Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., on April 14, 2016. Edmonton-based Liquor Stores N.A. Ltd. says it has hired one of its directors to map out its future cannabis strategy as Canada moves to make recreational pot legal by next July. THE CANADIAN PRESS/Ron Ward

Growing flowers of cannabis intended for the medical marijuana market are shown at OrganiGram in Moncton, N.B., on April 14, 2016. Edmonton-based Liquor Stores N.A. Ltd. says it has hired one of its directors to map out its future cannabis strategy as Canada moves to make recreational pot legal by next July. THE CANADIAN PRESS/Ron Ward

Pot from the Rock: Canopy Growth strikes deal for private stores in Newfoundland

ST. JOHN’S, N.L. — Canopy Growth Corp. will have the first privately run legal weed stores announced in Canada under a landmark deal to supply and produce pot in Newfoundland and Labrador.

The publicly traded company is the largest of its kind in the country with e-commerce operations and grow sites in six other provinces. It’s perhaps best known for its celebrity partnership with American rapper Snoop Dogg under the brand Leafs by Snoop.

Its $40 million production plant in or near St. John’s will have a retail outlet in addition to three more storefronts in the province.

Canopy CEO Bruce Linton said a custom brand from Newfoundland and Labrador has great potential for sales outside the province. But he was coy when asked if consumers may soon see strains marketed under such labels as: Yes B’y or Best Kind.

“I have some very specific branded names of products that I want to bring out of here which would be really foolish for me to say now because everybody would grab them,” he told a news conference Friday in St. John’s.

“But I think we can actually create products … that become extremely interesting for a lot of people in the country, and probably some exports internationally.”

Linton said Canopy Growth Corp. (TSX:WEED) is growing fast in Canada and is exporting to Germany, with other countries soon to follow.

Critics were quick to say the agreement announced Friday is a “giveaway” that will block smaller producers — concerns Industry Minister Christopher Mitchelmore downplayed.

“What this deal with Canopy has done is secure supply,” he told a news conference. “It also secures production and jobs. We’re open and in active discussion and negotiation with a number of other companies across the province and across the country.

“There was no special treatment given to Canopy Growth.”

The company will supply up to 8,000 kilograms a year for two years, with a one-year extension option, once recreational pot is legalized next July. There is no minimum purchase requirement.

The province has no licensed production sites yet so time was of the essence to nail down a reputable source, Mitchelmore said.

“This provides stability and confidence.”

Canopy Growth will ship product in at first, but will also spend more than $40 million to build a plant that will employ about 145 people. It’s to operate for at least two decades and is expected to produce 12,000 kilograms of flower and oil products a year by 2019.

Mitchelmore said the province will contribute to construction costs by reducing remittances the company pays on each sale until those costs are recouped — up to $40 million.

Canopy will also invest $100,000 a year in a research-and-development program over five years to be matched by the province.

It’s meant to educate other producers under its CraftGrow program.

“Our vision is for an industry which leads to production, job creation, supply chain development and research and development in this province,” Mitchelmore said.

He estimates the province will ultimately have about 100 pot stores or more.

Canopy has also partnered with various groups to educate the public about the dangers of driving high.

The province’s liquor corporation will set the price in licensed stores. Recreational pot will be restricted to consumers 19 and older for use in private residences, and will be sold by private retailers.

The federal government has moved to legalize recreational weed next July, but left distribution and regulation to the provinces.

Interim NDP Leader Lorraine Michael said the “secretively brokered” Canopy deal is a missed chance for economic development in a province that desperately needs it. Worse, she said the governing Liberals are giving the company cash breaks that will ultimately be worth millions of dollars as Canopy is free to export surplus product with little local benefit.

“This is a real giveaway,” she said in an interview. “What does it say to people in our agricultural industry who saw this as a new growth opportunity?

“I think they’ve just been knocked out of the game.”

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