As Australia’s domestic medical cannabis market evolves, some companies are becoming frustrated with the country’s ongoing reliance on cannabis imports from Canada.
Still, others say demand is being driven by consumer preference.
Australia legalized medical cannabis in 2016, and by 2017, Canadian cannabis companies were announcing exports of cannabis oil and flower to the country. Although many of these initial shipments were relatively small (just the equivalent of 200 grams in 2017), by 2021, Canadian companies exported nearly 5,800 kg of cannabis; by 2023, that figure was over 34,000 kg.
The early reliance on imports came at a time when Australia’s domestic industry was in its infancy. But in late 2024, some of these companies recently told the country’s Sydney Morning Herald that they are struggling to compete with what some characterize as product “dumping”.
Some cannabis companies in Australia say that much of the cannabis being imported from Canada is of lower quality and that the products have fewer checks on quality than what is produced by Australian companies.
“I have no issue with imports coming here; the issue is that because they have surplus product, they’re dumping it here, which makes things difficult for local cultivators,” Nan-Maree Schoerie, managing director of ECS Botanics, tells the Herald. ECS is an Australian cultivator and manufacturer of medicinal cannabis.
StratCann also spoke with Schoerie about the issue. She explained that while some of the Canadian cannabis products coming into Australia are good quality, she thinks some companies are unloading lower-quality products from their vaults due to an oversupply in Canada.
“We have a product that comes into Australia from Canada that is extraordinarily good quality, probably for the extra years of experience,” she tells StratCann. “But there’s also an enormous amount of product that we believe is coming from stockpiling in Canada.
“That product is flooding into Australia. It’s not necessarily fresh, it’s not necessarily great, but they can sell it at a very low price.”
The export market is a good opportunity for Canadian companies to offload lower-quality product, but she notes this pushes the price down in Australia just as it has in Canada. While growers in Australia could get around AU$6 a gram, wholesale, in 2023, Schoerie says in 2024 that has dropped to around $4-4.50.
“That is a direct consequence of the amount of product that has come in, primarily from Canada.”
Schoerie notes that her own company exports products, as well, and doesn’t blame Canadian companies, or any others for finding markets for their products where they can.
Ultimately, she says the issue is one created by the Australian government, specifically the agency that oversees Australia’s cannabis for medical purposes program, the Therapeutic Goods Administration (TGA).
She explains this because the TGA, which requires Australian companies to have GMP compliance, allows companies importing their products into Australia to use a “loophole” to have them packaged in a GMP-compliant facility. She also says the TGA doesn’t have the resources to ensure the facilities that package goods in Canada adhere to Australian requirements.
Andrew Dowling, the director at an Australian cannabis wholesaler called Phytoca that focuses primarily on imports, pushes back against this argument, saying that being processed in a GMP facility in Canada or Australia is still the same standard.
“The actual growing of cannabis is not covered under GMP, anywhere in the world, because it’s not a manufacturing activity,” argues Dowlin. “It’s cultivation.”
The issue of product “dumping”, he says, is one being pushed by companies who simply aren’t meeting the international market’s demands, both in terms of price, but also in terms of quality.
“If these governments really had a problem with Canadian imports, there are levers at their disposal that they could be pulling on to turn it off.”
“It’s wrong to claim it’s being dumped. That product is being ordered because there’s a commercial opportunity and the demand is driven by the price point that is unmatched by Australian companies. If Australian companies could find a solution to that, they’d be doing it.”
Deepak Anand, an industry consultant in Canada who assists cannabis companies with exports into countries like Australia, echoes these sentiments.
“Whether it be Germany, Australia, or Israel, Canadian products are of a better quality than domestic supply. This is a reflection of what the market wants rather than this alleged dumping, which hasn’t been proven anywhere.
“I think this notion of dumping, which was started by the Israelis—it’s catchy and sounds like something nefarious is going on—but the fact of the matter is Canadian products are just of a higher quality so that’s why there’s a demand for it.”
Canadian cannabis companies have indeed been dealing with domestic price compression from an excess of supply that has led many companies to lean into the export market. Exports are seen as an easier and, at times, more lucrative path to market than selling domestically, since exports are often bulk sales and are not subject to Canada’s federal excise tax of $1 per gram.
The oversupply of cannabis in Canada that has pushed many companies to the export market has, in the past year or so, also had the effect of relieving some of that downward pressure on domestic prices. While exports don’t appear to be slowing down, it’s possible that the international market will begin to find some balance.
