Transcript: Post-legalization Pot Losses | Nov 21, 2019

Steve sits in the studio. He's slim, clean-shaven, in his fifties, with short curly brown hair. He's wearing a gray suit, white shirt, and spotted brown tie.

A caption on screen reads "Post-legalization pot losses. @spaikin, @theagenda."

Steve says WHATEVER QUALMS ANYONE MAY
HAVE HAD ABOUT LEGALIZING POT,
FEW DISPUTED THE IDEA THAT IT
WOULD BRING IN TAX REVENUES BIG
TIME.
BUT NOW IN THE SECOND YEAR OF
LEGAL CANNABIS SALES, THAT
FINANCIAL WINDFALL FOR THE
PROVINCIAL COFFERS HAS YET TO
MATERIALIZE.
INSTEAD, IT TURNS OUT, ONTARIO
LOST MONEY IN ITS FIRST YEAR OF
POT SALES.
WITH US NOW ON THE HIGHS AND
LOWS OF LEGALIZATION SO FAR...
GOSH THAT'S AN AWFUL PUN:
IN SAN DIEGO, CALIFORNIA, BRUCE
LINTON, FOUNDER AND FORMER
CO-CEO OF CANOPY GROWTH.

Bruce is in his fifties, clean-shaven, with short blond hair. He's wearing a blue plaid coat and a black t-shirt.

Steve continues AND HERE IN OUR STUDIO:
JAY ROSENTHAL, FOUNDER AND
PRESIDENT OF THE INDUSTRY
PLATFORM, BUSINESS OF CANNABIS...

Jay is in his late thirties, with curly brown hair and a prominent full beard. He's wearing rounded glasses, a gray suit and a blue shirt.

Steve continues PAMELA JEFFERY, MEMBER OF THE
ONTARIO CANNABIS POLICY COUNCIL
AND CHAIR OF THE FIRE and FLOWER
ONTARIO ADVISORY BOARD.

Pamela is in her late fifties, with wavy gray hair. She's wearing a black blazer and a printed scarf.

Steve continues AND VANMALA SUBRAMANIAM,
BUSINESS REPORTER AT THE
FINANCIAL POST.

Vanmala is in her thirties, with long straight black hair. She's wearing a dark green blazer.

Steve continues AND IT IS GREAT TO HAVE ALL OF
YOU HERE IN OUR STUDIO TODAY.
I THINK WE'VE GOT THREE
FIRST-TIME GUESTS HERE IN THE
STUDIO, SO LOVELY TO SEE
EVERYBODY HERE.
BRUCE, THANKS FOR MAKING TIME
FOR US FROM SAN DIEGO.
WE'RE GLAD TO HAVE YOU ON THE
PROGRAM AS WELL.
AND LET'S GET STARTED WITH THIS.
YEARS FROM NOW WHEN WE REFLECT
BACK ON THE YEAR THAT WAS,
BECOMING THE FIRST G7 COUNTRY TO
LEGALIZE CANNABIS SALES, HOW
WOULD YOU SAY THE FIRST CHAPTER
OF THIS BOOK HAS BEEN GOING SO
FAR?
PAMELA?

The caption changes to "Pamela Jeffery. Ontario Cannabis Policy Council."
Then, it changes again to "State of the cannabis industry."

Pamela says I WOULD SAY THAT THERE HAS
BEEN OPPORTUNITY LOST, STEVE.
I WOULD SAY THAT WE HAD A GREAT
OPPORTUNITY AS THE FIRST G7 WITH
LEGALIZATION TO UNLOCK A LOT OF
ECONOMIC GROWTH, AND WE ARE NOT
DOING THAT.
AND WE NEED TO BE DOING THAT.

Steve says JAY, FOLLOW UP.
WHAT WOULD YOU SAY?

The caption changes to "Jay Rosenthal. Business of Cannabis."

Jay says I'D SAY MEDIUM, MAYBE BETTER
THAN YOU DESCRIBED.
I THINK MEDIUM.
THE FIRST IS THAT WE ACTUALLY
DID IT.
THAT IS A VERY DIFFICULT THING
TO DO.
IF IT WAS EASY, ALL THE OTHER G7
COUNTRIES WOULD HAVE DONE IT,
UNITED STATES MOST NOTABLY WOULD
HAVE DONE IT ON A NATIONAL
SCALE, NOT STATE BY STATE.
WE DID IT.
THAT'S THE FIRST THING.
HAVE WE HAD TRIPPUPS AND
ROADBLOCKS?
ABSOLUTELY.
AND I THINK WE'LL ADDRESS THOSE
IN FULL YEAR TWO.
FULL YEAR ONE WAS ROCKY, BUT WE
DID IT.
WE'RE THROUGH THE FIRST YEAR.
WE'RE ON TO THE SECOND.
I'LL BULLISH ON WHAT'S AHEAD
EVEN THOUGH I THINK WE CAN
LAMENT WHAT'S HAPPENED IN THE
PREVIOUS YEAR.

