In ‘historic’ deal, New Brunswick to buy CA$100 million of cannabis

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New Brunswick entered into separate agreements with two of Canada’s largest licensed producers to buy 9,000 kilograms of cannabis per year worth 100 million Canadian dollars ($82 million) to meet demand for its recreational market when adult-use marijuana is legalized next summer.

The groundbreaking deals could be a harbinger of things to come for Canadian provinces choosing a monopoly model to retail recreational cannabis in their legalized markets.

Organigram, based in New Brunswick, said in a news release it will supply at least 5,000 kilograms of cannabis per year. The cannabis is estimated to have a retail value of about CA$50 million and represents about a quarter of the company’s anticipated production.

Smiths Falls-based Canopy Growth, meanwhile, agreed to allocate 4,000 kilograms of cannabis to New Brunswick’s recreational market for an estimated annual retail value of CA$40 million.

In a news release, the company said the deal – which it called “historic” – won’t affect its ability to fill medical marijuana prescriptions.

New Brunswick’s recreational cannabis blueprint could be released later today, and is expected to involve a government-run monopoly, leaving licensed producers out of distribution and making them strictly wholesalers. Ontario, Quebec and Prince Edward Island have all either announced or are leaning towards a similar government system.

Organigram, traded on the TSX Venture Exchange under the symbol OGI, was up 10% Friday morning. Canopy, traded on the TSX Exchange under the symbol WEED, was up about 1.5%.

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