(This story was updated at 2:05 p.m. ET with more details and comments.)
Major Canadian pharmacy chain Shoppers Drug Mart is offloading its 4-year-old medical cannabis distribution business to another company, marking its exit from the marijuana industry.
Shoppers, a division of Canada’s biggest grocer Loblaw Cos., said Tuesday it was “transitioning” its Medical Cannabis by Shoppers business to biopharmaceutical operator Avicanna.
Financial terms of that deal were not disclosed.
Shoppers launched the MMJ distribution business in January 2019.
“As we move away from medical cannabis distribution, we remain firm in our belief that this medication should be dispensed in pharmacies like all others and will continue our advocacy to that end,” Shoppers President Jeff Leger said in a news release.
The release did not explicitly state why Shoppers decided to pull the plug on its medical cannabis operations.
MJBizDaily asked Loblaw to comment on the reasons behind the move.
“Medical cannabis is the only medication that is not dispensed in pharmacy,” Loblaw’s public relations team wrote in response.
“As a pharmacy retail chain, we remain committed to supporting our patients and focusing on our core business, where we can make the biggest impact.”
Although Shoppers boasts nearly 1,350 locations across Canada, it was never allowed to dispense medical marijuana from those brick-and-mortar stores.
Canada’s federally regulated medical cannabis program revolves around mail-order sales to registered patients, with Shoppers offering an online platform to its MMJ clients to facilitate that process.
Shoppers did not cultivate cannabis, instead signing supply deals with growers.
Parent company Loblaw did not specify the value of Shoppers’ medical marijuana business in recent financial filings.
Shoppers’ exit from the cannabis sector came as no surprise to Mitchell Osak, president of Toronto-based Quanta Consulting, who consults for the cannabis industry.
Osak believes Shoppers’ medical cannabis business was “floundering,” considering the overall decline of Canada’s regulated MMJ market in terms of both revenue and patients.
“When (Shoppers) got into the medical cannabis industry in 2019, I believe there was a hope that they would be able to influence the government, or the government would change the regulations, which would allow medical cannabis to be prescribed in their pharmacies, by pharmacists,” he told MJBizDaily.
“That never happened.”
Osak added that Shoppers’ move out of cannabis “is a blow to the credibility of the industry,” noting that the company was involved in medical cannabis research.
“They were important players in medical cannabis, and their exit obviously doesn’t help the entire industry.”
Medical cannabis spending in Canada has declined as the legal adult-use market has grown.
Health Canada reported 247,548 medical cannabis registrations as of March 2022, down from a peak of 377,024 in September 2020. (Patients can be registered with more than one MMJ provider.)
Meanwhile, some licensed producers have refocused on medical cannabis as a higher-margin category than adult-use marijuana, looking in particular to patients whose MMJ spending is covered by employee health benefits plans.
Loblaw isn’t the only North American company to turn away from cannabis this year, illustrating the challenges of operating in the sector.
Technology company Forian recently left the cannabis space, selling off its BioTrack seed-to-sale tracking software.
Another tech company, Akerna, also sold its cannabis software assets earlier this year.
Solomon Israel can be reached at solomon.israel@mjbizdaily.com.