Steve says BRUCE, HOW ABOUT YOU?

The caption changes to "Bruce Linton. Canopy Growth Corporation Founder."

Bruce says SO MAYBE IT'S PORRIDGE TOO
HOT PORRIDGE TOO COLD MAYBE I
THINK IT'S JUST RIGHT.
WHEN I LOOK AT THE YEAR, YES A
LITTLE BIT OUT OF THE GATE, BUT
THIS... NO ONE RIGHT NOW IS IN
THE STREET WITH PLACARDS
PROTESTING A REALLY BOLD
DECISION.
AS FAR AS I CAN TELL, PEOPLE ARE
STILL GOING TO WORK AND LIFE'S
PRETTY NORMAL, AND WHAT THEY'RE
GOING TO DO IS BUILD FROM A,
SURE, MAYBE THE PRODUCT COULD
HAVE BEEN A BIT DIFFERENT, THE
PACKAGING A BIT DIFFERENT,
WHATEVER, BUT THEY'RE GOING TO
BUILD FROM AN INITIATION AND
FILL MORE STORES WITH MORE AND
BETTER PRODUCTS STARTING IN
JANUARY, AND WHEN WE REFLECT ON
IT IN FIVE YEARS, MAJORITY OF
THE G7, G20 WON'T HAVE DONE
THIS, AND SO WE'LL STILL LOOK
QUITE BOLD.

Steve says OKAY, VANMALA, YOU'RE
THE ONLY ONE HERE WHO DOESN'T
HAVE A DIRECT INTEREST IN THIS.
LET'S SEE WHAT YOUR TAKE IS.

The caption changes to "Vanmala Subramaniam. Financial Post."

Vanmala says WELL, I THINK I'M MORE ALONG
THE LINES OF AGREEING WITH JAY
AND BRUCE.
I THINK IT'S PRETTY SURREAL IF
YOU THINK ABOUT IT, THAT
CANNABIS IS LEGAL IN CANADA AND
WE'RE JUST THE SECOND COUNTRY IN
THE WORLD TO HAVE DONE THAT.
SO EVEN SOMETIMES WHEN I'M
WALKING ON QUEEN STREET IN
TORONTO AND I GO INTO A LEGAL
SHOP, YOU KNOW, IT'S... I THINK
ABOUT IT AND I AM LIKE, WELL, A
YEAR AGO WE DIDN'T HAVE THAT.
HOWEVER, THERE HAVE BEEN A LOT
OF PROBLEMS, AND YOU KNOW WE'LL
GET INTO THAT LATER IN THE
EPISODE, BUT THERE HAVE BEEN A
LOT OF PROBLEMS THAT PERHAPS YOU
COULD SAY COULD HAVE BEEN
AVOIDED, COULD HAVE BEEN FIXED.
THERE WERE ALSO A LOT OF
SCANDALS WITH COMPANIES AND A
LOT OF, YOU KNOW, AVERAGE RETAIL
INVESTORS THINKING THAT THEY
WERE GOING TO DO MUCH BETTER IN
THE MARKET BUT ENDING UP GETTING
A LITTLE BIT BURNED.
SO I THINK IT DEPENDS WHO YOU
ASK, BUT OVERALL IF YOU WOULD
TAKE A LOOK AT THE ENTIRE KIND
OF YEAR OF LEGALIZATION, I WOULD
SAY IT'S BEEN, YOU KNOW, A
PRETTY INTERESTING EXPERIMENT.

Steve says WELL, I DON'T KNOW IF
THIS NEXT QUESTION COMES UNDER
THE CATEGORY OF BURNED OR
SCANDALOUS OR INTERESTING OR
WHAT.
MAYBE ALL OF THE ABOVE.
BUT IF THE UNPREDICTABLE NATURE
OF THIS BUSINESS WERE EVER MORE
APPARENT THAN OUR GUEST IN
SAN DIEGO, I'M NOT SURE WHAT IT
WOULD BE.
OUSTED AS THE CEO OF THE COMPANY
YOU FOUNDED.
NOW, BRUCE, I DON'T WANT TO HAVE
YOU TAKE US THROUGH CHAPTER AND
VERSE OF THE WHOLE THING, BUT I
MEAN, THAT'S A PRETTY GOOD
INDICATION OF HOW UNPREDICTABLE
THIS BUSINESS HAS BEEN OVER THE
PAST YEAR, ISN'T IT?