Donald Trump is an excellent archetypal shadow projection case study for our times. He carries an immense weight of psychic pressure from people’s positive and negative projections, which speaks for the strength of his whole being.
This statement does not imply that I see him as a “good” or “bad” person (or any other label). It’s not a judgment of his character. I’m speaking about unseen psychic energies and cosmic forces in the context of thought projections and the psyche.
Most people would have already crumbled, died of a disease, become drug addicts, or committed suicide under the load of these intense psychic projections.
As I’ve written in a previous article, he’s the target of the projections from the left, conservatives, and the truther community alike – billions of people on a global level.
One side sees him as Hitler and dictator, or controlled op, shill, Lucefarian, or false savior. The other side sees him as the savior/messiah who can’t do wrong.
Most people are caught in these oversimplified good/bad either/or projections.
If you know how to do shadow work, hold the tension of opposites within [key concept!], and withdraw your projections, you will start to see him as he IS [the arising “third force” beyond the black-and-white duality], not as you think he is or want him to be beyond any label.
“If we can stay with the tension of opposites long enough —sustain it, be true to it—we can sometimes become vessels within which the divine opposites come together and give birth to a new reality.”
– Marie-Louise von Franz
This is an extremely difficult internal process. It’s not an intellectual exercise of “neutrality” or “balance.” It’s not a moral question and cannot be reached via logic and the mind. It’s not a thought process.
I’m certainly not free from all projections, let alone having an integrated shadow. I have my triggers. They serve me to do the internal work [if I catch them]. It’s a continuing “trial and error” process that becomes more nuanced over time.
Anyone who claims they don’t project, don’t get triggered, don’t have a shadow, or are “done with shadow work” [huge red flag!] doesn’t grasp what shadow work is and is lying to themselves. It would literally imply that you are “enlightened” without any unconsciousness.
Most people, normies, and self-proclaimed “awake” truthers alike indulge in their projections (sometimes truthers even more than normies, ironically).
The mind and reality (by extension through the process of projective identification) will always give them a “reason” and “justification” to indulge in their projections—augmented with thought injections by occult forces that trigger their unconscious shadow to feed off the emotionally charged projections of the suppressed shadow.
As Paul Levy explained in his work, this is also the modus operandi of wetiko tagging into the shadow – it feeds you what you want to see to feed off you even more.
That’s why trying to expose all the lies, psy-ops, and conspiracies “out there” in the world is an endless feedback loop because “you” and the collective psyche will “dream up” more of the same, living under the illusion that the outside world is separate from “you.”
Until you stop externalizing, withdraw your projections, focus the vision within, and start living from within—grounded and embodied in Self.
I can see it in my mind, too, and it requires internal willpower not to give in to the “justified” projections but to use them to ignite the alchemical fire within as fuel for the Great Work to bring forth Essence/Self.
Hence, the real battle and psy-op is within and working THROUGH you.
The more you are a slave to occult forces outside your awareness, regardless of whether you call yourself a “truther” who thinks he is awake and has figured it all out or the average person who may not be aware of any conspiracies.
Starting the process of withdrawing your projections (by becoming aware of them) is the most critical part and foundation of inner work before deeper spiritual/esoteric self-work can begin (or you’ll fall into the trap of spiritual bypassing).
It is about entering the “House of Gathering” as Carl Jung described:
“We are still certain we know what other people think or what their true character is. We are convinced that certain people have all the bad qualities we do not know in ourselves.
If you imagine someone who is brave enough to withdraw all his projections, then you get an individual who is conscious of a pretty thick shadow. Such a man has saddled himself with new problems and conflicts.
He has become a serious problem to himself, as he is now unable to say that they do this or that, they are wrong, and they must be fought against. He lives in the “House of the Gathering.”
Such a man knows that whatever is wrong in the world is in himself, and if he only learns to deal with his own shadow he has done something real for the world. He has succeeded in shouldering at least an infinitesimal part of the gigantic, unsolved social problems of our day.”
– Carl Gustav Jung
The conditioned ego-personality stuck in pride and victim/blame consciousness will deny and resist this process.
It will vehemently protest the idea that “whatever is wrong in the world is in himself” with various reasons and justifications to mentally shield itself from disillusionment – a crucial threshold to break through in the Great Work.
Withdrawing your projections not only helps you see clearly beyond your mechanical, programmed, and reactive likes and dislikes, attractions, and repulsions, but you do more for the betterment of humanity than trying to figure out any conspiracy or psy-op intellectually.
Integrating your shadow will also give you more access to Self-energy, your essence as a vessel for the Divine, and, by extension, more access to creativity, life force, and true FREE WILL with CONSCIOUS action and not mechanical re-action.
