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Legalization 2.0 Product Rollout in Canada

• The approval of these products is significant, both for consumers and for the cannabis industry in Canada
• The infused products sector is large and very lucrative, and has already been hugely successful in parts of the US where cannabis is legal
• It is also one with enormous growth potential. Some estimates suggest that the market will grow by a whopping $17 billion by 2022.

By Matt P

On October 17th, 2019, the Canadian government went ahead with the second phase of its cannabis program. Legalization 2.0 included the approval of edibles and infused products.  The move came exactly one year after the first wave of legalization which saw Canada make history, with recreational cannabis flower and oil hitting the legal market for the first time.

The approval of these products is significant, both for consumers and for the cannabis industry in Canada.  The infused products sector is large and very lucrative, and has already been hugely successful in parts of the US where cannabis is legal.  It is also one with enormous growth potential. Some estimates suggest that the market will grow by a whopping $17 billion by 2022.

While legalization occurred in October, Canadians still had not been able to purchase the new items. January 6th, 2020 marked the first day which vaporizers and cannabis-infused products were widely available to all Canadians.

Why Has It Taken So Long To Get Product Out?

Much of the delay has come from the restrictions imposed by the government.  All licensed producers looking to sell these new products are required to submit a 60 day notification directly to Health Canada. 

This means that the earliest date they would be available on shelves would be mid-December.  The timing was particularly important, since it fell right before the start of the holidays. Retailers and producers were looking to capitalize on making these hot new products readily available for holiday shoppers. 

Some retailers and consumers were lucky enough to get a limited supply before the holidays.  However, many had to wait until January 6th to finally get their hands on the new goodies.

Legalization 2.0 Product Rollout Across Canada

Whether or not you’ve had access to edibles before now depends largely on which part of Canada you’re living in. Consumers in British Columbia have had access to them since late December. Residents were able to purchase both through BC’s online store as well as through a number of private dispensaries. Edibles hit the shelves just in time for the holidays.  Saskatchewan was another province that saw edibles become available just before December 25th.

For other parts of the country, January 6th was the first time residents could pick up the new products.  In Ontario, Alberta and Quebec, the rollout for legalization 2.0 was delayed until January.  This was mainly due to the fact that all three provinces maintain their own distribution system, as opposed to allowing licensed producers to interact directly with retailers.

Image Courtesy of Alexander Stein

In Alberta, January 6th marked the first day that stores were able to place their orders with the AGLC, which acts as the cannabis wholesaler for the provinces retailers.  There are currently a limited number of products available, but that’s expected to change.  AGLC spokeswoman Heather Holman commented on the situation, saying that “right now in Alberta, AGLC has contracts with 43 federally licensed producers.  They manufacture a variety of products. About half of those licensed producers will be providing for what we’re calling cannabis 2.0 (which are) the new line of products like edibles, extracts and topicals. What we see this week and the coming weeks isn’t reflective of the bigger picture.”

In Ontario, online sales through the Ontario Cannabis Store began at 9:00am Thursday, January 16th. The store subsequently sold out of all product by 2:00pm on the same day.  The online retailer announced last week that they’d be carrying 59 new cannabis products.

Quebec and Legalization 2.0

The situation is significantly more complicated in the province of Quebec.  The province has the distinction of having the strictest cannabis laws in the country. The province also passed a law raising the age of consumption to 21 back in October.

Although they officially rolled out the new products this month, these strict laws extend to legalization 2.0.  In addition to heavy-handed age of consumption laws, the province has also passed a number of restrictions on these new products.  Infused products such as chocolates and baked goods have been banned.  So have vape pens and cartridges. Quebec officials enacted the bans based on fears that the products could appeal to minors.

For the time being, it seems that users in Quebec will have to make do with a much more limited selection than the rest of the country.

Issues And Potential Hurdles

Much like the original rollout of legal cannabis flower in 2018, things haven’t gone as smoothly as both the government and cannabis industry would have liked.  Along with the delays in multiple provinces, there have also been other issues.

