Delta 9 Cannabis Secures Rare Manitoba Conditional Approval
March 8th, 2018
Exclusive, News, Top News
Canada’s cannabis industry is projected to reach up to C$22.6 billion over the coming years, according to Deloitte, driven by the legalization of recreational adult-use cannabis later this year. While the federal government finalizes the legislation, individual provinces have also been working out how they will handle the cultivation, distribution, and sale of cannabis. These rules have created several opportunities among publicly-traded companies in the space.
Delta 9 Cannabis Inc. (TSX-V: NINE) is one licensed producer that could benefit from these new provincial rules. As one of just four groups conditionally approved in Manitoba, the company is uniquely positioned to capitalize on a market that management believes could be worth between $300 million and $500 million per year. Investors may want to take a closer look at the stock given the company’s new conditional approval and partnership with an industry leader.
Manitoba Decides on Four LPs
Manitoba has conditionally approved four groups that will operate the province’s cannabis retail after receiving over one hundred applications. Each of the four groups submitted proposals that met the criteria outlined in the government’s RFP, but official acceptance of the proposals is conditional on them reaching all of the necessary agreements and providing the required documents that were outlined in the government’s RFP.
The four groups that were conditionally approved include:
- Delta 9 Cannabis and Canopy Growth Corp. (TSX: WEED)
- National Access Cannabis and Manitoba First Nations
- Tokyo Smoke and B.O.B. Headquarters
- Avana Canada, Fisher River Cree Nation, Chippewas of the Thames of Ontario, MediPharm Labs, and Native Roots Dispensary (a U.S. retailer)
The group applications were evaluated by an independent third party to ensure that the process was fair and equitable. Over the coming weeks, the Manitoba government will work with these groups on the next stages of due diligence, including the number of locations and retail stores each group will be permitted to operate under provincial licensing agreements.
Delta 9’s Agreement with Canopy
Delta 9 Cannabis and Canopy Growth teamed up to build and operate a chain of retail stores throughout Manitoba. The first location has already been built in the Osborne Village area of Winnipeg and has been operating for several months as a resource center and clinic. In addition, the agreement calls for Delta 9’s products to be distributed through Canopy Growth outlets in other provinces and through its Tweed Main Street online sales portal.
“It is hard to overstate how important this award is for our company, our shareholders, and the future of the legal cannabis industry in Manitoba,” said Delta 9 Cannabis CEO John Arbuthnot in a recent press release. “As the only Manitoba producer licensed to sell cannabis, and partnered with the world’s largest cannabis company, we feel we are uniquely situated to serve the Manitoba market with both quantity and quality of product.”
Management estimates that Manitoba’s cannabis market could be worth between $300 million and $500 million per year. In addition to leveraging Canopy Growth’s significant scale, the company also continues to advance its own construction project that’s coming in under budget. Management believes that it is fully funded to build 600 of its self-designed “grow pods”, which could increase its cannabis production to 17,500 kilograms per year.
Delta 9 Cannabis Inc. (TSX-V: NINE) is one of just four groups approved to open retail locations in Manitoba’s market, which management believes could be worth $300 million to $500 million per year. Through its partnership with Canopy Growth, the company is uniquely positioned to scale up in the new recreational adult-use market while simultaneously building up its own production capacity using its innovative grow pods.
For more information, visit the company’s website at www.delta9.ca.
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