Quebec signs recreational cannabis supply agreement with 6 producers

The Quebec provincial government has signed a multi-year deal with their local cannabis producer Hydropothecary, and 5 other cannabis producers from Canada to supply the province with recreational cannabis.

Just a few months to go before the legalization of recreational cannabis in Canada takes place, and the provincial governments are one by one signing deals for supplying their markets.

We already know that Quebec has the cheapest weed in the country, maybe even in all of the first world countries.

But, will they have enough weed to meet the demands?

Quebec is the latest province to resolve their recreational cannabis market supply, as they landed a deal for roughly 64 tons of cannabis on a yearly basis, which is to be supplied by 6 different cannabis producers.

However, many estimates say that the aggregate demand in Quebec is estimated to be roughly 100 tons per year, some estimates even going up to ~150 tons.

Hydropothecary gets the biggest piece of the cake

Co-founder and CEO of Hydropothecary (CVE: THCX), Sebastien St. Louis, a Quebec-based cannabis producer, said in an interview that 100 tons are simply not enough, and that the province might soon fall into a deep lack of supply.

“I was sitting with the government of Quebec a few weeks ago, the parliamentary commission on marijuana legalization, and the government expressed concern around the legal industry’s ability to supply quality marijuana to Quebecers. In response to that, their demand – for Quebec alone – was 144 tons.”

Perhaps the biggest winner of this deal is in fact Hydropothecary itself.

So far, Hydropothecary has shown more than just potential to be the biggest and best supplier in Quebec. They have shown exact stats.

Here’s just a few interesting things you might not know about Hydropothecary:

  • They have a very low cost of production at $0.89/gram.
  • They are fully funded for an expansion up to 108,000 kg/year.
  • They are the biggest licensed producer in Quebec.

For all this and more, Hydropothecary has been awarded with a deal to supply the province with around 20 tons of recreational cannabis (including non-psychoactive products).

Quebec has another 5 cannabis production companies within its borders, including the second location of Aurora Cannabis.

The other 5 producers have just acquired their licenses in the past 2 moths and are nowhere near the level of Hydropothecary at this moment.

Let us remind you that several provinces already have completed their deals as well, although those were smaller provinces such as New Brunswick and PEI.

The government of Quebec reached a deal with several other cannabis producers, including Aphria, MedReleaf, Aurora Cannabis, Canopy Growth and Tilray.

Here are the initial amounts each producer is supposed to provide on an annual basis:

  • Canopy Growth: 12,000kg
  • Aphria: 12,000kg
  • MedReleaf: 8,000kg
  • Aurora Cannabis: 5,000kg
  • Tilray: 5,000kg
  • Hydropothecary: 20,000kg

Shopify enters the online market

One of the biggest developments in the world of weed last few weeks was the entrance of Shopify, the Canadian online sales platform, which signed a deal with the government in Ontario to secure online sales of recreational cannabis.

The government in Ontario will sell cannabis online via its LCBO subsidiary, the Ontario Cannabis Retail Corporation (OCRC).

According to the details of the deal Shopify is to provide the OCRC with technology which is to be used not only for sales, but also for inventory, tracking, accounting, and human resources operations.

This technology will not only be implemented in the online sales platform but also within the brick-and-mortar stores as well.

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