The Aphria Recall

In a case of terrible timing, cannabis giant Aphria was forced to recall its line of vape pens. The recall was due to leaky vape cartridges.  According to chief corporate affairs officer Tamara Macgregor, “out of an abundance of caution we asked provincial customers to return certain initially shipped ‘510 cartridges’ that did not meet our intended consumer experience.”

Like most of the licensed producers in Canada, Aprhia has no doubt had their eyes set on this second wave of legalization (particularly given what a disappointing year 2019 was).

Vaping Restrictions

One of the big issues plaguing the cannabis industry over the past year has been the backlash against vaping across the country.  Effective as of January 1st, Ontario has implemented an advertising ban on all vape products in convenience stores and gas stations.  The move was prompted from data indicating that more young people are vaping, and is designed to bring the current laws in line with provincial tobacco laws.

Image Courtesy of Lexphumirat

The move didn’t effect the cannabis industry directly. The Ontario cannabis Store and licensed retailers are responsible for the sale of cannabis vapes. However, the fact that provincial lawmakers are willing to target vaping more broadly is troubling.  Along with Quebec, Newfoundland and Labrador have also banned cannabis vapes. Officials in British Columbia plan to raise taxes on these products specifically to 20%.

These moves have no doubt left the industry very concerned. Canada will continue to be a proving ground for legalization as Cannabis 2.0 rollout continues.

Source: https://www.puffpuffpost.com/legalization-2-0-rollout-canada-success-and-failure/

• In late December completed first harvest at Salinas, California cultivation facility
• Harvested 2,687 plants that were included in the acquisition of the Qlora Group

TORONTO, Jan. 09, 2020 — North Bud Farms Inc. (CSE: NBUD) (OTCQB: NOBDF) (“NORTHBUD” or the “Company“) is pleased to provide shareholders with the following corporate update:

Cannabis Production Facility in Salinas, California

In late December we completed our first harvest at our Salinas, California cultivation facility. We harvested 2,687 plants that were included in the acquisition of the Qlora Group (“Qlora”). The Company anticipates completing testing and sale of the product in late January 2020, which will represent the first revenue generated by the Company in California.  The Company has also completed an in-depth review and analysis of both the infrastructure and cultivation practices and will be implementing significant efficiencies over the course of the next four harvests. The Company anticipates continual harvests of 2,000-3,000 plants every 25 days, with quality and yield improving with each harvest. This product will be sold via wholesale agreements to existing Qlora clients in the interim as we prepare for the launch of NORTHBUD branded flower products in California in the third quarter of 2020.  

“Despite challenges faced by the cultivation team during this period of transition, we are extremely excited to be harvesting our first crops and look forward to continual improvements as we implement procedural and infrastructure efficiencies,” said Justin Braune, President of Bonfire Brands USA, a wholly owned subsidiary of NORTHBUD.

Cannabis Production Facility in Reno, Nevada

The Company is pleased to announce the completion of the first harvest of approximately 175 indoor grown plants. Upon the completion of testing and processing, the product will be distributed as NORTHBUD flower, pre-rolls and infused pre-rolls into selected Nevada dispensaries. The launching of NORTHBUD branded products into Nevada marks a significant milestone for the Company.

Status of Cultivation Licence Application for Cannabis Production Facility in Low, Quebec

On September 18, 2019, the Company received a confirmation of receipt of the site evidence package submitted in late August 2019. On November 22, 2019, the Company received a request for information from Health Canada (the “Request”).  The Request was received within the 60-business day service window for feedback provided by the regulator.  The Company is pleased to report that the Request was responded to in full in advance of the December 8th deadline. The Request did not contain any notices of deficiencies in the Company’s cultivation licence application nor did it require the Company to make any modifications or changes to its facility.

On December 19, 2019 the Company received a subsequent follow-up request for information consisting of two questions which were responded to that same day, and on December 20th, the Company received a request to clarify the roles of recently-hired employees in relation to the requested cultivation licence. This request was responded to in full on January 3, 2020. The Company has received no further communication from Health Canada.