Bruce says YEAH, I THINK IT'S PROBABLY A
BUNCH OF THINGS ARE INDICATED
THERE, LIKE YOU KNOW MOST OF THE
CAPITAL THAT WE RECEIVED THE
LAST CHEQUE WAS ABOUT 5 BILLION DOLLARS
FOR 17 percent OF THE THEN FIVE AND A
HALF-YEAR-OLD COMPANY CAME FROM
BIG OLDER COMPANIES WHICH MAKE
WHAT THEY CALL EARNINGS PER
SHARE.
SO ESSENTIALLILY THE BUSINESSES
MIGHT BE GROWING MODERATELY AND
THEY HAVE STRONG CASH FLOWS AND
TRYING TO DECIDE WHAT TO DO WITH
THE MONEY.
WHEN THESE COMPANIES PUT CASH
INTO A COMPANY LIKE AMAZON, A
RAPID GROWTH COMPANY.
MY COMPANY WAS LIVING ON THE
ADJUSTED I BITDA.
IT LOOKS AT HOW RAPIDLY AM I
GROWING MY MARKET SHARE AND HOW
MUCH OF THAT COSTING IS A
QUESTION.
SO THERE'S GOING TO BE I WOULD
SAY CONFLICTS IN ACCOUNTING, AND
WHERE CAPITAL COMES FROM IS
GOING TO DEFINE WHETHER OR NOT
THERE'S REALLY AMBITIOUS
COMPANIES OR REALLY TIGHTLY
MANAGED AND FOCUSED ON TODAY AND
TOMORROW, NOT THE OVERALL WIN
OVER THE NEXT DECADE.

Steve says LET ME DO A QUICK
FOLLOW-UP WITH YOU, BRUCE.
I KNOW IT CANNOT HAVE ESCAPED
PEOPLE'S ATTENTION THAT
HEADLINES HAVE BEEN ALL OVER THE
PLACE AT THE STOCK MARKET DIP
IN... WELL, IT'S WAY MORE THAN A
DIP.
I MEAN, THIS IS THE... THE
PRICES HAVE REALLY BEEN SINKING
OVER THE LAST FEW WEEKS.
CAN YOU TELL US WHY YOU THINK
THAT'S HAPPENED?

Bruce says SO IT VARIES BY COMPANY,
RIGHT?
SO A COMPANY LIKE CANOPY, PART
OF THE REASON IT'S DOWN IS THEY
ARE WAITING TO KNOW WHO'S GOING
TO RUN THE PLACE BECAUSE THERE'S
A TRANSITION IN LEADERSHIP, AND
I WOULD SAY THAT CAPITAL MARKETS
DON'T LIKE AN ABSENCE OF
CLARITY.
IN THE U.S. ONES, IT WAS KIND OF
SURPRISING TO ME, BUT I THINK
WHAT HAPPENED THERE IS YOU
PROBABLY WOULD HAVE HAD TEN
TIMES MORE COMPANIES OPERATING
IN AMERICA, EVEN THOUGH IT'S
FEDERALLY LEGAL, THAN YOU DID
THREE TO FIVE YEARS AGO, BUT I
DON'T THINK THERE ARE REALLY
MANY MORE INVESTORS, NOT THAT
MUCH MORE CAPITAL.
WHAT YOU'RE SEEING IS A
TIGHTENING OF AVAILABLE CAPITAL.
FOR A LOT OF THE CANADIAN ONES,
THEY GET LOST IN THE COMPANY.
WE HAVE SO MANY PUBLIC COMPANIES
THAT YOU TRACK THE TOP FOUR OR
FIVE NAMES, BUT AFTER THAT THEY
GO PUBLIC BECAUSE IT WAS GOOD
FOR A BANKER AND THEN THEY TRADE
50 OR 70,000 SHARES A DAY, WHICH
IS REALLY NOT A MARKET.
I THINK YOU'RE GOING TO SEE A
REAL STRATIFICATION OVER THE
NEXT YEAR WHERE OTHER COMPANIES
THAT CREATE GOODS THAT ARE
FINISHED GOODS, LIKE A BEVERAGE
OR A CHOCOLATE, OR MEDICAL
PRODUCTS, AND THEY'RE GOING TO
DO WELL, ASSUMING THEIR PRODUCTS
ARE GOOD.
AND THEN YOU'RE GOING TO HAVE A
WHOLE BUNCH OF OTHERS STUCK
THROUGHOUT THE SMALL FARMING
STAGE.
AND THAT'S GOING TO BE TOUGH.

Steve says WE SHALL SEE.
HERE IS ONE OF THE HEADLINES:
CAN PRIVILEGE GROWTH PLUNGES TO
RECORD LOW AFTER REVENUE DROPS
MOST SINCE CANNABIS
LEGALIZATION.
WE'RE GOING TO BRING UP A CHART
FROM ONE OF THE ARTICLES THAT
YOU WROTE.
YOU CAN SEE IT HERE IN THE
STUDIO ON THE MONITOR THERE.

A slate appears on screen, with the title "Cannabis market cap descent. June 4 to November 14, 2019, in U.S. millions of dollars."

A line chart shows the descent in market cap of four companies: Canopy Growth Corporation, Aurora Cannabis Inc., Cronos Group Inc., and Tilray Inc.

Steve reads data from the slate and says
FOR THOSE LISTENING ON PODCAST,
WE'RE BASICALLY TRACKING FOUR
DIFFERENT COMPANIES HERE, AND
THIS IS A GRAPH THAT INDICATES
THAT CANOPY'S LINE IS JUST, YOU
KNOW, AFTER A BUNCH OF SQUIGGLES
AT THE TOP, IT'S GONE DOWN AND
DOWN AND DOWN AND VERY
DRAMATICALLY.
AURORA CANNABIS IS DOWN, CHRONOS
GROUP IS DOWN.
TILLRAY IS DOWN.
WHAT'S GOING ON HERE?

