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

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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3 comments on “In ‘historic’ deal, New Brunswick to buy CA$100 million of cannabis
  1. johnny on

    New Brunswick is very progressive, I guess its because of many years of having little in the way of major businesses and any meaningful income generated in their province. Once the Feds screwed up the fisheries they were one of Canada’s poor cousins. I say they learned the hard way and now are making up for it. GOOD FOR THEM. I hope they don’t follow Ontario’s lead in the way they will distribute the products. I believe they are to smart for that.

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  2. Don on

    The only thing I find ¨Historic¨is the price the Province is paying these corporate thieves. My calculations (correct me if I´m wrong) works out to over $11000 CDN a kilo….more than twice the price of AAA marijuana available right now. This will do nothing but encourage the black market to continue unabated.

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