The Company is confident that the approval process is on track and within comparable timelines experienced by other publicly-traded companies who have recently submitted evidence packages.  At this time, the Company cannot predict when it will be granted a cultivation licence by Health Canada. The Company will update shareholders on any further progress on the application.

Annual General Meeting

The Company wishes to inform shareholders that it will hold its Annual General and Special Meeting at 1:00 p.m. ET on Monday, February 3, 2020 at the office of McMillan LLP, World Exchange Plaza, Suite 2000, Ottawa, Ontario. The Company will file the required information for the annual and special meeting under its issuer profile on SEDAR at www.sedar.com.

Staffing and Personnel

The Company is pleased to announce the hiring of Adam Shapero as General Counsel. Adam comes to NORTHBUD after serving as Director of Risk Management, Corporate Secretary and Senior Counsel at Origin House (CSE: OH), who was recently acquired by Cresco Labs (CSE: CL) in a transaction valued at ~ $520 million. “We are extremely pleased to welcome Adam to our team,” said Sean Homuth, CEO of NORTHBUD. “His first-hand experience in the Cannabis industry will add tremendous value to our team while reducing our reliance on external counsel.”

About North Bud Farms Inc.

North Bud Farms Inc., through its wholly owned subsidiary GrowPros MMP Inc., is pursuing a license under The Cannabis Act.  The Company has built a state-of-the-art purpose-built cannabis production facility located on 135 acres of Agricultural Land in Low, Quebec, Canada. NORTHBUD through its wholly owned U.S. subsidiary, Bonfire Brands USA has acquired cannabis production facilities in California and Nevada. The Salinas, California property is located on 11 acres which currently consists of a 300,000 sq. ft. of licensable greenhouse space with 60,000 sq. ft. actively cultivating cannabis and a 2,000 sq. ft. building licensed for distribution.  The Reno, Nevada property is located on 3.2 acres of land which was acquired through the acquisition of Nevada Botanical Science, Inc. a world class cannabis production, research and development facility with 5,000 sq. ft. of indoor cultivation which holds medical and adult use licenses for cultivation, extraction and distribution.

For more information visit: www.northbud.com

Neither the CSE nor its Regulation Services Provider (as that term is defined in the policies of the CSE) accepts responsibility for the adequacy or accuracy of this release.

Forward-looking statements
Certain statements and information included in this press release that, to the extent they are not historical fact, constitute forward-looking information or statements (collectively, “forward-looking statements”) within the meaning of applicable securities legislation.  Forward-looking statements, including, but not limited to, those identified by the expressions “anticipate”, “believe”, “plan”, “estimate”, “expect”, “intend”, “may”, “should” and similar expressions to the extent they relate to the Company or its management.

Forward-looking statements, including, but not limited to, those regarding the success of the Company’s licence application in Quebec, future sales of cannabis in California and Nevada, plant harvest yields at the Company’s California and Nevada operations, conditions in the cannabis market, the Company entering agreements in connection with the B2B supply of cannabis and the Company’s transition into a revenue generating operational phase of development are based on the reasonable assumptions, estimates, analysis and opinions of management made in light of its experience and its perception of trends, current conditions and expected developments, as well as other factors that management believes to be relevant and reasonable in the circumstances at the date that such statements are made, but which may prove to be incorrect.

Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to differ materially from any future results, performance or achievements expressed or implied by the forward-looking statements.  Such risks and uncertainties include, among others, the risk factors included in the Company’s final long form prospectus dated August 21, 2018, which is available under the Company’s SEDAR profile at www.sedar.com. Accordingly, readers should not place undue reliance on any such forward-looking statements. Further, any forward-looking statement speaks only as of the date on which such statement is made. New factors emerge from time to time, and it is not possible for the Company’s management to predict all of such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. The Company does not undertake any obligation to update any forward-looking statements to reflect information, events, results, circumstances or otherwise after the date hereof or to reflect the occurrence of unanticipated events, except as required by law including securities laws. This news release does not constitute an offer to sell or a solicitation of any offer to buy any securities of the Company.

