Late last week, Nova Scotia’s Finance Minister Karen Casey confessed that only 6% of Nova Scotia cannabis sales were completed on-line (4% below government predictions of 10%).
According the BNN Bloomberg, “Casey announced that the province has asked the Nova Scotia Liquor Corp (NSLC) to look at adding to its 12 retail locations currently selling cannabis. She said an expansion would also address geographical gaps in the province.”
On January 10, 2019 Biome Grow (BIO.C)’s Highland Grow fulfilled its first purchase order with NSLC.
The initial shipment consisted of three genetic varieties targeted specially for the local market.
Highland Grow intends to expand its “genetic and product offerings” – validating its “localized approach to its domestic market”.
Biome Grow is unapologetically focused on Atlantic Canada.
- Back Home is a late-stage applicant which will service both Newfoundland and Labrador.
- Highland Grow: A licensed producer in Antigonish, Nova Scotia. Highland Grow was Biome’s first licensed producer under Canada’s ACMPR guidelines.
“We believed that on-line cannabis sales would address areas of the province where there was a gap,” stated Casey. “We’ve recognized that to date it has not materialized, so we have to look at how can we get out to other areas if online is not going to bring the consumer in.”
The minister acknowledged the shortage of retail outlets, particularly from the South Shore through the Annapolis Valley.
Highland Grow’s Nova Scotia Facility is 6,500 square feet and resides on 19 acres of farmland and was a cost-effective way to achieve Highland Grow’s first license. The Nova Scotia Facility will ultimately be expanded to 100,000 square feet in two phases.
The Phase I expansion will be 50,000 square feet and will be completed in the first quarter of 2019.
The Phase II expansion of 50,000 square feet is targeted for completion during the second quarter of 2019.
Nobody should be surprised that Nova Scotia cannabis consumers are currently under-served.
From the get-go, Nova Scotia adopted a conservative approach to distribution and sales.
Government stores carried limited strains of flower – announcing that it would sell cannabis oil “at a later date.”
The NSLC established three price categories:
- Value: $6.33 to $8.49
- Core: $9 to $10.98
- Premium: $10.99 to $15
The Nova Scotian government sternly advised cannabis consumers to treat their purchases like alcohol.
“If you buy a 40 ouncer of rum you’re required to put it in a compartment that’s away from the driver or its occupants,” scolded Nova Scotia RCMP Cpl. Dal Hutchinson, “Same thing applies when you go to buy your cannabis.”
“You have to keep cannabis in a secure location whether it be in a trunk or in a container in the back of a truck,” Hutchinson continued, “or in the case of a minivan have it in the very back, maybe in a floor compartment.”
According to Statistics Canada, in 2018 Nova Scotians won 1st prize for “most pot consumed per capita”.
But Nova Scotians’ preference for “value” (cheaper) strains of weed, meant that it only claimed 2nd prize (behind P.E.I) for “most money spent on pot” ($11.34 per capita).
National Cannabis Survey Highlights:
- Nova Scotians consume 51% more cannabis per capita than the national average.
- 23% of Nova Scotians consumed pot in Q3, 2018.
- 19.4% of Atlantic Canadians consumed pot in Q3, 2018
- This is 4% higher than the national average of 15.2%.
“We spotted the lack of competition and high per capita consumption in Atlantic Canada early on and set out to acquire subsidiaries and establish partnerships across the region,” stated Biome CEO, Khurram Malik.
“Biome and Highland Grow are preparing to meet the increase in demand and do our part to eliminate the current supply shortage in our home province,” confirmed Frank MacMaster, President of Highland Grow.
“Biome Grow has been steadfast in its focus on a regional business strategy,” confirmed Malik, “We are now transitioning from development to a commercial cannabis enterprise.”
Operating at full capacity, the Antigonish County, Nova Scotia operation can produce about 700,000 grams of marijuana a year.
Casey told The Chronicle Herald that cannabis demand is currently outstripping supply by about 60% in the province.
BIO.C is trading at .68 – down 70% from it’s pre-legalisation high of $2.05.
The current market cap is $74 million.
Full Disclosure: Biome is an Equity Guru marketing client, and we own the stock.