The cannabis space continued to be impacted by the coronavirus outbreak this week, with the conversation on whether marijuana is essential developing further in Canada.
Meanwhile, a troubled Canadian cannabis company received creditor protection, while across the border, Illinois reported solid Q1 sales after legalizing recreational cannabis on January 1.
Read on for a closer look at some of the biggest cannabis news over the last five days.
Cannabis essential no more in Ontario
Concerns about coronavirus-related store closures caused cannabis sales spikes in various regions in mid-March, but since then panic buying has largely dissipated.
In the US, sales jumps occurred in areas like California, Colorado, Nevada and Washington, while in Canada, BC, Ontario and Quebec reported elevated levels of buying.
BMO Capital Markets analyst Tamy Chen said in a note this week that inventory data from the government-run Ontario Cannabis Store shows sales returned to normal after the initial run on stores.
“We believe this may reflect pantry loading activity, rather than a permanent increase in demand for recreational cannabis,” she said. Buying appears to have pulled back after consumers realized stores in the province would stay open. “If quarantine measures are extended for longer than expected, there may be another round of pantry loading activity.”
More recent news indicates that another spike in buying may come sooner than expected, at least in Ontario. On Friday (April 3), the province decreased the number of businesses it considers essential — and this time, cannabis stores didn’t make the list.
Speaking to BNN Bloomberg, a senior Ontario government official confirmed that cannabis stores will have to close their doors on Saturday (April 4) at 11:59 p.m. EDT, although companies that produce marijuana will be allowed to stay open because they fulfill a medical need.
The Ontario Cannabis Store has said that it will be working to increase its capacity to handle online orders. The extended shutdown in the province is set to last for two weeks.
Illinois reports Q1 cannabis sales of US$110 million
Recreational cannabis sales began in Illinois on January 1, and the state now has sales data for Q1.
For the entire three months, sales came in at US$110.2 million — that works out to about US$39.2 million in January, US$34.8 million in February and US$35.9 million in March.
According to the Chicago Sun Times, those numbers outshine stats from similar states in their first three months of recreational sales. For example, Colorado’s sales came in at US$48.1 million for the period, while Michigan brought in US$31.6 million.
The strong sales seen in March of course came as the COVID-19 outbreak intensified. While cannabis has been designated essential in Illinois, there has been some stocking up as a result of the virus, and one sector participant suggested that April sales in the state may be lower without that boost.
CannTrust Holdings gets creditor protection
Under the order, all of the company’s creditors, plus class-action plaintiffs and plaintiffs in other litigation, will not be able to enforce their claims for 10 days, with possible extensions to be decided on by the Ontario Superior Court of Justice.
The beleaguered cannabis company has been in hot water since midway through last year, when Health Canada discovered that it was growing marijuana in unlicensed rooms at its facility in Pelham, Ontario. More turmoil developed after CEO Peter Aceto was fired, and after additional illegal growing was discovered at CannTrust’s facility in Vaughan, Ontario.
CannTrust said in its release that among other things, the creditor protection will allow it to finish remediation efforts outlined for it by Health Canada, as well as try to put together a plan for addressing all the lawsuits against it in one swoop.
The company emphasized in its statement that its future remains uncertain, and it expects to be delisted from both the TSX and NYSE as a result of receiving creditor protection.
Against the backdrop of a troubled cannabis market, a number of other marijuana firms have received creditor protection recently. Those include Wayland Group (OTC Pink:MRRCF) in December, Invictus MD Strategies (TSXV:GENE.H) in February and Pure Global Cannabis (TSXV:PURE.H) in March.
Cannabis company news
- Fume Labs and 48North Cannabis (TSXV:NRTH) have signed a supply agreement with PAX Labs (Canada). Under the deal, Fume Labs, a subsidiary of humble+fume, will make two branded cannabis oil pods for the PAX Era, a vaporizer system for cannabis concentrates.
- The Green Organic Dutchman Holdings (TSX:TGOD,OTCQX:TGODF) received Health Canada licensing approval for the processing facility for its Ancaster site. According to the company, this was the final step in licensing for the Ontario-based property; it can now finalize the ramp-up of production and will be able to reduce its reliance on third parties.
- The Supreme Cannabis Company (TSX:FIRE,OTCQX:SPRWF) has made its first international cannabis shipment, sending product from Canada to Israel. The company’s international medical brand, called Truverra, will be sold in pharmacies across the country. In its release, Supreme also commented on the COVID-19 situation, saying that it will have to delay the launch of 7ACRES’ whole flower pre-rolls and PAX pods for the PAX Era vaporizer. 7ACRES is one of the company’s brands.
- World-Class Extractions (CSE:PUMP,OTCQB:WCEXF) signed a definitive investment agreement to take a controlling stake in Pineapple Express Delivery. Pineapple Express offers legal cannabis delivery services in Canada, and has experienced an uptick in business due to COVID-19.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: World-Class Extractions is a client of the Investing News Network. This article is not paid-for content.