Vanmala says YES, SO JUST TO CLARIFY, THE
CHART SHOWS THE MARKET
CAPITALIZATION OF THESE
COMPANIES.
I MEAN, YOU KNOW, IT TENDS TO GO
IN LINE WITH THE STOCK PRICE, SO
IT'S BASICALLY HOW MUCH THE
VALUE OF THE COMPANIES HAVE COME
DOWN.

Steve says WHAT THEY'RE WORTH.

The caption changes to "Vanmala Subramaniam, @vanmalas."

Vanmala says THAT'S RIGHT.
BRUCE IS RIGHT.
YOU CAN'T LUMP THEM ALL
TOGETHER.
LET'S TAKE THE BIG COMPANIES,
THE ONES ON THE CHART.
THEY HAVE SEEN DECLINING
REVENUES QUARTER BY QUARTER.
SO CANOPY, FOR INSTANCE, YOU
KNOW, IF I'M NOT MISTAKEN, THE
SECOND QUARTER IN A ROW THAT IT
HAS SEEN DECLINING REVENUES, AND
THIS SPECIFIC QUARTER, THE
REVENUES WERE DOWN BY ABOUT 15 percent
BECAUSE THERE WERE A COUPLE OF
ISSUES WITH CERTAIN PRODUCTS
THAT HAD TO BE RETURNED BY THE
PROVINCE TO CANOPY BECAUSE THEY
REALLY WEREN'T SELLING WELL.
PLUS MACROECONOMIC FACTORS OF
THE PRICE OF WEED DECLINING.
SO COMPANIES HAVE TO MAKE
PRICING ADJUSTMENTS TO TAKE THAT
INTO ACCOUNT.
SO WE'RE STARTING TO SEE
DECLINING REVENUES AMONGST
CANADIAN COMPANIES AND THE
MARKET IS REACTING TO THAT,
SAYING, WELL, YOU KNOW, WE KIND
OF THOUGHT THAT THIS WOULD JUST
BE UP, UP, UP FOREVER.
AND NOW WE'RE SEEING THESE
COMPANIES KIND OF STALL A LITTLE
BIT, AND THEY ARE STALLING FOR
VARIOUS FACTORS.

Steve says WELL, PAMELA, FOLLOW
UP ON THAT.
I WONDER IF THE WHOLE THING
WASN'T OVERHIND FROM THE
BEGINNING.
WHAT DO YOU THINK OF THAT?

Pamela says WELL, I THINK THAT THIS IS A BRAND NEW INDUSTRY, AND SO THERE
WAS HYPE BECAUSE THIS IS THE
VERY FIRST TIME, RIGHT, THAT WE
HAVE AN INDUSTRY, LEGAL
CANNABIS.
AND SO THERE WAS A LOT OF HYPE,
AND I THINK THAT THE NEXT STEP
IS GOING TO BE CRUCIAL THAT THE
ONTARIO GOVERNMENT IS GOING TO
TAKE WITH RESPECT TO WHAT THAT
LICENSING PROCESS IS GOING TO
LOOK LIKE.

Steve says WE'RE GOING TO GET TO
THAT.
THAT'S BEEN CONTROVERSIAL.

Pamela says VERY CONTROVERSIAL.

Steve says JAY, WHAT DO YOU THINK
IN TERMS OF WHETHER OR NOT THIS
STUFF WAS ALL OVER-HYPERED TO
BEGIN WITH?

The caption changes to "Jay Rosenthal, @jaymrosenthal."

Jay says I DON'T KNOW THAT.
PEOPLE LIKE BUYING CANNABIS,
PEOPLE LIKE BUYING CANNABIS
STOCK.
IT WAS A HAVE VERY COOL THING TO
BUY.
IT WAS THE FIRST TIME TO DO IT
LEGALLY.
PEOPLE WANTED TO DO IT.
THAT SENT STOCK PRICES UP.
IN TERMS OF HOW IT WAS ROLLED
OUT AND IMPORTANT TO THAT CHART
AND LOOKING TO THE FUTURE IS WE
LEGALIZED CANNABIS HERE IN
CANADA AND BASICALLY SAID 50 TO
60 percent OF YOU CAN'T ACTUALLY BUY IT
LEGALLY IN THE STORE IN ONTARIO.
RIGHT?
THERE'S A... THE ONLY
CONCENTRATION OF STORES IN
ONTARIO IS IN DOWNTOWN TORONTO.
THAT'S NOT GOOD ENOUGH.
WE ONLY HAVE 24 STORES IN THE
LARGEST PROVINCE.
WE NEED TO BE ABLE TO SELL MORE
AT RETAIL SORT OF BRICKS AND
MORTAR, AND UNTIL AND UNLESS WE
DO THAT, TWO THINGS ARE GOING TO
HAPPEN.
ONE, THE REVENUES TO THESE
COMPANIES WHICH ARE PRIMARILY
SELLING IN CANADA ARE NOT GOING
TO BE GOOD ENOUGH.
AND TWO, THE ILLICIT MARKET IS
GOING TO CONTINUE TO THRIVE
BECAUSE THE LEGACY MARKET LOVES
GAPS.
RIGHT NOW THERE'S A HUGE GAP IN
RETAIL AND A HUGE GAP IN ACTUAL
PRODUCTS THAT PEOPLE TRULY LOVE
AND WANT, AND SO UNTIL AND
UNLESS WE FILL THOSE TWO GAPS
WE'RE GOING TO SEE SOME SIMILAR
NUMBERS MOVING FORWARD.

