Canadian CANNAINVESTOR Magazine October 2017 - Page 189

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For Canopy, the two-year supply agreement includes 4,000 kilograms of cannabis and cannabis derivative products for the first year, and is expected to have an estimated retail value of $40 million in its first year. Based on production capabilities across the Canopy-wide production platform, this agreement will not affect medical sales or their commitment to meeting the needs of Canadians who require cannabis for medical purposes.

Organigram has agreed to supply a minimum of 5,000 kilograms per year and is estimated to have a retail value of at least $40 million to $60 million per year. As the press release states, the “Agreement reinforces progressive leadership of New Brunswick within Canadian market, and emphasizes province’s commitment to New Brunswick-based businesses”. And the same can be said about Organigram’s commitment to New Brunswick, solidified with this deal, and the five phase expansion plans expected to be about 250,000 square feet with capacity to produce 26,000 kilograms per year.

These two announcements are significant, and potentially represent a sign of things to come in other provinces where distribution is handled by a crown corporation of the province, or similar distribution models. New Brunswick is the first province to make the announcement on deals

struck with LP’s. And it only represents a small share of what is esti-

mated by Deloitte to be a $8.7 billion market country-wide. It is

important to note that the figures referenced in the press releases and summarized above are based on an average retail price of $10 per gram, widely suggested as the target both federally and in most provinces.