Cannabis Industry in Limbo Over Ontario’s New Retail Plan Limitations

Article by Christina Pellegrini and Marina Strauss, The Globe and Mail

Cannabis industry in limbo over Ontario’s new retail plan limitations CHRISTINA PELLEGRINI AND MARINA STRAUSS Grow Technician Rebecca Canplin trims cannabis plants during the grand opening event for the CannTrust Niagara Greenhouse Facility in Fenwick, Ont., June 26, 2018. TIJANA MARTIN/THE CANADIAN PRESS

Cannabis growers’ plans to expand into retail in Ontario are in limbo after the province unveiled legislation on Thursday that would limit their share of Canada’s largest market.
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The proposed law would restrict marijuana producers and their affiliates to operating just one retail store at one production site. It is unclear whether a grower could take a minority stake in a retailer. It could come down to how the province defines the term “affiliates” in regulations it plans to issue by December.
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Out of 118 production licences Health Canada has issued, 63 are for companies in Ontario. Many of their sites are far from cities, where most of the expected customers live.
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The Progressive Conservative government has said it is drawing a line between cannabis producing and retailing in a bid to spur competition and prevent a few large players from gaining control of the market. This could derail some growers’ plans to add a retail chain to their business in Ontario.
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“It’s not surprising, because [Premier] Doug Ford is for the little man. That’s his whole mantra,” said Eric Paul, chief executive of cannabis grower CannTrust in Vaughan, Ont. “It’s a bit of a vote-getting strategy.”
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The uncertainty over whether producers could have more than one retail store in Canada’s most-populous province weighed on their stocks on Thursday. Shares of CannTrust Holdings Inc. fell 7 per cent, Aphria Inc. dropped 6 per cent, Canopy Growth Corp. declined 5 per cent and Aurora Cannabis Inc. slid 4 per cent. (Stock in Tilray Inc., which is listed in New York rather than in Toronto, as with the others, was up 15 per cent.)

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