Steve says I'M GOING TO FOLLOW UP
ON THAT IN A SECOND, BUT BRUCE I
DON'T WANT TO GET AWAY FROM THE
FACT THAT BECAUSE THE STOCK
PRICE IS SO LOW RIGHT NOW AND IF
YOU THINK THIS THING HAS A
FUTURE, YOU KNOW, THIS IS
OBVIOUSLY A BUYING OPPORTUNITY
FOR SOME.
WOULD YOU ADVISE GIVEN WHERE THE
SHARE PRICES WHERE, WOULD YOU
ADVISE PEOPLE TO GET IN RIGHT NOW?

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Bruce says YES, SELECTIVELY, RIGHT?
IF YOU WERE LOOKING AT THIS
TRADE TWO YEARS AGO, YOU COULD
BASICALLY BUY, YOU KNOW, THE
MARKET WAS HOT AND THE COMPANIES
IN THE MARKET WERE... IT DIDN'T
MATTER.
I THINK NOW PEOPLE HAVE TO LOOK
AND SAY WHO CAN MAKE PRODUCTS
THAT YOU WOULD STAND IN LINE TO
BUY THAT ARE NOT JUST DRIED
CANNABIS.
AND SO THERE'S GOING TO BE A
HANDFUL FOR THAT.
TODAY, I DON'T KNOW, THE STOCKS
HAVE BEEN MOVING AROUND TODAY.
THEY WERE UP 20 percent AT ONE POINT IN
TIME.
IT'S STILL A VOLATILE SECTOR.
IF PEOPLE DO GET IN, THEY'VE GOT
TO BE WILLING TO SEE, LIKE, 20 percent
VOLATILITY ON A COMPANY LIKE
CANOPY, SUPPOSE THE MARKET CAP
TODAY IS 9 BILLION DOLLARS, HAVING A
20 percent VARIATION IN YOUR PRICE IN A MORNING OF TRADING, A DAY OF
TRADING, IS QUITE UNBELIEVABLE.
SO IF YOU'RE GETTING IN, YOU
BETTER... IT'S ONE OF THOSE
AREAS THAT YOU SHOULD BUCKLE UP
AND KIND OF LOOK AT THEM EVERY
QUARTER, NOT EVERY HOUR.

Steve says WE WANT TO SHOW A
CHART HERE THAT REALLY REFLECTS
WHERE THE PROVINCE OF ONTARIO IS
VIS-A-VIS OTHER PROVINCES IN THE
COUNTRY, AND AGAIN FOR THOSE
LISTENING ON PODCAST, I'LL
DESCRIBE THIS.

A slate appears on screen, with the title "Cannabis shops across Canada."

A bar chart shows that Alberta leads by far, with 329 shops, followed by British Columbia with 88, then the rest of the provinces with less than 40.

Steve reads data from the slate and says
ALBERTA HAS 329 RETAIL OUTLETS,
AND THERE'S ONTARIO IN THE
MIDDLE OF THE PACK WITH 24,
OKAY?
ALBERTA'S GOT MORE THAN 10 TIMES
AS MANY OUTLETS AS THE PROVINCE
OF ONTARIO.
AND IN FACT, IF YOU LOOK AT THE
TOP FIVE, ALBERTA, BRITISH
COLUMBIA, SASKATCHEWAN, QUEBEC
IS IN THERE, AND THEN MANITOBA,
FOUR OF THE TOP FIVE ARE ALL IN
THE WEST.
TERRITORIES PERHAPS NOT
SURPRISINGLY DOWN AT THE BOTTOM
OF THE PACK THERE.
BUT YOU KNOW, THOSE IN THE
PROVINCE OF ONTARIO WHO HAVE
HOPED TO SEE A LOT MORE ACTIVITY
ON THIS FRONT HAVE BEEN SORT OF
BITTERLY DISAPPOINTED SO FAR.
TO PUT IT ANOTHER WAY, ALBERTA
HAS ONE THIRD OF ONTARIO'S
POPULATION BUT 13 TIMES THE
NUMBER OF STORES AS THE PROVINCE
OF ONTARIO DOES, AND THEY SOLD,
DESPITE HAVING, AGAIN, A
SIGNIFICANTLY SMALLER PERCENTAGE
OF POPULATION, THEY SOLD ABOUT
THE SAME AMOUNT OF CANNABIS AS
ONTARIO DID.
ALL RIGHT, PAMELA, LET'S GET
INTO THIS.
HOW IS IT POSSIBLE THAT... DOUG
FORD WENT TO THE BORDER.
HE PUT SIGNS UP SAYING OPEN FOR
BUSINESS.
WHAT'S GOING ON HERE?