Your whole being becomes lighter and a more efficient transducer for Divine Will, which will express itself uniquely through you. It will connect you more to your soul purpose and creative spirit.
In other words, you raise your frequency and vibration to higher levels of Being; hence, as Jung said, “One does not become enlightened by imaging figures of light but by making the darkness conscious.”
He’s referring to your internal darkness, your shadow, what you are not aware of yourself within but project externally on others.
But it’s not easy because once you engage in embodied shadow work (and don’t just intellectualize it), you will encounter all kinds of complexes, traumas, beliefs, urges, desires, mother/father wounds, and feelings you didn’t know you had [many of them are not “yours”].
Yet, the only way out is in and through. All need to be revealed from darkness to Light. There is also only so much shadow work you can do by yourself. Find others with whom you can engage in the same inner work. We need each other.
I’m not implying that we shouldn’t look at the world, speak out, and expose the lies. It is not about inaction or being passive.
But if you are more focused externally without embodied psychological self-awareness [and a higher spiritual vision beyond the 3D manifestations in the context of the evolutions of consciousness], you can easily get lost in the conspiracy wormhole and see conspiracies, psy-ops, and controlled ops where there are none.
You won’t be able to accurately separate truth from lies in the world because you haven’t faced the lies within yourself.
“To speak the truth, one must know what the truth is and what a lie is, and first of all, in oneself. And this nobody wants to know.”
– Gurdjieff
The wetiko-infused psyche and suppressed shadow will also pull more of the same out of the “magician’s hat” for you to justify your projections, and you become like Don Quixote, fighting illusory windmills or shadows in Plato’s allegory of the cave.
In other words, you will see precisely what you want to see. It’s an endless loop.
Living in that externalized state – especially constantly glued to the internet in a disembodied state – you are actually more vulnerable to manipulation and control while you believe [lie to yourself] that you are “awake”, “free”, and “sovereign.”
As within so without. What we see playing out in the external world disguised as conspiracies, psy-ops, or the deep state is also related to our personal and collective shadow.
That which we don’t face within ourselves is also manifested in the outside world as “fate” on a personal and collective level, hence all there is are lessons.
It’s a constant revelation and unveiling (apocalypse), and it is accelerating.
It’s an amazing opportunity to utilize all the manifestations of the psychic material for the Great Work, bringing about a true shift and transformation in consciousness.
“People often ask Dr. Jung, “Will we make it?” This refers to the cataclysm of our time. He always replied, “If enough people will do their inner work.” This soul work is the one thing that will pull us through any emergency.”
– Robert A. Johnson
In other words, instead of only trying to expose the controlled ops, psy-ops, NWO, and Deep State out there, also face the controlled ops and deep state within in your own mind, psyche, and being – where you lie to yourself, deceive yourself, betray yourself, sell your soul, put on a mask, suppress all kinds of unconscious drives only to project them externally.
In short, it’s both inner and outer work, but if the inner work is small or non-existent, the outer work is even smaller and less effective and potent, for you mostly fight shadows while creating more psychic pollution and “chaos” in the world out of your own unrecognized shadow.
“The outer work can never be small if the inner work is great. And the outer work can never be great if the inner work is small.
The outer work can never be minor, when the inner work is a major one, and the outer work can never be major or good when the inner work is a minor one and without value.
The inner work always determines in itself all the dimensions of the outer work, its whole breadth and extent. The inner work receives and draws the whole of its being from nowhere but the heart and in the heart of God.
If your works are to be living works, then God must spur you to action from within, from your innermost part, if they are really to be alive. For that is where your own life is, and that is the sole place where you are truly alive.”
– Meister Eckhart
The Deep Dive:
We go way deeper into the process of Shadow Work in the context of Inner and Outer Work among other psycho-spiritual modalities, and how it relates to Trauma, sub-personalities, Occult Forces, and much more in our 14-week group coaching program “Time of Transition: Embodied Soul Awakening.”
“I was blown away by how comprehensive their teachings are. As a practicing psychotherapist for over 20 years, I learned more about shadow work, trigger work, and effective ways of helping myself and others to process childhood, past life, and unconscious wounding than in any of my psychology training.
They give everyone, no matter if you’re new or seasoned to this type of work, a step-by-step process to go into the depths of your soul and self-heal. I feel lighter, calmer, and more accepting of EVERYONE as a result, I am more embodied in who I am than I’ve ever been.
Laura & Bernhard DELIVER on their promises of teaching the inner and outer work.”
