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Alberta

Cannabis companies weigh pricing strategies after OCS margin cut

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TORONTO — Canopy Growth Corp. will hold its prices as licensed pot producers weigh whether to pass along to consumers the savings from the Ontario Cannabis Store’s forthcoming margin decrease.

The Smiths Falls, Ont. cannabis company behind the Tweed, Ace Valley and 7Acres brands isn’t budging on what it will charge because the pot market is already “highly competitive,” chief executive David Klein said in a statement to The Canadian Press.

Canopy declined to say more about the pricing decision, which comes after it laid off 800 workers and the company reporting a $266.7 million net loss in its third quarter.

The decision comes after the OCS, the province’s pot distributor, said last week that it would reduce the margins it makes on weed sales this September in a move expected to put $35 million back in the hands of licensed pot companies this fiscal year and $60 million in the 2024 fiscal year. 

Companies aren’t required to pass along the savings to consumers by lowering their prices, so many observers believe licensed producers will adopt a range of pricing strategies when the new margins come into effect.

“It’s reasonable to think that some cannabis producers and retailers may decide to decrease their prices after the OCS announcement just to be more competitive, provided that they have the wiggle room in their market margins,” said Sherry Boodram, chief executive of CannDelta Inc., a Toronto cannabis consulting company.

“But certainly in other cases, some producers and retailers may not want to decrease their prices.”

Making that decision is no easy task when many licensed producers are awaiting details about how deep the cuts will be.

However, two industry sources told The Canadian Press the average mark-up will decline to 25 per cent from 28 per cent, though the amount will vary across product categories. The biggest margin reductions will come in the vapes, edibles and beverage categories with more modest decreases to flower, pre-rolls and concentrates.

The Canadian Press is not identifying the sources because they were not authorized to disclose the information.

“At this point, it’s too early for us to comment on pricing,” said Rick Savone, senior vice-president of global government relations at Aurora Cannabis Inc., which makes the Daily Special, San Rafael ’71, Greybeard and Drift products.

“We are waiting for explicit understanding from the OCS about how the pricing changes will be applied.”

Meanwhile, Moncton, N.B.’s Organigram Holdings Inc. refused to discuss its pricing model, but spokesperson Paolo DeLuca says it will ensure prices are attract to consumers and generate a reasonable margin.

Once companies understand the margin changes, Boodram said businesses will have to factor in production and distribution costs for each item, taxation, market competition, profitability and supply and demand.

“There are some businesses that are facing increased competition that have declining sales and that have excess inventory, so for them reducing prices can be a really effective way for them to attract customers and increase demand for their products,” she said.

But lowering prices can also weigh on profitability and the company’s ability to fund other ventures, and send a false signal to consumers that a product is cheaper because it is of lower quality.

“At the consumer level they’re not aware of this OCS announcement and the reasoning behind the price decrease, so they might wonder what’s going on here?” Boodram said.

Cannabis companies, which have endured rounds of layoffs and facility closures in recent years, are also in a particularly tough spot when making pricing decisions because they have already slashed their own margins several times in recent years.

“Several companies are already actively doing price drops, so price drops are very, very popular,” said Lisa Campbell, chief executive at cannabis marketing company Mercari Agency.

The average price for cannabis was $11.78 per gram at the start of 2019, shortly after legalization, but fell to $7.50 per gram in 2021, a report from Deloitte Canada and cannabis research firms Hifyre and BDSA said. 

The average price for vape cartridges has similarly fallen by 41 per cent from $32.02 per gram around legalization to $19 per gram a year later.

“In some situations, to be competitive with illicit market prices will have to be reduced more, but I don’t think that that’s going to be the case for all products,” Boodram said.

By the OCS’s count, the illicit market made up 43 per cent of Ontario’s cannabis market last March.

While any margin decrease is helpful for licensed producers, Campbell doesn’t see it having a meaningful effect on the industry’s profitability because the cut isn’t big enough and OCS margins have steadily increased since legalization.

Shoppers are also unlikely to bat an eye.

“I don’t think the consumer is thinking too much about it,” she said.

“I don’t think it’s really going to be a significant change.”

This report by The Canadian Press was first published Feb. 22, 2023.

Companies in this story: (TSX:WEED, TSX:ACB, TSX:OGI)

Tara Deschamps, The Canadian Press

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Alberta

Alberta introduces bill banning sex reassignment surgery on minors

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From LifeSiteNews

By Anthony Murdoch

Alberta Conservative Premier Danielle Smith followed through on a promised bill banning so-called ‘top and bottom’ surgeries for minors.

Alberta Conservative Premier Danielle Smith made good on her promise to protect kids from extreme transgender ideology after introducing a bill banning so-called “top and bottom” surgeries for minors.