FOR ADDITIONAL INFORMATION, PLEASE CONTACT:
North Bud Farms Inc.
Edward Miller
VP, IR & Communications
Office: (855) 628-3420 ext. 3
[email protected]

SPONSOR: NORTHBUD (NBUD:CSE) Sustainable low cost, high quality cannabinoid production and procurement focusing on both bio-pharmaceutical development and Cannabinoid Infused Products. Learn More.

When CBD met chocolate

The health-conscious, environmentally-aware consumer has encouraged new trends in the chocolate sector that affect flavour, texture and harvesting. Greater Goods has gone one step further, infusing the beloved food of the gods with CBD. Bethan Grylls hears from its co-founder about why this combination works.

Indulgent, premium and good-for-you: these words will be familiar to the modern-day confectioner as they look to address current trends1 and differentiate themselves in a competitive market. Be it a new sensory experience across taste, texture or colour; the lure of single-origin sourcing; or a guilt-free treat, the realms of chocolate innovation and buyer demands have stretched well beyond the days of penny sweets.

Some brands have taken things one step further, combining trends like organic, fair trade and non-GMO confectionery, with the demand for CBD – a term that was Googled 6. 4 million times during April 2019.2

Greater Goods, based in Oregon, US, is one example, offering its customers a selection of cannabinoid-infused ‘goodies’. Despite being a modest husband and wife venture, the team says they are looking to compete against the larger companies through hand-crafted, fun and unusually-flavoured products.

Source: https://www.newfoodmagazine.com/article/101342/when-cbd-met-chocolate/

SPONSOR: NORTHBUD (NBUD:CSE) Sustainable low cost, high quality cannabinoid production and procurement focusing on both bio-pharmaceutical development and Cannabinoid Infused Products. Learn More.

Canadians Bought 100 Tonnes Of Legal Cannabis In First Year

• Canadians bought nearly 100 tonnes of legal recreational cannabis in its first year of availability, according to new figures released by Health Canada.

Health Canada said 88,676 kilograms of dried flower cannabis was sold in Canada in the first year of legalization, according to its Cannabis Tracking System. Overall sales of legal dried cannabis by weight have nearly tripled since October 2018.

Statistics Canada said Tuesday that Canadian household spending on cannabis totaled $1.27 billion in the third quarter of 2019, with the illicit market accounting for $860 million of that figure and the legal market estimated at $417 million.

While 100 tonnes may sound like a lot, the amount sold through legal channels was far below what analysts projected Canadian demand would be, a sign that the illicit market continues to weigh on legal sales. CIBC World Markets said in mid-2018 that the Canadian market would demand about 400,000 kilograms of legal pot annually, while the Bank of Nova Scotia forecast total cannabis demand in Canada will be 900,000 kilograms this year.

Health Canada also said that the total active cultivation area for cannabis in the country reached 1.78 million square metres at the end of September, a sizable jump from the 452,896 square meters of cultivation that was licensed for legal pot a year earlier. Nearly five million cannabis plants were being grown by producers at the end of the first year of legalization, Health Canada said.

Source: https://menafn.com/1099515194/Canadians-Bought-100-Tonnes-Of-Legal-Cannabis-In-First-Year

SPONSOR: NORTHBUD (NBUD:CSE) Sustainable low cost, high quality cannabinoid production and procurement focusing on both bio-pharmaceutical development and Cannabinoid Infused Products. Learn More.

Teas and edibles and vapes, oh my!

By: Kyle Mack

The latest in cannabis products will be available for legal sale in Ontario.

The Ontario Cannabis Store (OCS) is releasing 59 new products including edibles, beverages, lotions, and concentrates in stores today but online Jan 16.