The caption changes to "Worst weed rollout?"

Pamela says SO WHAT'S GOING ON, STEVE, IS
LET'S LOOK AT THE NUMBER OF
STORES.
SO IN COLORADO WE HAD... WE HAVE
A NUMBER WHICH IS ONE STORE FOR
EVERY 10,000 PEOPLE.
SO WE TAKE OUR POPULATION OF 14
MILLION DOLLARS IN ONTARIO, WE SHOULD
HAVE 1400 STORES.
AND THOSE 1400 STORES WOULD
HAVE 1400 GENERAL MANAGERS,
20,000 EMPLOYEES, YOU'RE
ABSOLUTELY RIGHT, IT'S ABOUT THE
LACK OF ACCESS THAT CUSTOMERS
HAVE FOR... TO THE PRODUCT THAT
IS CONVENIENT.

Steve says WHO DO YOU BLAME FOR
THAT?

The caption changes to "Pamela Jeffery, @Pamela_Jeffery."

Pamela says WELL, WE'RE LOOKING TO THE
PROVINCE OF ONTARIO TO ADDRESS
THIS, AND WE'RE HOPEFUL THAT
THROUGH ACTION THAT THEY'RE
GOING TO TAKE, SPECIFICALLY
AROUND THAT SUPPLY ISSUE, AND
HAVING A TRANSPARENT PLAN AND A
TIMELINE TO MOVE TOWARDS OPEN
ALLOCATION, BASED ON MERIT, IS
GOING TO DO WHAT IS NECESSARY
AND IMPORTANT TO HELP KICK START
THIS INDUSTRY.
BECAUSE YOU SEE IN ALBERTA, THEY
KICK STARTED THE INDUSTRY.

Steve says THEY SURE HAVE.
WHAT I'M READING BETWEEN THE
LINES THERE IS YOU THINK THIS
WHOLE SYSTEM WE HAVE IN PLACE
RIGHT NOW IS BASICALLY A
LOTTERY, THROW YOUR NAME IN A
HAT AND YOU CROSS YOUR FINGERS,
WELL, I SHOULDN'T SAY... I
SHOULD ASK.
WHAT DO YOU THINK OF IT?

Jay says WELL, I THINK THEY SPENT MORE TIME PUTTING UP THOSE OPEN FOR
BUSINESS SIGNS THAN THEY DID TO
GIVING THOUGHT TO OPENING
CANNABIS STORES.
I THINK THAT'S PART OF THE
CHALLENGE.
SECONDLY, THEY CAME INTO POWER
IN 2018 IN THE MIDST OF A
ROLLOUT PLAN OF A DIFFERENT SORT
OF RETAIL CANNABIS HERE IN
ONTARIO.
IT WAS GOING TO BE LCBO TYPE OF
MODEL.
THEY SCRAPPED THAT AND WENT WITH
THIS OTHER MODEL WHICH WAS GOING
TO BE FREE MARKET.
GREAT AND THEN PROMPTLY FOLLOWED
THAT WITH A LOTTERY WHICH MADE
ABSOLUTELY NO SENSE AND WE'RE
STILL STUCK AT 24 STORES IN
ONTARIO.
IT'S JUST NOT ENOUGH.

Steve says TELL ME WHY YOU THINK
THE LOTTERY MADE NO SENSE.

Jay says WELL, IT WAS 75 AND AN EMAIL
ADDRESS ESSENTIALLY GOT YOU A
LICENCE, POTENTIALLY IF YOU GOT
PULLED FROM A HAT.
17,000 PEOPLE PUT THEIR NAMES IN
AND 25 WERE PULLED, 24 STORES
HAVE OPENED UP.
OKAY, THAT WAS LAST APRIL.
WE'RE A WAYS AWAY FROM THAT NOW
AND WE STILL HAVEN'T OPENED THE
NEXT ROUND OF STORES.
THERE IS NO EXCUSE.
THE EXCUSE EARLY ON WAS THE
SUPPLY WASN'T THERE.
THAT EXCUSE IS NO LONGER VALID.
OBVIOUSLY OTHER PROVINCES ARE
DOING BETTER.
THERE'S MORE STORES IN THE CITY
OF CALGARY THAN IN ALL OF THE
PROVINCE OF ONTARIO.

Steve says HMM.
BRUCE, WHAT OUGHT WE TO LEARN,
WHAT SHOULD PEOPLE IN THE
PROVINCE OF ONTARIO BE LEARNING
OR PERHAPS MORE PARTICULARLY THE
PEOPLE WHO MAKE THE DECISIONS IN
THE GOVERNMENT OF ONTARIO, WHAT
SHOULD THEY BE LEARNING FROM
OTHER PROVINCES IN CANADA AS TO
HOW TO IMPROVE THEIR ACT?

