In the cannabis space this week, Ontario announced an end to measures introduced earlier this year in order to curb the spread of COVID-19.
Meanwhile, the latest numbers released by Health Canada indicate that marijuana inventory in the country remains high, which could be a problem for the industry moving forward.
Read on for a closer look at some of the biggest cannabis news over the last five days.
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Ontario ends delivery, curbside pickup for private stores
News hit this week that customers will no longer be able to receive delivery or curbside pickup services from privately run cannabis stores in Ontario. They had been allowed to do so since April due to a temporary emergency order from the provincial government.
Instead, the province-run Ontario Cannabis Store will now be the only entity able to offer delivery.
The news has not been well received by operators of private cannabis stores in the province, largely because they believe taking these services away makes retailers less competitive with the black market.
There had been some expectation that the measures would remain even after COVID-19 — speaking to the Investing News Network (INN) not long after they were introduced, Charles Taerk, president and CEO of Faircourt Asset Management, expressed optimism that they would be left in place.
While they were “designed to end with the provincial re-openings, there is an opportunity to add (these services) in addition to home delivery, which further reduces demand for the illicit market,” he said.
Faircourt is the portfolio advisor to the Ninepoint Alternative Health Fund, which Taerk manages with Doug Waterson. The fund’s inception was in March 2017.
Stats show Canada’s cannabis inventory still high
Fresh data released by Health Canada indicates that cannabis inventory remains elevated in the country.
According to the organization’s latest report, which covers the month of April, Canadian marijuana producers held unpackaged inventory of 620,144 kilograms at that time, a new high.
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Meanwhile, federal license holders had packaged inventory of 46,413 kilograms, with provincial distributors and retailers having a further 38,601 kilograms.
Health Canada defines unpackaged inventory as cannabis that is held in stock by a cultivator or processor that is not packaged for sale at the retail level; packaged inventory is described as cannabis held in stock by a cultivator, processor, distributor or retailer that is packaged for sale at the retail level.
Speaking to Marijuana Business Daily, Craig Wiggins, managing director of market researcher TheCannalysts, expressed concerns about the market’s ability to absorb the inventory that is amassing.
“The total addressable market is growing. There’s no question about it,” he said. “But it’s not growing to the extent that it can absorb the unsalable product, so adjustments are coming.”
The Health Canada report also includes a breakdown of April sales in the country. About 7.59 million packaged units of cannabis were sold for both medical and non-medical purposes; dried cannabis, cannabis extracts and edibles represented 73 percent, 14 percent and 12 percent of sales, respectively.
Cannabis investor base starting to diversify
INN spoke this week with Nawan Butt of Purpose Investments, who said marijuana investors are becoming a more varied set of people as opposed to a single group with similar ideas.
For example, he pointed out that while interest from institutional investors is strengthening, some retail investors have lost enthusiasm.
Click here to skip to the Investing News Network’s overview of Butt’s comments.
Support from institutional investors is coming as the marijuana space begins to see more stability after a tough 2019. Attention from these investors is mostly being directed at licensed producers (LPs), and Butt said it is happening partially due to strong cannabis sales seen during the coronavirus outbreak.
“On the institutional side, we’ve seen financings increase,” Butt said. “It has mostly been for LPs, which are on the sort of margins for profitability … just about maybe six to 12 months away.”
Butt’s comments on institutional investors are in contrast to thoughts expressed by panelists at the recent Prohibition Partners LIVE event.
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Cannabis company news
Company news in the cannabis spaced ran the gamut from operational updates to store launches.
- Aleafia Health (TSX:AH,OTCQX:ALEAF) shared an update on its strategic growth plan, saying that it is getting close to releasing its Cannabis 2.0 products. CEO Geoffrey Benic described the launch, which is expected this month, as a “major milestone” for the company.
- Fire & Flower Holdings (TSX:FAF,OTCQX:FFLWF) opened two cannabis retail stores adjacent to Circle K locations in Alberta. The company expects the stores to benefit from being in high-traffic areas, and anticipates additional co-locations with other Circle K stores in the future.
- The first Hemisphere Cannabis store opened this week in Toronto. Hemisphere is owned by Aegis Brands, the parent company of coffee shop chain Second Cup Coffee (TSX:SCU), and the store is situated at a former Second Cup Coffee location. Six more Hemisphere stores are set to open in Ontario before the end of the year, according to Aegis.
- HEXO (TSX:HEXO,NYSE:HEXO) said it has launched medical cannabis products in Israel via a two year agreement with Breath of Life International, an Israeli medical cannabis company. This is the first time the company’s medical cannabis products have been available outside Canada.
- The Green Organic Dutchman Holdings (TSX:TGOD,OTCQX:TGODF) announced that its Ontario-based Ancaster facility has received a European Union Good Manufacturing Practice certificate, allowing it to export dried flower and cannabis extracts to Germany for validation.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
New FREE Report: Investing in Psychedelics
What’s ahead for this exciting new segment? Learn more with our exclusive psychedelics report today. Published July 6, 2020.