Prices of edibles range from $7.50 to $16 per item while beverages can cost between $4 to $10 and vapes falling between $25 – $125. Daniel Safayeni, Director of Policy at The Ontario Chamber of Commerce has previously released a statement on the THC limit per edible stating,

“The OCC supports a THC limit of 10-milligrams per discrete unit of edibles, as well as the sale of multi-packs or multiple products—up to a maximum of 100-milligrams of THC per package—within child-proof packaging. As we outline in the report, single-packs are costly, while multi-packs would allow licensed producers to create economies of scale. The proposed regulations, however, limit the amount of THC per package to only 10 milligrams, which is significantly lower than illegal alternatives and lower in other U.S. jurisdictions where recreational cannabis is legal”.

The THC cap may act as a barrier to shifting cannabis shoppers from making illicit purchases, where higher THC contents can be found.

For more information on edibles, visit the Ontario Cannabis Store.

Source: https://www.bttoronto.ca/2020/01/06/teas-and-edibles-and-vapes-oh-my/

SPONSOR: NORTHBUD (NBUD:CSE) Sustainable low cost, high quality cannabinoid production and procurement focusing on both bio-pharmaceutical development and Cannabinoid Infused Products. Learn More.

Edibles, vapes and tea coming to legal Ontario cannabis shops Monday

• Ontario’s cannabis distributor says dozens of new marijuana products will be available in retail shops starting Monday but supplies will be limited.
• Unveiled 59 new items today including a variety of vapes, edibles and a tea.

TORONTO – Ontario’s cannabis distributor says dozens of new marijuana products will be available in retail shops starting Monday but supplies will be limited.

The Ontario Cannabis Store unveiled 59 new items today including a variety of vapes, edibles and a tea.

The products will be available in the province’s legal cannabis retail stores starting next week and Cannabis edibles to hit store shelves in January.

The distributor estimates that products will be in short supply until March as manufacturers ramp up production to meet demand.

The number of products will grow to 100 in the coming months as they receive regulatory approval.

The OCS says the new selection will help it combat black market sales across the province.

Source: https://globalnews.ca/news/6362213/ontario-cannabis-store-edibles-vapes-tea-retail-shops/

SPONSOR: NORTHBUD (NBUD:CSE) Sustainable low cost, high quality cannabinoid production and procurement focusing on both bio-pharmaceutical development and Cannabinoid Infused Products. Learn More.

Ontario sold the most cannabis in first year of legalization

• Ontario accounted for $217 million in recreational cannabis sales — or 24 per cent of the overall Canadian market
• From October 2018 to September 2019, followed by Alberta and Quebec, which sold $196 million and $195 million worth, respectively

By: Vanmala Subramaniam

Cannabis retailers in Ontario sold the most cannabis of any province in the first year following legalization, even though there was only one online store and 24 brick-and-mortar stores in operation for most of that period, according to new Statistics Canada data.

Ontario accounted for $217 million in recreational cannabis sales — or 24 per cent of the overall Canadian market — from October 2018 to September 2019, followed by Alberta and Quebec, which sold $196 million and $195 million worth, respectively.

The year following legalization saw more than 400 brick-and-mortar stores established across the country. Total adult-use cannabis sales from online retail stores amounted to $908 million for that period, far short of many estimates prior to legalization.

For instance, a June 2018 report from CIBC estimated that legal cannabis sales could reach $6.5 billion by 2020, with the potential to yield $1 billion in EBITDA. A similar report by Deloitte had forecast the legal cannabis market to generate $4.3 billion in sales in the year following legalization.

The StatsCanada data also observed a sharp decline in the number of consumers who purchased cannabis online, in tandem with the growth of the number of retail stores across the country. The share of online sales declined from 43.4 per cent in Oct. 2018 to just 5.9 per cent the following September, while the number of brick-and-mortar stores rose 88 per cent between March and July 2019.

Online retail stores — most of which are operated by provincial wholesalers — made approximately $120 million in the year following legalization, while brick-and-mortar stores raked in the remaining $788 million in sales.