New Brunswickers prefer more “convenient” cannabis products as the market continues to shift to products like vape pens, concentrates, and pre-rolls, especially infused pre-rolls, according to a new annual report from Cannabis NB.
Sales of dried flower still represented just over half (50.6%) of sales by category, down from 52.5% in 2022-2023, with concentrates and extracts at 35.2%, up from 33.5% in the previous year. Sales of edibles were the third largest product category, with 7.4% of sales by category.
The newest annual figures from the provincial cannabis agency Cannabis NB show $93.8 million in total sales for the year ended March 31, 2024, a 12.4% increase from the previous year. From this, the provincial agency generated $22.7 million in net income, a 24% increase from the previous year.
While dried cannabis sales still increased year-over-year, whole flower sales in the Picture Province were just over 30% of overall sales, while infused pre-rolls now represent 15% of total concentrate sales.
In the most recent fiscal year, Cannabis NB brought in eight of its planned nine private retail cannabis locations, part of a commitment to diversify the retail market and bring stores into more remote regions of the province. Total sales in the private retail channel were more than $2.8 million.
New Brunswick also has 25 Cannabis NB locations in the province and seven approved cannabis farmgate locations. The provincial cannabis agency also supports the local cannabis industry by working with local producers who currently contribute 21.5% of total sales. Cannabis NB says they expect this number to continue to grow as more locally-made products become available.
There were 279 products from New Brunswick producers available in the province as of March 31, 2024 (out of 1,927 from across Canada). Whole flower was the largest category, with 58 SKUs, followed by cannabis accessories at 46 and concentrates at 42. The province carried 19 clone SKUs in 2023-2024, the most of any province. Ontario is the only province that eclipses New Brunswick producers in terms of available SKUs (848).
Cannabis NB was the first ever cannabis board in Canada to host a consumer-facing education event, the New Brunswick Cannabis Expo, with over 1,400 attendees. The Cannabis Expo is a cannabis education trade show that’s expertly crafted for 19+ New Brunswickers who consume cannabis.
Image via Cannabis NB
“For us, delivering for the people of New Brunswick means generating revenue to support the province, while consistently prioritizing safety, responsibility, and top customer service,” writes Cannabis NB president and CEO Lori Stickles in the annual report.
Manitoba sold $153.6 million worth of cannabis in the fiscal year ended March 31, 2024, bringing in $39.5 million in net revenue for the province.
Cannabis operations revenues for the Manitoba Liquor & Lotteries Corporation increased $22.7 million from the prior year, while net income and comprehensive income and total allocation to the Province of Manitoba increased by $8.3 million.
MBLL says this growth was mainly driven by the addition of 35 new retail locations. The province had 205 licensed private retail cannabis locations open throughout the province as of the end of March 2024, compared to 177 last year. Seven existing locations closed in the most recent fiscal year.
Sales of dried flower again dominated, with $92.9 million in sales, compared with $82.2 million in the previous fiscal year. Extracts were the next highest-selling product category, with $50 million in sales, up from $39.1 million the previous year.
There were $10.1 million worth of cannabis edibles sold in the year ended March 31, 2024, compared to $9.1 million in the previous year. Sales of cannabis topicals were worth $567,000, up from $424,000 in the previous year.
Manitoba also expanded its cannabis distribution options in the most recent fiscal year, allowing licensed producers to warehouse cannabis products with a licensed cannabis distributor as well as implementing a twenty-day purchase order deadline, and a five-day receiving requirement.
The MBLL says these changes have brought more cannabis inventory into the Manitoba market and closer to the retail network, improving the lead time and fulfillment cycles experienced by retailers.
In 2024-25, the MBLL says its cannabis operations will focus on technology initiatives, including the automation of its federal cannabis tracking requirements and the automation and enhancement of cannabis performance metrics and reporting.
For context, while the MBLL brought in $39.5 million in net revenue for cannabis sales, it brought in $89.9 million from casinos, $313.8 million from alcohol sales, $45.1 million from The Manitoba Lottery, $45.2 million from online gaming, $199 million from video lotto. Cannabis sales were about 5% of the total $732.5 million combined net revenue from all these sources.
MBLL will host a virtual Q&A with President and CEO Gerry Sul on October 30, 2024.
The Arkansas Supreme Court decided in a narrow 4-3 ruling that votes in favor of and against a plan to broaden the state’s medical cannabis program would not be taken into account. Protect Arkansas Kids, a nonprofit that joined the legal fight against the amendment—Issue 3, filed a case that resulted in this decision. The votes cast on Issue 3 will be ignored, even though it will still be on the ballot in November.
