British Columbia Restricts Retail for Cannabis Producers
Aurora Cannabis acquisition last week
Aurora Cannabis (ACBFF) was in the news last week, as it plans to acquire 19.9% ownership in Liquor Stores for a total value of $103.5 million. After the initial investment, Aurora Cannabis will have the option to make additional investments in Liquor Stores, up to a 40% interest. Liquor Stores is expected to set up new cannabis retail outlets and convert some of its stores to cannabis retail.
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BC restricts retail for producers
The above chart shows three retail sales models that different provinces will adopt. The BC (British Columbia) cannabis retail model accommodates both government and privately run retail stores.
However, the BC government will put restrictions on retail activity for cannabis producers in the province. BC’s “Private Retail Licencing Guide” says, “Where there is a close association (financial or otherwise) between a licensed producer and a non-medical cannabis retail business, the retail business will be prohibited from selling any products from the licensed producer.”
This regulation may come as a setback to Aurora Cannabis and producers (MJX) such as Canopy Growth (WEED), MedReleaf (LEAF), and Aphria (APHQF), who planned to pursue retail in British Columbia. However, it will all come down to how “close association” is defined.
In Alberta, however, the cannabis retail sales will come from private retail stores, which will be under the strict purview of the Alberta government. It remains to be seen if Alberta will have a similar restriction between producers and retailers. Alberta’s website states, “Full details on licensing and establishing a cannabis retail operation will be available in early 2018.”
In Ontario, the government has proposed to sell recreational cannabis through a subsidiary corporation of LCBO (Liquor Control Board of Ontario), which is a government enterprise and currently retails and distributes alcoholic beverages in the province. The subsidiary corporation will be known as OCRC (Ontario Cannabis Retail Corporation). There is no provision for private retailers.
For more information on the marijuana industry, check out the following series: