Canadian Cannabis Firms Brace for COVID-19, Potential Fallout

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The COVID-19 pandemic is forcing governments worldwide to take drastic measures to “flatten the curve” and reduce economic fallout, and Canada is no exception. The Great White North closed its border with the U.S. for all non-essential travel (goods are not included in that shutdown), shuttered schools, colleges and universities across the country, and provinces are taking steps to stop all non-essential businesses.

The Canadian cannabis industry, for the most part, can operate as normally as it can. Dispensaries are conducting business with social distancing measures in place, deliveries can be made—although Canada Post will no longer deliver cannabis packages to purchasers’ homes, opting instead for postal office pickup to minimize delivery person exposure—and cultivation sites continue to operate. 

Both the Quebec and Ontario governments have deemed cannabis cultivation and retail businesses “essential” to the marketplace and, as such, can remain open during each province’s mandatory shutdown. Other provinces such as Alberta are considering similar proposals. 

Some companies, however, are taking extra steps to ensure their employee’s, patients and consumers safety. For example, Canopy Growth, a vertically integrated LP, closed its retail storefronts on March 17. “We have a responsibility to our employees, their families, and our communities to do our part to “flatten the curve” by limiting social interactions. For us, that means shifting our focus from retail to e-commerce,” said David Klein, Canopy’s CEO, in a press release. “This is a big decision but it was also an easy one to make – our retail teams are public-facing and have been serving an above-average volume of transactions in recent days. Given the current situation, it is in the best interest of our teams and our communities to close these busy hubs until we are confident we can operate our stores in the best interest of public health.” 

The company is keeping its cultivation operations open but is asking that all employees who can work remotely do so, said Canopy’s VP of Communications Jordan Sinclair in a March 24 email to CBT. The company recently closed facilities in Aldergrove and Delta, British Columbia, and scrapped plans for a third greenhouse at its Niagara-on-the-Lake location in Ontario, both unrelated to the COVID-19 outbreak.

Amid a reported surge in demand, Aurora Cannabis’ “production facilities remain fully operational and … have not experienced any disruptions to regular operations, including [to the] existing supply chain,” said Michelle Lefler, Aurora’s VP of Communications in a March 20 email to CBT. The company is taking steps to mitigate risks, Lefler said, including “implementing good hygiene practices and illness prevention measures across our organization.”

She added that, “at this time, we have paused all business travel and have advised staff to defer personal travel, which we are carefully monitoring. Employees are being provided the option to work from home as per the social distancing procedures advised by the World Health Organization. The company will adapt further guidance to employees as necessary.”

As the Canadian cannabis industry does its part to help the country’s fight against the pandemic, some are feeling left out by the federal government’s lack of resources available to cannabis producers and retailers. As LPs, like the rest of the world, try to figure out how to best navigate the COVID-19 pandemic, the Canadian government announced that cannabis businesses will not be eligible for business relief funds.

Dan Sutton, CEO of Tantalus Labs, another LP, has been in correspondence with both the Business Development Bank of Canada (BDC), a government-owned development bank, and Farm Credit Canada (FCC), the country’s largest agricultural term lender. Neither have indicated a willingness to work with smaller cannabis firms, he says.

“We confirmed on Friday that BDC remains in their position that ‘we do not do business with cannabis firms at this time,’” Sutton said in a March 23 email to CBT. “Today, our file was taken to credit with FCC who confirmed that their preference is to ‘focus on portfolio companies.’ To my knowledge, there are five firms in Canadian cannabis that currently do business with FCC, so this is not the stimulus lifeline the industry needs right now.”

He added that without provincial and/or federal assistance, “many firms will perish in the economic fallout and liquidity crunch from COVID-19.”

The Alberta Cannabis Council (ACC), a not-for-profit industry trade group serving the province’s cannabis industry stakeholders, shared a letter signed by 74 industry stakeholders with the Canadian government calling for legislators to grant the same access to economic relief programs to the country’s cannabis industry. 

“We are not asking for special treatment, but rather equitable treatment,” the signatories said.

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