Hydropothecary signs a 5-year, $1 billion supply deal with Quebec

Hydropothecary has been awarded a 5-year contract for supplying its home province of Quebec with recreational cannabis. The value of the deal is around $1 billion CAD.

Quebec has become the next province in line to sign a supply deal with one of Canada’s licensed producers, and this time it is the province-based Hydropothecary that took the cake.

As a part of their offer, Hydropothecary is to supply Quebec with high-quality recreational cannabis for the next 5 years, a deal that is going to amount to a total of around 200,000 kilograms.

The province also has a 6th-year option as a part of the deal.

Hydropotechary won the monopoly

Sébastien St-Louis, co-founder and CEO of Hydropothecary (CVE: THCX), said that this was indeed a historic moment for his company, as they’ve set a record to behold.

“This agreement marks an important step in the execution of our growth strategy, which is focused initially on the Quebec market by expanding our Gatineau facilities and hiring new employees, and then establishing our presence in other Canadian markets,” St-Louis said.

The government in Quebec clearly stated it’s intention to supply its market with cannabis and make sure that a shortage does not happen.

Here is the structure of their 5-year deal:

  • 20,000 kg of products in the first year
  • 35,000 kg in the second year
  • 45,000 kg in the third year
  • Last 2 or 3 will be determined based on the needs of the market

Based on an anticipated 10% growth rate, the government in Quebec will need approximately 49,500 kg and 54,450 kg respectively for its fourth and final year of the deal.

The SAQ, Quebec’s body for handling cannabis issues, has the right to terminate the deal with Hydropothercary at any moment.

“By doing business with Hydropothecary, the SAQ is engaging with a company that complies with the law and adheres to best practices in both corporate governance and the development and manufacturing of high quality and safe products,” added Mr. St-Louis.

Seeing how Hydropothecary is the only licensed producer of cannabis in Quebec, this will give them total control over the market seeing how the province will not allow growing cannabis at home to its residents.

By completing this $1 billion deal, Hydropothecary will cement itself as the de facto cannabis oligarch in Quebec for the next 5 year.

Cannabis will be available in Quebec both online and in the stores as of this summer, and sales will be controlled by the SAQ.

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