C$0.67, C$1.55, C$10.75 and C$8.16.

Here’s the complete list of cannabis producers, and the respective public company associated with some producers, signed on by the OCS to supply the province:

  1. 7ACRES/The Supreme Cannabis Company (TSXV:FIRE)
  2. AgMedica Bioscience
  3. Aphria (TSX:APH)
  4. Aurora Cannabis
  5. Beleave
  6. Broken Coast Cannabis/Aphria
  7. CannTrust (TSX:TRST)
  8. Canopy Growth
  9. Emblem Cannabis
  10. HEXO Operations/The Hydropothecary Corporation (TSX:HEXO)
  11. Hiku Brands/Canopy Growth
  12. Maricann (CSE:MARI)
  13. MedReleaf / Aurora Cannabis
  14. Natural MedCo/Eve & Co.
  15. Northern Green Canada
  16. Organigram (TSXV:OGI)
  17. Peace Naturals Project/Cronos Group
  18. Radicle Medical Marijuana
  19. RedeCan Pharm
  20. Solace Health/TerrAscend (CSE:TER)
  21. Starseed Medicinal
  22. THC BioMed (CSE:THC)
  23. The Flowr Group Okanagan
  24. Tilray Canada (NYSE:TLRY)
  25. Up Cannabis/Newstrike Resources
  26. VIVO Cannabis (TSXV:VIVO)

Don’t forget to look for our coverage of MJBizCon INT’L, with show notes from the floor and exclusive interviews on INN. You can also follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: Beleave, Emblem, Maricann and the Supreme Cannabis Company are clients of the Investing News Network. This article is not paid-for content.

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