“It is so important that all youth can enter adulthood equipped to make adult decisions. In order to do that, we need to preserve their ability to make those decisions, and that’s what we’re doing,” Smith said in a press release.

“The changes we’re introducing are founded on compassion and science, both of which are vital for the development of youth throughout a time that can be difficult and confusing.”

Bill 26, the Health Statutes Amendment Act, 2024 “reflects the government’s commitment to build a health care system that responds to the changing needs of Albertans,” the government says.

The bill will amend the Health Act to “prohibit regulated health professionals from performing sex reassignment surgeries on minors.”

It will also ban the “use of puberty blockers and hormone therapies for the treatment of gender dysphoria or gender incongruence” to kids 15 and under “except for those who have already commenced treatment and would allow for minors aged 16 and 17 to choose to commence puberty blockers and hormone therapies for gender reassignment and affirmation purposes with parental, physician and psychologist approval.”

Alberta Minister of Health Adriana LaGrange, the bill’s sponsor, said the province’s legislative priorities include “implementing policy changes to continue our refocusing work, position our health care system to respond to pressures and public health emergencies, and to preserve choice for minors. These amendments reflect our dedication to ensuring our health care system meets the needs of every Albertan.”

Earlier this year, the United Conservative Party (UCP) provincial government under Smith announced  she would introduce the strong pro-family legislation that strengthens parental rights, protecting kids from life-altering, so-called “top and bottom” surgeries as well as other extreme forms of transgender ideology.

With Smith’s UCP holding a majority in the provincial legislature, the passage of Bill 26 is almost certain.

While Smith has done far more than predecessor Jason Kenney to satisfy social conservatives, she has been mostly soft on social issues such as abortion and has publicly expressed pro-LGBT views, telling Jordan Peterson that conservatives must embrace homosexual “couples” as “nuclear families.”

This weekend, thousands of UCP members will gather for the party’s annual general meeting, where Smith’s leadership will be voted on along with many other pro-freedom and family policy proposals from members. Smith is expected to pass her leadership review vote with a large majority.

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Alberta

Alberta court upholds conviction of Pastor Artur Pawlowski for preaching at Freedom Convoy protest

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From LifeSiteNews

By Clare Marie Merkowsky

Lawyers argued that Pastor Artur Pawlowski’s sermon was intended to encourage protesters to find a peaceful solution to the blockade, but the statement was characterized as a call for mischief.

An Alberta Court of Appeal ruled that Calgary Pastor Artur Pawlowski is guilty of mischief for his sermon at the Freedom Convoy-related border protest blockade in February 2022 in Coutts, Alberta.

On October 29, Alberta Court of Appeal Justice Gordon Krinke sentenced the pro-freedom pastor to 60 days in jail for “counselling mischief” by encouraging protesters to continue blocking Highway 4 to protest COVID mandates.

“A reasonable person would understand the appellant’s speech to be an active inducement of the illegal activity that was ongoing and that the appellant intended for his speech to be so understood,” the decision reads.

Pawlowski addressed a group of truckers and protesters blocking entrance into the U.S. state of Montana on February 3, the fifth day of the Freedom Convoy-styled protest. He encouraged the protesters to “hold the line” after they had reportedly made a deal with Royal Canadian Mounted Police to leave the border crossing and travel to Edmonton.

“The eyes of the world are fixed right here on you guys. You are the heroes,” Pawlowski said. “Don’t you dare go breaking the line.”

After Pawlowski’s sermon, the protesters remained at the border crossing for two additional weeks. While his lawyers argued that his speech was made to encourage protesters to find a peaceful solution to the blockade, the statement is being characterized as a call for mischief.

Days later, on February 8, Pawlowski was arrested – for the fifth time – by an undercover SWAT team just before he was slated to speak again to the Coutts protesters.

He was subsequently jailed for nearly three months for what he said was for speaking out against COVID mandates, the subject of all the Freedom Convoy-related protests.

In Krinke’s decision, he argued that Pawlowski’s sermon incited the continuation of the protest, saying, “The Charter does not provide justification to anybody who incites a third party to commit such crimes.”

“While the appellant is correct that peaceful, lawful and nonviolent communication is entitled to protection, blockading a highway is an inherently aggressive and potentially violent form of conduct, designed to intimidate and impede the movement of third parties,” he wrote.

Pawlowski was released after the verdict. He has already spent 78 days in jail before the trial.

Pawlowski is the first Albertan to be charged for violating the province’s Critical Infrastructure Defence Act (CIDA), which was put in place in 2020 under then-Premier Jason Kenney.

The CIDA, however, was not put in place due to COVID mandates but rather after anti-pipeline protesters blockaded key infrastructure points such as railway lines in Alberta a few years ago.

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