HTTP/1.0 200 OK Content-Type: text/html Pot Producers Keen To Initiate Co-Op For Sales
Pubdate: Fri, 06 Oct 2017
Source: Calgary Herald (CN AB)
Copyright: 2017 Postmedia Network
Author: Reid Southwick
Page: A2


Advocates says province would be spared millions in cost of building
retail outlets

A dozen cannabis producers from across Canada want to launch a
cooperative in Alberta, where they would sell the drug online and in
street-level stores - and they're promising extra revenues for the

A day after the province reopened public consultations on a new
cannabis market - leaving its options open on whether to pursue
privately or publicly run stores - the Canadian Cannabis Co-op said
its proposed retail model poses no risks or costs to taxpayers.

"There is no reason for Alberta to dump hundreds of millions of
dollars, or billions of dollars, to build out a retail network," said
Allan Rewak, of the Ontario producer and co-op member Newstrike Resources.

The co-op, featuring some highly valued producers including Aphria
Inc. which is valued at $1 billion, and smaller players such as
Newstrike, has pitched a model of 50 Alberta stores employing an
estimated 500 people, with $30 million in annual wages.

The group said its model could grow or shrink, depending on the number
of stores the province allows, but would cost its members tens of
millions of dollars to finance.

It's also willing to sweeten the deal by paying the provincial
government a dividend, an undisclosed share of revenues beyond tax

"Alberta has got a rich history of private-sector retail and
distribution, particularly for alcohol ... and we think it's a good
starting point for the co-op," said Darren Karasiuk, chair of the
organization's working group, adding the co-op has ambitions to expand
into other provinces and welcome new members.

Karasiuk said the co-op is not looking for a monopoly and doesn't
represent a majority of licensed producers.

But he said the co-operative model gives smaller growers leverage they
wouldn't otherwise have when the group negotiates with a single, large
buyer, such as the Alberta Gaming and Liquor Commission, which will
handle wholesale distribution of cannabis.

Noticeably absent from the roster of co-op members are any Alberta
producers. The province is home to four companies with federal
licences to grow marijuana, but only one - Canada's second largest,
publicly traded producer Aurora Cannabis - has a licence to sell.

Cam Battley, Aurora's executive vice-president, said the company has
chosen to stay out of the co-op for now as it awaits more clarity on
how the cannabis market will operate in Alberta and elsewhere before
it finalizes its retail plans.

Battley said the company is still considering whether it will open its
own stores, or it may join the coop, though all of it depends on the
retail models the provinces adopt.

So far, Ontario has decided to open government-owned and operated
stores. Alberta hasn't selected a model yet, but announced this week
it will hold a second round of consultations to determine the model,
among other things, before introducing legislation this winter.

"We are very focused on seeing that the benefits of the expansion of
this new industry flow to all sizes of organization," Battley said.
"That's the best way to ensure broad social acceptance and the
broadest possible opportunities to participate in a brand-new,
emerging market."

The Alberta government said this week it may not immediately allow for
online sales of cannabis when the drug is legalized July 1, given
concerns about verifying the buyer and person accepting home delivery
are of legal age.

Karasiuk said the co-op is confident it could roll out an online
distribution model with the proper checks and balances.

The group plans to press its case with the government during this
round of public consultations, which ends Oct. 27.
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