Cannabis Update: Licensed Producers Agree on Deal with New Brunswick for Recreational Marijuana Sales
The Canadian province of New Brunswick has partnered with Organigram Holdings and Canopy Growth for their plan for recreational marijuana consumption, set to become legal next year in Canada. Organigram Holdings has agreed to supply 5 million grams per year of cannabis, with an estimated retail value of between $40 million to $60 million per year, while Canopy Growth plans to use local trades and hire people for a New Brunswick site getting established in Fredericton.
Meanwhile, in Ontario, the provincial government has announced plans to launch a government-controlled cannabis monopoly, opening 150 legal marijuana stores across the province by 2020. The minimum legal age to buy cannabis in Ontario will be 19, and it will be illegal for people to consume cannabis recreationally outdoors. The Ontario government's cannabis system will be overseen by the province's Liquor Control Board of Ontario.
A poll by Campaign Research found that a majority of citizens support Ontario's proposed plan for cannabis use in the province. However, Abi Roach, the owner of a local weed lounge in Toronto, expressed concern that the Ontario government's model may not satisfy the needs of "actual cannabis consumers."
On the other side of the continent, Nevada allows cannabis consumption lounges where adults can consume cannabis on-site. However, the first state-regulated cannabis consumption lounge in Nevada closed after just over a year of operation, reflecting some ongoing challenges in this sector. While cannabis lounges are permitted, integrating cannabis consumption with casino gambling remains complex and risky for the casino industry due to regulatory and business concerns.
In California, cannabis lounges allowing smoking, vaping, and ingesting cannabis on retail premises are permitted in some local jurisdictions following reforms since 2018. The number of lounges is growing, with new laws (effective 2025) allowing licensed retailers to serve non-alcoholic beverages and host live events on-site.
Colorado licenses cannabis hospitality businesses with local jurisdictions opting into this regime since 2020, enabling lounges with regulated consumption. Massachusetts is poised to become the 11th state to allow social cannabis consumption, with proposed regulations including licenses for on-site consumption at existing retail locations, hospitality businesses, and events.
In the market, Supreme Pharmaceuticals (TSXV:FIRE) and Aurora Cannabis (TSX:ACB) were two of the biggest winners during the week, with an 8.85 and 6.17 percent increase respectively. Canaccord Genuity analyst Matt Bottomley maintains a "Speculative Buy" rating for Cronos Group (TSXV:MJN) and sets their price target for $3 in one year, with expectations of Adjusted EBITDA of positive $13.0-million on a topline of $44.0-million in fiscal 2018 for Cronos Group.
References:
[1] Marijuana Business Daily. (2021, March 1). Cannabis consumption lounges: A guide to state-by-state regulations. Retrieved from https://mjbizdaily.com/cannabis-consumption-lounges-a-guide-to-state-by-state-regulations/
[2] Leafly. (2021, February 23). Nevada's first cannabis consumption lounge closes after just over a year. Retrieved from https://www.leafly.com/news/industry/nevadas-first-cannabis-consumption-lounge-closes-after-just-over-a-year
[3] NORML. (2021, February 2). Social consumption lounges: A guide to state-by-state regulations. Retrieved from https://norml.org/law/item/social-consumption-lounges-a-guide-to-state-by-state-regulations