Bruce says YOU KNOW, THEY NEED TO LET
THE PRIVATE SECTOR GET ROLLING.
I THINK I SAW SOMETHING COME
ACROSS THE WIRE THIS MORNING
THAT SAID THE PROVINCE EXPECTS
TO SEE STARTING JANUARY 1
OPENING IT UP SO 700 TO A 1,000
IS SORT OF THEIR TARGET.
IT'S GOING TO BE MORE
MUNICIPALITIES ALSO.
THAT WILL GET FIXED UP, BUT I
WOULD SAY A KEY THING WHEN I
LOOK AT THE STORES RIGHT NOW IN
JANUARY THE SELECTION OF
PRODUCTS THOSE STORES HAVE WILL
BECOME VERY COMPELLING AS A
REASON TO GO THERE.
IF YOU'RE GOING TO TURN THE
CORNER ON THE ILLICIT MARKET,
YOU CAN'T JUST HAVE MORE STORES
SELLING HALF THE PRODUCTS THAT
EXIST IN THE ILLICIT MARKET OR
LESS.
YOU NEED TO HAVE BOTH MORE
STORES AND MORE PRODUCTS AND I
THINK THOSE THINGS ARE MERGING
TOGETHER AS WE GOAT TO 2020.

Steve says PAMELA, DID YOU WANT
TO ADD SOMETHING THERE?

Pamela says YEAH, I DO.
I THINK WHAT BRUCE JUST SAID IS
REALLY RELEVANT, OF COURSE,
BECAUSE WHAT WE'RE SEEING IS
CUSTOMERS WANT TO BE EDUCATED.
THEY'VE GOT QUESTIONS THEY WANT
TO ASK, AND THEY WANT TO ASK
THOSE QUESTIONS OF SOMEONE WHO
IS KNOWLEDGEABLE AND TRAINED,
AND I THINK WHAT'S GREAT ABOUT
ROLLING OUT THE STORES IS THAT
ONTARIANS ARE GOING TO HAVE A
CHANCE TO CONVENIENTLY GO INTO A
STORE AND ASK QUESTIONS OF
TRAINED STAFF AND BUY PRODUCTS
OFF A SHELF KNOWLEDGEABLY.

Steve says THAT DOES RAISE A
BUNCH OF QUESTIONS ABOUT WHETHER
OR NOT THE PEOPLE WHO ACTUALLY
KNEW THIS BUSINESS WERE ALLOWED
TO BE IN THIS BUSINESS.
I'M GOING TO COME BACK TO THAT
IN A SECOND.

Pamela says OKAY.

Steve says I DO WANT TO FIND OUT
FROM Vanmala, HOW IS IT POSSIBLE
TO LOSE MONEY DOING THIS?

The caption changes to "Watch us anytime: tvo.org, Twitter: @theagenda, Facebook Live, YouTube."

Vanmala says THAT'S A REALLY GOOD
QUESTION.
SO WHAT JAY ALLUDED TO, SO IN
2018 WE HAD A GOVERNMENT CHANGE
AND THE ONTARIO CANNABIS RETAIL
CORPORATION HAD ALREADY SIGNED
ALL THESE LEASES AND PUT IN, YOU
KNOW, KIND OF HAD ALL THESE
OVERHEAD COSTS OF STORES.
THEY THOUGHT THE PROVINCES WERE
GOING TO RUN THEM, AND THAT
DIDN'T END UP HAPPENING BECAUSE
THE FORD GOVERNMENT MOVED
TOWARDS THE PRIVATE RETAIL
MODEL.
SO IF YOU ACTUALLY LOOK AT THE
BREAKDOWN OF HOW THAT 42 MILLION DOLLARS
LOSS CAME ABOUT, REVENUE WAS 63
MILLION DOLLARS.
THEY DID MAKE MONEY, BUT THE
GENERAL ADMINISTRATIVE EXPENSES
WERE SO HIGH THAT, YOU KNOW, TO
SOME EXTENT THAT ADDED UP TO THE
LOSS.
SO THEY ARE SAYING IT'S A LOSS
BECAUSE OF START-UP COSTS, AND
THEY HAVE TO CHANGE THE MODEL.
BUT YOU KNOW, IT'S YET TO REMAIN
AND BE SURE TO LOOK AT THE DATA
IN THE NEXT THREE MONTHS AS TO
HOW THE PERFORMANCE OF THESE
STORES HAVE BEEN GOING BECAUSE
REALLY AS PAMELA POINTED OUT, I
THINK A LOT OF PEOPLE PREFER
COMING INTO STORES AND BUYING
THE CANNABIS THAT WAY INSTEAD OF
BUYING IT ON-LINE.
AND RIGHT NOW THE PROVINCE GETS
THEIR MONEY FROM THE WEBSITE.
THEY DON'T HAVE ANY PHYSICAL
RETAIL STORES, RIGHT?
SO YEAH.