The amendment sought to introduce several modifications to the state’s medical cannabis system, which was initially approved in 2016. It sought to ease licensing rules, widen the range of qualifying illnesses and medical professionals authorized to prescribe cannabis as well as permit patients to grow their marijuana at home.
However, in its decision, the court rejected Secretary of State John Thurston’s initial complaint. The main argument of the complaint focused on paid canvassers’ training requirements. Thurston contended that the group supporting the proposal, Arkansans for Patient Access, did not reach the required 90,704 valid signatures to qualify for the ballot due to non-compliance with state laws related to canvassers’ training.
In his majority opinion, Justice Shawn Womack supported a second legal complaint that argued the proposal’s ballot title and popular name were inadequate. Justice Womack also objected to a clause in Issue 3 that would have permitted the holding of up to one ounce of cannabis if it were to be legalized federally. He argued that this provision was misleading, as it would apply even to those without a medical cannabis prescription, contradicting the popular name, which solely references medical cannabis.
Womack was joined in the majority opinion by Justices Bilenda Harris-Ritter, Barbara Womack Webb, and Don Curdie.
Meanwhile, Justices Cody Hiland, Rhonda Wood, and Karen Baker dissented from the majority ruling. Hiland contended that the initiative’s ballot title and popular name were neither insufficient nor misleading. He argued that the court’s long-standing legal standard for determining the sufficiency of ballot titles had been disregarded in this case and that voters should have been allowed to decide on the initiative.
Arkansans for Patient Access expressed disappointment over the court’s decision, calling it a setback for the state’s medical cannabis program. They reaffirmed their commitment to removing barriers for patients and reducing costs while accusing anti-cannabis politicians of ignoring the will of the people.
Conversely, Protect Arkansas Kids praised the ruling describing the ballot initiative as misleading. They claimed it was part of a broader effort by the cannabis industry to legalize potent, addictive drugs under the pretense of medicine.
The ruling is likely to be a disappointment to the broader cannabis industry, including firms from across the border like Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON) since the issues that the ballot measure was seeking to address will persist until the next election cycle when campaigners can launch another attempt to enact change.
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Calgary-based Decibel Cannabis Company Inc. has closed on its acquisition of AgMedica Bioscience Ltd., a subsidiary of Atlas Global Brands.
The deal comes from an exchange with Callisto Capital Corp for a $6.3 million unsecured convertible debenture. The deal still requires the final approval of the TSX.
The purchase gives Decibel better access to export markets. Decibel projects that AgMedica could contribute $30 million in net revenue and $4 million in EBITDA in 2025, totalling an anticipated $130 million of net revenue and $25 million of adjusted EBITDA in 2025 on a pro-forma basis.
“I am excited to announce the acquisition of AgMedica,” said Benjamin Sze, CEO of Decibel, in a press release. “An EU GMP certification is an international standard that Decibel has been contemplating for quite some time; this acquisition accelerates that timeline.
“The AgMedica facility becomes the cornerstone of our international strategy as it allows us to extend our products and brand to the rest of the world. Furthermore, this marks the first step of Decibel’s new strategy as we execute on profitable growth opportunities enhanced by synergistic and accretive transactions.”
Decibel expects the deal to significantly expand its international footprint by using Agmedica’s EU GMP certification to enable export of flower and various extract products to seven countries, including Australia, Denmark, Germany, Israel, Norway, Spain, and the United Kingdom. This adds EU GMP and IMC-GAP certified annual flower production of 5.1 metric tonnes per annum, which, when combined with Decibel’s GACP facility, expands the total metric tonnes per annum of exportable flower to more than 12.
The deal also includes Decibel’s acquisition of GreenSeal Nursery Ltd., a licensed cannabis nursery.
Following completion of the transaction, AgMedica will enter into a five-year industrial lease for the AgMedica facility in Chatham, Ontario, as well as a sale and leaseback agreement with Callisto, pursuant to which specific equipment belonging to AgMedica was transferred to Callisto and leased back to AgMedica for a nominal cost for the term of the AgMedica facility lease. AgMedica has the option to repurchase the equipment at the end of the lease term for a nominal value.
Decibel’s Q3 2024 financial report is expected on or about November 21, 2024, and is projected to have net revenue between $23 to $25 million.
