N.L. government makes deal with company to provide marijuana once legal
The Canadian Press
Published Friday, December 8, 2017 8:50AM EST
Last Updated Friday, December 8, 2017 9:16AM EST
ST. JOHN'S, N.L. -- Newfoundland and Labrador has struck a deal with Canopy Growth Corp. to supply pot in the province once it's legal next July, saying the model could be used for other similar arrangements.
The publicly traded company is the largest of its kind in the country, with eight licences across Canada. It will supply up to 8,000 kilograms a year for two years, with a one-year extension option.
The deal is aimed at ensuring a safe supply of pot, but does not bar purchases from other providers that could be licensed over time.
"We will also use this as a framework for other agreements related to cannabis supply and production," Industry Minister Christopher Mitchelmore told a news conference Friday. He stressed that the deal does not shut out other potential suppliers.
The production facility is to operate for at least 20 years, he said.
"This provides stability and confidence," Mitchelmore said.
The company will ship product in at first, but will also build a $40-million production facility in the province that will employ about 145 people. It will have a store and there will be three more retail outlets as part of the deal.
The production site is expected to produce 12,000 kilograms of flower and oil products a year by 2019.
"Our vision is for an industry which leads to production, job creation, supply chain development and research and development in this province," Mitchelmore said.
The province has no licensed production facilities yet.
It will contribute to construction costs of the plant by reducing what the company pays on each sale until those costs are recouped.
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.
Canopy CEO Bruce Linton said the company is growing fast in Canada and is exporting to Germany, with other countries soon to follow.
He said a cannabis brand from Newfoundland and Labrador has great potential for sales outside the province.
"I look forward to turning the first shovel very quickly," he said.
Canopy has also partnered with various groups to educate the public about the dangers of driving high.
Estimated tax revenue is about $52 million from labour, plus corporate income tax and other revenues.
The province's liquor corporation will set the price in licensed stores.