The government of New Brunswick, Canada just made a landmark marijuana deal. Tomorrow, the provincial government will announce a partnership with Organigram, a federally licensed medical marijuana producer, to supply the province's cannabis retailers when Canada legalizes recreational use in 2018.
Under the new agreement, Organigram — which is based in Moncton, New Brunswick — will allocate approximately 25 percent of its cannabis supply to stocking the shelves of recreational retailers. That means they will contribute no less than 5 million grams per year to retailers. The deal is valued at $40 million to $60 million.
“We are excited to enter into this MOU with the Province," Organigram CEO Greg Engel said in a press release. "The Government of New Brunswick has established itself as a leader in the developing marijuana industry, working to ensure that the industry develops in a responsible and effective manner. New Brunswick’s stewardship on this file has been recognized throughout Canada and we are proud to work closely and support them as a strategic partner.”
Engel also congratulated the province on making this bold move to help the province boost the economy and create jobs with the unique opportunity that legalization offers. “We applaud the New Brunswick government’s efforts to foster an innovative, forward-thinking economic climate that supports cannabis as a driver of growth for New Brunswick-based businesses.”
But money isn't the only thing on their minds. The agreement also includes a plan for Organigram to contribute to social responsibility programs that will educate the public about cannabis and promote public safety when recreational cannabis use becomes legal next year. It's an opportunity that the company relishes because keeping communities safe has long been one of their top priorities, according to Chief Commercial Officer Ray Gracewood.
“As we move forward under this agreement, we have the opportunity not only to help build a strong and successful cannabis market within the province and beyond, but to also reinforce our company’s commitment to safety and education,” Gracewood said via press release. "The safety of those in our community is of the utmost importance, and we are proud to support programs that will continue to educate the public on cannabis and all of its forms."
A Landmark Deal
This is the first time that a provincial government has made this sort of deal with a cannabis grower. For Organigram, this landmark deal is about making history as well as reaffirming the company's commitment to New Brunswick.
"Not only is it a statement on how progressive New Brunswick has been on the file, but also a statement of our support for the New Brunswick market, making sure New Brunswickers have access to a safe and regulated product," Gracewood told Civilized. "Although it's a relatively small market, it's our number one priority. And Organigram's approach has been to support New Brunswick first, making sure there is adequate supply to make sure shelves are stocked for next summer."
Supply is one of the crucial challenges facing the federal government. For months, stories have circulated of potential pot shortages across the country when Canada repeals cannabis prohibition next summer. That's a huge problem because empty shelves at legal retailers will keep the black market in business despite Prime Minister Justin Trudeau's goal of shutting it down with legalization.
But Organigram is confident that they will keep provincial retailers well stocked.
"Our production plan matches up well to the requirement that we've worked out with the government of New Brunwsick," Gracewood added. "We're confident that by the end of this year, our new expansion will be up and running."
So the only lingering question is who those retailers will be. The New Brunswick government hasn't announced that yet, but they could clear up the issue as early as tomorrow, when the partnership with Organigram will be officially announced. Check back with us for details.