Pubdate: Sat, 16 Sep 2017
Source: Globe and Mail (Canada)
Copyright: 2017 The Globe and Mail Company
Author: Grant Robertson
Page: A21


Province inks supply deals, including with pot producer in pesticides

New Brunswick became the second province to start unveiling plans to
sell recreational marijuana next year, when the federal government
expects to lift nearly a century of prohibition on the product.

The province announced on Friday that it has created a Crown
corporation to oversee sales of recreational marijuana, and has signed
agreements with two cannabis-producing companies to supply a portion
of its retail network.

However, the New Brunswick government stopped short of releasing
specific details on how the product will be sold - such as the legal
age for consumption and the number of retail sites that will be
permitted. The new Crown corporation will not directly conduct retail
sales but will work with other entities to operate the stores, the
province said.

Ottawa introduced federal legislation in the spring to legalize
recreational cannabis by July 1, but has left decisions on how it will
be sold, and the rules governing consumption, to the provinces.

Last week, Ontario became the first province to detail its plans for
selling marijuana, which will involve a combination of government-run
retail stores and online sales. Roughly 40 storefronts will open
across the province at the outset of legalization, expanding to 150 by

Ontario will make it illegal for anyone under the age of 19 to
purchase the product, an age that New Brunswick has also been
considering. However, New Brunswick Finance Minister Cathy Rogers said
the province has not made final decisions on the age of consumption or
the size of the retail network.

New Brunswick said it signed agreements with two federally licensed
marijuana producers, Canopy Growth Corp. and Organigram Inc., to
supply cannabis to the province when the market is opened. Similar
agreements with other companies could be reached in future. Ms. Rogers
said the province wanted to lock up supply in advance so that it isn't
short once legalization arrives.

However, the Organigram announcement comes at a time when the
Moncton-based company is embroiled in controversy over the discovery
of harmful banned pesticides in its products, which have prompted mass

Late last year, Organigram was caught selling medical marijuana that
contained two illegal pesticides, prompting the recall of virtually
all of its 2016 production because of concerns over product safety.

A subsequent investigation by The Globe and Mail last month found
three additional banned pesticides in recalled Organigram products
that were independently tested at a Health Canada certified lab.
Numerous Organigram patients have reported falling seriously ill after
consuming the tainted marijuana, with symptoms that range from
dramatic weight loss to searing abdominal pains, painful cyst-like
rashes and persistent breathing difficulties, among other health concerns.

Health Canada has yet to get to the bottom of the problem; Organigram
conducted an internal investigation this year and said it did not know
how the banned pesticides involved in the recall got into the product.
Organigram also denies that additional banned pesticides found in The
Globe investigation were used. Meanwhile, some of the patients have
since sought medical treatment in the United States at facilities
specializing in toxicology and pesticide poisoning.

In a news release issued on Friday, Organigram - which billed its
product to consumers as organic prior to the recalls - said the deal
to supply the New Brunswick government was worth between $40-million
and $60-million a year, representing about a quarter of its production.

"We applaud the New Brunswick government's efforts to foster an
innovative, forwardthinking economic climate that supports cannabis as
a driver of growth for New Brunswick-based businesses," Organigram
chief executive officer Greg Engel said in a statement.

Canopy Growth, the largest of roughly 50 government-sanctioned
marijuana producers in Canada, also reached a supply agreement with
the New Brunswick government, which is worth about

It's not the first time the government has signed a deal with
Organigram. Last spring, the province gave Organigram $990,000 in
financial incentives to expand its medical-marijuana operations in
advance of legalization of the substance as a recreational product.
The money came in the form of payroll rebates to hire new staff.

Organigram employed 43 people at the time, but the rebates would help
the company add more than 100 jobs, the government said. The move was
criticized by the province's Progressive Conservative and Green
parties, which said the financial stimulus was awarded without proper
public debate.

The recreational cannabis market in Canada is expected to be worth
billions of dollars and licensed cannabis producers have been lining
up to supply the new industry. A report by Deloitte last year
estimated recreational marijuana could be worth more than $22-billion
to the Canadian economy, including jobs and spinoff businesses.

- - With reports from The Canadian Press
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