For some time the outlook for Canada’s cannabis sector has been gloomy. Following the crest in company values post-legalization came a crash from which the cannabis equity market hasn’t yet recovered. Meanwhile, domestic demand for cannabis seems to have flattened and shows few signs of new growth. While overall revenue is projected to reach US$5.63 billion this year, recreational sales have leveled off. With over 3,700 authorized retail stores across the country, and just under a store per 10,000 population the recreational market appears to be saturated.
Looking at low-THC consumer products in the U.S. in my previous article, I was struck by the segment’s triple-digit growth and by its movement into multiple sales channels. While consumer data is still catching up with this new market it seems that low-THC adult use products are reaching new customers who are loath to visit dispensaries. In contrast to the U.S., recreational cannabis offerings here reveal the continuing dominance of high-THC products. Could Canadian and U.S. consumers be so different, I wondered?
I’m betting they are not.
Sure, American low-potency markets have taken advantage of the loophole created by the 2018 Farm Bill’s hemp definition. Aside from conversion cannabinoids, natural hemp adult-use products below the 0.3% THC threshold are profitably marketed across the U.S. Could similar products be sold here?
Canada’s Industrial Hemp Regulations suggest it might be a difficult path. Only classified hemp cultivars may be used, although there’s a long list. It’s difficult to say if these have attractive terpene profiles for recreational use. THC levels are typically quite low. The government can be petitioned to add varieties, but that’s another process to engage.
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A simpler option would be to use regular cannabis, which low-potency beverages, edibles and other products could be derived from. Products would need to be adopted by provincial distributors, but the OCS has a small low-potency category, and Alberta has cut out the middleman to allow for direct distribution. Advertising and promotion rules are another obstacle.
Cannabis retail here would also need to make some changes. A typical retail store is oriented, through its branding, sales culture and limited floor space, to selling high potency. In the U.S., beverages are the key category for lower THC products where they’re sold by supermarkets and liquor outlets depending on state legislation. Beverages require more floor and shelf space than in dispensaries. As the ‘Dad Grass’ brand I featured exemplifies, the stateside pitch is to regular folks – those who drink lite beer while tending the BBQ.
I can think of two business models that may be useful ways to reach a similar clientele here.
The first I’m borrowing from Alberta-based SNDL, a firm that’s been on a tear recently, buying up chains and using the retail brands they represent to target specific customers. For example, the Value Buds and Firesale brands appeal to bargain hunters, Spiritleaf offers a “premium guest experience,” while Superette is designed to reach shoppers who just want to have fun. Significantly, SNDL has evolved from its core cultivation business, so it’s well situated to customize new products to supply its stores. By rationalizing staffing and internal systems, the firm seems intent on reducing its cost structure to live with the price compression that’s helping to drive some of its competitors out of business. The company is also a major liquor retailer, with transferable expertise for merchandising cannabis beverages.
I previously hinted at a second model in my piece about Ontario’s changing retail markets. Supermarkets are a popular sales channel in states that permit hemp-based THC drinks. By incorporating separate but complementary cannabis outlets beside their stores, grocery chains could also sell low-THC products to their customers. Major grocery players would bring advantages of deep pockets plus business, marketing and logistics capability to evolve the model.
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A variation on these approaches is to feature both low-THC recreational and Cannabis Health Products in proximate outlets. The federal government’s slow uptake of its 2022 Scientific Advisory Committee report is blocking this strategy, for now. However, Health Canada says it will clear a regulatory path for Cannabis Health and Wellness products. With its stake in and plans for expanding their pharmacy business, Big Grocery is well-positioned to take advantage. Food shoppers could wheel their carts to the pharmacy for CHPs, then drop into the low-potency cannabis outlet beside the entrance. Some work is required to research, test and implement viable channels for newly branded low-THC products here. But judging from results south of the border, such efforts may well be worth it.
Denis Gertleris a regulatory consultant, board member and former government regulator.
(CNW) Calgary – Decibel Cannabis Company Inc., a market leader in premium cannabis and extract manufactured products, is pleased to announce that it has closed a transaction whereby it acquired AgMedica Bioscience Ltd., a leader in international medical cannabis exports, pursuant to an assignment agreement dated October 28, 2024 entered into with Callisto Capital Corp. in exchange for a $6.3 million unsecured convertible debenture. The conversion of the Convertible Debenture into common shares in the capital of the Company is contingent upon the Company obtaining each of the following: (i) the final approval of the TSX Venture Exchange in respect of the Transaction; and (ii), if applicable, the approval of the disinterested shareholders of the Company in accordance with the rules and policies of the TSXV, which approval, if required, is expected to be sought at the Company’s upcoming annual and special meeting of shareholders to be held on December 10, 2024 as set forth herein.
