Nearly six months after Canada became the first G20 nation to legalize recreational cannabis, Ontario residents will finally have the opportunity to walk into a store and purchase weed.
This is no April Fool’s joke.
Researchers estimate that monthly brick-and-mortar sales in Ontario will average $1.25 million, reflecting decades of pent-up demand for the green plant.
Supreme Cannabis (FIRE.T), a publicly-traded marijuana producer, is using this new retail channel to educate dispensaries on the various strains of recreational cannabis it has available.
On April 1, 2019, Ontario’s marijuana business will have a physical presence as dozens of dispensaries begin to open across the province. Twenty-five privately owned stores have been allocated to the province, with the bulk operating in the Greater Toronto Area (GTA).
The Ontario government has opted for a restricted rollout of brick-and-mortar stores amid an ongoing supply shortage of recreational pot. This is largely due to weak supply chains and a long backlog of cultivation licenses from Health Canada.
That shortage could be filled very quickly as the nation’s largest producers acquire new land for cultivation. As a matter of fact, Canada’s marijuana market may soon find itself in a state of oversupply after Health Canada goes through some 840 license applications.
Companies like Canopy Growth (WEED.T), Aurora Cannabis (ACB.T) and Tilray (TILRY.Q) are among those best positioned to not only ramp up production but focus on alternative pot segments to drive both domestic and international sales.
On March 22, 2019, Supreme announced that its oil products will be introduced to adult-use consumers in select Canadian markets starting April 2019, before expanding to additional provinces this summer.
Each bottle will contain a proprietary blend of highly-purified cannabis oils and terpenes derived from plants grown by 7ACRES.
“Premium oils require premium cannabis,” stated Supreme CEO Navdeep Dhaliwal, “Our formulation will leverage super-critical CO2 technology to produce a high quality, purified cannabis oil which we re-formulate with the naturally occurring cannabis terpenes.”
Economic Footprint Grows
Since recreational pot was legalized, Ontario has lagged other provinces in overall sales, which reflects a reluctance to buy weed online.
According to the latest StatsCan figures, legal pot sales in Ontario were valued at almost $9 million in December, which was well below Quebec ($12 million) and Alberta ($14 million). Both provinces already operate retail cannabis stores.
According to Brightfield Group, Canada’s legal recreational pot sector could be worth $5 billion in just two years.
Deloitte expects Canada’s marijuana sector to be worth more than $7 billion in 2019, although that figure includes recreational, medicinal and black-market sales.
Supreme Cannabis Targets Ontario’s Retail Segment
One of Canada’s most innovative pot growers – Supreme expects per-capita spending on recreational weed to increase significantly in Ontario once consumers have physical access to the plant.
John Fowler, president of Supreme, recently told BNN Bloomberg that he believes per-capita spending will grow more than two-fold in the not-too-distant future.
“In a market like Ontario, which is Canada’s biggest market, these brick-&-mortar stores are going to be critical to ensuring the success of legalization,” Fowler said.
John Fowler named to High Times’ list of 100 Most Influential People in Cannabis.
In terms of size and economic impact, Ontario holds the key to the marijuana industry’s future expansion. The province is Canada’s most populous and accounts for nearly 39% of the nation’s Gross Domestic Product (GDP).
Even with Ontario retail stores at full capacity, the legal pot sector still faces competition from the black market. Fowler emphasized this point in his interview with Bloomberg, where he claimed that retailers lag the black market in terms of price and product.
Given Supreme’s emphasis on quality, Fowler is reaching out to Ontario dispensaries to educate them about his company’s various strains.
Supreme Cannabis operates 7ACRES producers within Canada and Medigrow Lesotho in Africa. Last year, it signed an international partnership deal with Khalifa Kush Enterprises (KKE) to launch a new line of premium cannabis products for international consumers.
The company recently signed a letter of intent with Malta’s economic development agency to begin cannabis production within the tiny European island state. Malta is considered a primary gateway to the European Union’s medical marijuana industry.
For Canada’s largest marijuana producers, international expansion will be the next order of business. Tilray CEO Brendan Kennedy has publicly stated that marijuana’s addressable market is likely worth $150 billion globally.
Although recreational pot is legal only in two countries – Canada and Uruguay – several U.S. states have legalized the green plant or are in the process of doing so. The U.S. market alone is expected to generate more than 85% of the total legal cannabis sales this year.
Recreational marijuana sales are expected to surge in the coming years as provinces expand retail locations. Due to its large population and economic clout – once the backlogs of licenses are cleared – Ontario is going to be an important player.
Full Disclosure: Supreme Cannabis is an Equity Guru marketing client.