Pubdate: Sat, 16 Sep 2017
Source: National Post (Canada)
Copyright: 2017 Canwest Publishing Inc.
Author: Geoff Zochodne
Page: FP13


Province to create new Crown agency

New Brunswick has set up a new Crown corporation that will oversee
marijuana sales, but not actually retail the drug, when the federal
government's planned legalization of recreational cannabis goes into
effect next July

Provincial Finance Minister Cathy Rogers and Health Minister Benoit
Bourque made the announcement Friday in Moncton, adding that New
Brunswick has already struck deals with two licensed medical marijuana
companies to help supply its recreational market.

However, the province has still left the door open to a possibly less-
restrictive retail regime than the one proposed by Ontario, which is
setting up a single, government-run retailer.

"In addition, t he creation of this new provincial Crown corporation
provides the flexibility and lays the groundwork for the eventual
retail model once final decisions around that have been made," Rogers
said in a release.

While New Brunswick intends to have the government maintain "full
control" over the sales of non-medicinal cannabis, the release said
that the Crown corporation "will not directly conduct retail
operations." Rather, the new agency "will eventually engage with
another entity or entities to provide that framework," Rogers
explained, according to the release.

"It is expected to take other steps in the near future to ensure the
retail model is operational in order to meet the federal government's
timelines," the government said.

The plan for actually retailing marijuana to consumers will be
finalized when New Brunswick' s Liberal government is done considering
the findings of a legislative committee and working group, the
province said.

The working group recommended in a June interim report that a Crown
corporation model be employed for retail.

New Brunswick' s announcement was preceded by news it had already
struck a deal with a pair of licensed medical marijuana
producers-Moncton, N.B.-based Organigram Holdings Inc. and Smiths
Falls, Ont.based Canopy Growth Corp. - to ensure ample supply for the
province's market for recreational cannabis, which the federal
government is aiming to legalize by July 2018.

Organigram said the agreement would see it supply New Brunswick with
at least five million grams of recreational marijuana per year, or
about 25 per cent of its anticipated production. The company claimed
the arrangement has an estimated annual retail value of $ 40 million
to $60 million.

Canopy said it had a two year supply agreement that included four
million grams of cannabis and cannabis derivates for the first year,
which the company valued at $40 million.

The supply deals are "historic," Organigram chief executive Greg Engel
said in a phone interview

"These are the first agreements that any province has signed for
supply from licensed producers in Canada," Engel said.

"Part of the initiative to get this supply agreement in place was they
understand that there will be a supply deficiency for the first couple
years of the adult recreational market, and they wanted to make sure
that they were in a position to get a significant supply going forward
and be the first to do so."

Following the news, shares of both Canopy and Organigram rose Friday,
closing up by 2.09 per cent and 16.74 per cent, respectively.

As part of their supply agreements with New Brunswick, Canopy and
Organigram said they will help fund public education or social
programs as well.

"New Brunswick has led the country in its efforts to attract cannabis
jobs and investment and Canopy Growth is proud to be utilizing local
trades and to hire in New Brunswick for the site we are establishing
in Fredericton," said Mark Zekulin, president of Canopy, in a release.

Friday's announcements followed those of the Ontario government, which
plans on establishing a single legal retailer of marijuana, with sales
overseen by the province's liquor control board. The retailer would
sell recreational cannabis through 150 standalone stores and an
e-commerce site.

Ontario, however, has not struck a supply deal, a government
spokesperson told the Financial Post.
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MAP posted-by: Matt