“I am excited to announce the acquisition of AgMedica. An euGMP certification is an international standard that Decibel has been contemplating for quite some time, this acquisition accelerates that timeline.
The AgMedica facility becomes the cornerstone of our international strategy as it allows us to extend our products and brand to the rest of the world. Furthermore, this marks the first step of Decibel’s new strategy as we execute on profitable growth opportunities enhanced by synergistic and accretive transactions,” said Benjamin Sze, CEO.
Transaction Highlights
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AgMedica was acquired by the Company from Callisto pursuant to the assignment agreement whereby Callisto assigned all of its rights and obligations pursuant to a subscription agreement dated October 28, 2024 between, inter alia, Callisto, Atlas Global Brands Inc. and AgMedica, in connection with an Approval and Reverse Vesting Order granted pursuant to Atlas’ CCAA process involving Atlas and its subsidiaries (including AgMedica) in exchange for the Convertible Debenture.
If the Convertible Debenture converts into Common Shares in accordance with its terms, Callisto may become a “Control Person” (as such term is defined in the rules and policies of the TSXV) of the Company. The conversion price per Common Share under the Convertible Debenture is $0.055, which was determined based on the closing price of the Common Shares on the TSXV on October 25, 2024. In the event the Control Person approval is not obtained, the Convertible Debenture will no longer be convertible, will begin accruing interest at a rate of 15% per annum, and the principal amount plus interest accrued thereon will be repayable on April 28, 2025. All of the directors and officers of the Company, together with certain shareholders of the Company, who collectively own approximately 20% of the outstanding Common Shares, have entered into voting and support agreements pursuant to which they have agreed to vote their Common Shares at the Meeting in favour of the conversion feature of the Convertible Debenture and the potential creation of Callisto as a Control Person.
Decibel projects that AgMedica could contribute $30MM of net revenue and $4MM of EBITDA in 2025, totalling an anticipated $130MM of net revenue and $25MM of adjusted EBITDA1 in 2025 on a pro-forma basis.
The Company estimates a ~1.6x EBITDA multiple paid based on management’s 2025 projections prior to further optimization and automation initiatives.
The Transaction is expected to materially expand Decibel’s international footprint with EU GMP certification that enables export of flower and a variety of extract products, with proven sales to 7 different countries including Australia, Denmark, Germany, Israel, Norway, Spain, and the United Kingdom.
Adds EU GMP and IMC-GAP certified annual flower production of 5.1 metric tonnes per annum, when combined with Decibel’s GACP facility, expands total TPA of exportable flower to more than 12.
Decibel anticipates AgMedica to contribute free cash flow generation in 2025 with limited working capital requirements in the near term as a result of AgMedica being sold free and clear of certain historical liabilities.
In connection with, and directly following completion of the Transaction, AgMedica entered into a 5 year industrial lease for the AgMedica facility in Chatham, Ontario, as well as a sale and leaseback agreement with Callisto pursuant to which certain equipment of AgMedica was transferred to Callisto and leased back to AgMedica for a nominal cost for the term of the AgMedica facility lease. AgMedica has the option to repurchase the equipment at the end of the term of the lease for a nominal value.
In connection with the Transaction, Decibel also acquired GreenSeal Nursery Ltd., a licensed nursery that holds and maintains certain cannabis genetics.
The Transaction is subject to the receipt of the final approval of the TSXV following the filing of all final documentation in accordance with the TSXV’s conditional approval letter dated October 16, 2024.
Further opportunities for growth as a result of the Transaction include but are not limited to:
Further potential growth in export extract products to meet growing consumer trends;
Support for Decibel’s recent vape launches in Australia and United Kingdom markets and new product launches;
Flexibility to utilize Thunderchild or third-party good agricultural and collecting practice (GACP) production to supply certain international markets;
Potential to grow contract manufacturing operations to provide partners access to international markets;
EU GMP validation of bubble hash and edibles;
Expand AgMedica production by an additional 4.7 TPA with additional investment;
Improve AgMedica production yields which are below Decibel’s current operated cultivation facilities; and
Optimization of production and automation to enhance profitability.
Q3 2024 Guidance
The Company is pleased to provide guidance on its expected Q3 2024 financial results:
Net Revenue is expected to be between $23 to $25 million; and
Adjusted EBITDA2 is expected to be between $4 to $6 million3.
This guidance is based on Decibel’s new international exports within the quarter, sustained domestic sales, and new product launches. The Company expects to announce its Q3 2024 financial results on or about November 21, 2024.