Indeed, government-run stores have been struggling. Ontario Cannabis Retail Corp. which operates the Ontario Cannabis Store, lost $42 million in its latest fiscal year ending March 31, 2019. In New Brunswick, Cannabis NB, the crown corporation in charge of selling cannabis, recently said it was looking for a buyer, as losses piled up.

On a per capita basis, British Columbia reported the lowest sales values in the country at $10 per capita in the year following legalization. Ontario did not fare much better on that measure, with a per capita sales value of $15. Alberta, by contrast, had one of the highest per capita sales values at $45.

Statistics Canada attributed these vast differences to varying access to cannabis stores. In Ontario, for instance, just nine per cent of residents lived within a three kilometre distance to a cannabis store, whereas in Alberta — the province with the highest number of stores — 50 per cent of residents lived within three kilometres of a cannabis store.

The Canadian cannabis industry has, for the most part, struggled to meet expectations from both investors and consumers, with price, quality and accessibility being the key reasons why the sector did not take off at a rate many had hoped it would.

While the first few months of legalization were characterized by a supply shortage, the production ramp-up in the latter half of 2019 has now created the opposite problem: oversupply.

Cannabis producers are urging the Ontario government to open up the licensing process for retail stores, which they hope will lead to a sharp growth in the number of stores across Canada’s most populous province.

Source: https://business.financialpost.com/cannabis/cannabis-business/ontario-sold-the-most-cannabis-in-first-year-of-legalization-despite-low-store-count

SPONSOR: NORTHBUD (NBUD:CSE) Sustainable low cost, high quality cannabinoid production and procurement focusing on both bio-pharmaceutical development and Cannabinoid Infused Products. Learn More.

Canadians spent $908M at cannabis stores since legalization, StatCan says

• Canadians spent $907,833 on non-medical cannabis between October 2018 and September 2019, the agency said, which works out to $24 per capita.

THE CANADIAN PRESS/Justin Tang

OTTAWA – Canadians spent about $908 million on non-medical cannabis in the first year since legalization, but online sales dropped as more brick-and-mortar locations opened, said Statistics Canada.

Canadians spent $907,833 on non-medical cannabis between October 2018 and September 2019, the agency said, which works out to $24 per capita.

Canada legalized cannabis on Oct. 17, 2018, becoming the second country in the world – after Uruguay – to legalize the drug. Demand initially appeared to outstrip supply as retailers warned of a pending shortfall of product.

Over the year, demand appeared to be highest in the sparsely populated Yukon where sales per capita led the other provinces and territories at $103, according to Statistics Canada. It was not able to provide data for Nunavut – the only area without a physical store.

Prince Edward Island sales per capita were the second highest at $97, while B.C. ranked lowest at $10.

Throughout the year, Canadians’ access to cannabis stores increased. The number of retail stores jumped from 217 this past March to 407 in July, according to the agency.

Alberta boasts the highest number of stores at 176 and B.C. took second place with 57 stores. Nunavut had the fewest with zero, followed by Prince Edward Island and the Yukon, both of which have four.

Nineteen per cent of Canadians lived three kilometres from a cannabis store as of July 2019. Thirty per cent lived 30 kilometres away and 45 per cent lived within 10 kilometres.

Albertans enjoyed the closest proximity to a store of any province, with half of the population living within three kilometres of a cannabis outlet. That figure rises to 63 per cent for five kilometres and 70 per cent for 10 kilometres.

Ontarians lived the furthest from cannabis stores on average. Nine per cent of the population resided three kilometres from a cannabis store. Eighteen per cent lived five kilometres away and 33 per cent were 10 kilometres away.

As the number of physical stores increased, the share of online sales dropped from 43.4 per cent in October 2018 to 5.9 per cent in September 2019.

“While online cannabis retail ensures access to all Canadians regardless of proximity to a physical store, accessibility continues to improve as more stores open across the country,” wrote Statistics Canada in its paper.

This report by The Canadian Press was first published Dec. 11, 2019.

Source: https://www.cp24.com/lifestyle/canadians-spent-908m-at-cannabis-stores-since-legalization-statcan-says-1.4725872