Private Placement
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In connection with the Transaction, the Company intends to complete a non-brokered private placement financing of Common Shares for gross proceeds of between $3,000,000 to $3,500,000, or such other amount as may determined by the Company. The terms of the Offering will be determined in the context of the market, which terms will be announced by the Company in a subsequent news release.
Shareholder Meeting Update
The Company will hold the Meeting on December 10, 2024 such that, amongst other matters to be considered at the Meeting, shareholders may review, consider and approve a resolution to approve the conversion feature of the Convertible Debenture and the potential creation of Callisto as a Control Person. The Company previously extended its Meeting though an Order from the Court dated September 25, 2024. Additional meeting materials will be provided in due course and will be available under the Company’s profile at SEDAR+ (www.sedarplus.ca).
There was $87.6 million worth of cannabis sold in Newfoundland and Labrador in the 2023-2024 fiscal year, a nearly 24% increase from the previous year.
Some $57.9 million of that was dried flower sales, $21.1 million was extracts and concentrates, $8.3 million was “ingestible” cannabis products, and $0.3 million was from cannabis topical sales. These sales include products self-distributed by local licensed producers (direct delivery).
This is an increase from $70.7 million in sales in the previous year. In the most recent fiscal year, sales of extracts and topicals were twice those of 2022-2023’s $10.8 million in sales. Sales of cannabis vapes were not allowed until late 2022.
In the most recent fiscal year, ended March 31, 2024, Newfoundland and Labrador Liquor Corporation (NLC) regulated and distributed to 55 licensed cannabis retailers across the province, an increase of 14 from the previous year. The NLC also operates an online cannabis store.
NLC estimates that 84% of the illicit cannabis market in the province has been captured, an increase from 65% in the previous year and 25% four years ago.
The agency attributes this increase in part to the increase in the number of new cannabis stores as part of its Rural Expansion Plan. Cannabis sales through the network of privately-owned Licensed Cannabis Retailers (LCRs) were 24.1% higher than the previous year.
In addition to seeking to strengthen the presence of legal cannabis stores in the province, NLC says it works with local cannabis producers by providing support through its product listing process and providing provincial cannabis producers with premiums for the products they sell in the province. In 2023-24, the total support provided to local cannabis producers was $2.1 million.
Despite the estimated increase in adoption of the legal cannabis market, NLC says there is still a significant portion of the province that does not have easy access to legal sources. It expects to license more new stores to address these needs. A request for proposal for four new stores closed in September of this year.
There are, as of publication of this article, 59 stores listed. All but three are located on the island of Newfoundland. Cannabis sales are through Tier 1 stores that are only allowed to sell cannabis and cannabis accessories, or Tier 4 stores, which are in existing retail locations such as a general store.
There are currently four federally licensed cannabis producers listed as active in Newfoundland and Labrador: KRFT, Atlantic Cultivation, BeeHigh Vital Elements, and Oceanic Releaf.
PEI Cannabis, the provincial agency that manages cannabis sales in the province, sold $24,966,165 worth of cannabis in the year ended March 31, 2024, a total of 5,074 kilograms of weed.
This represented just over $3 million in revenue for the province, up from a target of $1.1 million and just over the previous year’s revenue of $2.9 million. All earnings are distributed to the PEI government. PEI Cannabis also contributed $3.8 million in excise tax revenue to provincial coffers.
Sales of dried flower were 43.2% of all sales in the province, while pre-rolls were 24.56%. Concentrates were the next largest category at 14.83% of sales, edibles were 5.85%, ingested extracts were 3.67%, and beverages were just 1.98%.
PEI Cannabis operates five stores in the province. The most recent opened in Stratford in January 2024. The Charlottetown location posted 54% of sales, Summerside was nearly 24%, and Montague was almost 14%.
Online sales were one-half of one percent of total sales, but those purchases were, on average, much larger basket sizes than those made in-store at $89.59. The O’Leary PEI Cannabis store saw the second-largest average basket size at $42.55, with all other stores ranged from $37.33 to $40.59.
Online basket sizes increased significantly from the previous year where they were $41.11.
“Mainstream” (42%) and “Value” (38%) categories were the most typical product types sold, while “Craft” was 20%.
PEI Cannabis served 622,367 customers in the year ended March 31, 2024. The population of PEI is around 175,000. The Prince Edward Island Cannabis Management Corporation is a wholly-owned Crown Corporation.
PEI is home to cannabis producers like Auxley, FIGR, FOG Organics, Mila, Green Island Genetics, Remidose, and Retro. All of the province’s annual reports can be found here.
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