Steve says 42 MILLION DOLLARS LOST.

Vanmala says YES.
YES, AND ACTUALLY, STEVE, THE
NEW... THE CANNABIS NEW
BRUNSWICK, THE PROVINCIALLY RUN
STORE, ON-LINE STORE IN NEW
BRUNSWICK, SHUT DOWN ALL
TOGETHER BECAUSE THE MODEL
WASN'T MAKING SENSE AND THEY
WEREN'T MAKING MONEY.
SO YOU KNOW, THERE'S A PRECEDENT
THAT ONE... YOU KNOW, A SIMILAR
MODEL FAILED.
IT WILL BE INTERESTING TO SEE
WHAT HAPPENS HERE.

Steve says I DON'T WANT TO BE
UNUSUALLY HARSH ON THEM.
THEY DECIDED TO GO A DIFFERENT
ROUTE, BUT JAY, DO YOU THINK
THERE IS A... IS THERE A
REASONABLE LOGICAL EXCUSE OR
EXPLANATION FOR LOSING THAT MUCH
MONEY?

Jay says I THINK SO.
I MEAN, NOT TO BE FLIP, BUT I
THINK SO.
YOU HAVE BASICALLY THE NUMBERS
THAT YOU'RE REFLECTING THAT 42
MILLION DOLLARS INCLUDES ZERO OF THE
SALES AT BRICKS AND MORTAR
RETAIL.
IT ONLY GOES THROUGH THE END OF
MARCH 2019.
SO THE IDEA THAT YOU HAD ALL THE
START-UP COSTS AND BASICALLY
NONE OF THE BENEFIT OF ACTUALLY
SELLING LOTS OF CANNABIS WOULD
EQUAL A 42 MILLION DOLLARS LOSS, AND I THIS I IT'S IMPORTANT IF YOU
ZOOM OUT A BIT, NO STATE, NO
COUNTRY, INCLUDING CANADA AND
INCLUDING SORT OF THE PROVINCE
OF ONTARIO, HAS DONE THIS
FLAWLESSLY.
MY MOTHER JUST SENT ME AN EMAIL
SAYING AFTER YEAR ONE IN
MASSACHUSETTS, LOTS OF
COMPLAINTS ABOUT HOW LEGAL
CANNABIS IS ROLLED OUT.
THIS IS NOT NEW.
THIS IS A DIFFICULT THING TO GET
RIGHT.
UNLIKE ALCOHOL WHICH HAS A
HUNDRED YEAR HISTORY, WE KNOW BY
THE DAY HOW MUCH ALCOHOL IS
GOING TO BE BOUGHT, BY WHOM AND
WHERE, WE KNOW NONE OF THAT FOR
CANNABIS, AND UNTIL AND UNLESS
WE START TO BUILD DATABASES
ABOUT HOW LONG AND HOW MUCH AND
WHAT TYPES OF PRODUCT PEOPLE
WANT TO BUY, WE'RE REALLY JUST
SORT OF FLYING BLIND, AND WHAT
YOU SEE IS FLYING BLIND FOR A
YEAR.
FLYING BLIND YEAR TWO YOU START
TO BE ABLE TO SEE A FEW THINGS
COMING DOWN THE PIPE.
YOU START TO OPEN MORE RETAIL
STORES AND LEARN A LOT MORE, AND
SO I THINK YEAR TWO WILL GO A
LOT SMOOTHER THAN YEAR ONE.
YEAR THREE WILL BE BETTER THAN
YEAR TWO.

Pamela says AND WHAT'S SO INTERESTING IN
CANADA IS WE HAVE DIFFERENT
RULES BY PROVINCE, AND SO WE'VE
GOT SOME GREAT LESSONS LEARNED
FROM SASKATCHEWAN AND MANITOBA,
FOR EXAMPLE, WHERE YOU HAVE
STRONG GOVERNMENT REGULATORY
OVERSIGHT WITH THE PRIVATE
SECTOR ABLE TO DELIVER PRODUCT
AND DO SO IN A CONVENIENT WAY
FOR THE CUSTOMER.
AND I THINK THAT THAT MODEL IS
ONE WHERE WE'VE HAD A LESSON
THAT WE CAN APPLY TO THE REST OF
THE COUNTRY.

Steve says BRUCE, HOW WOULD YOU
SORT OF... ALL RIGHT, YOU WANTED
TO MAKE A POINT.
GO AHEAD.

Bruce says WELL, I WAS GOING TO SAY, YOU
KNOW, WE WERE TALKING ABOUT
NUMBERS OF STORES AND MODELS OF
OWNERSHIP, BUT MAYBE FOR
TEXTURE, FOR THE AUDIENCE, MY
MOST INTERESTING EXPERIENCES
HAVE BEEN TO GO TO A STORE, SAY,
IN NOVA SCOTIA WHERE IT'S A
STORE IN STONE.
WHAT I MEAN BY THAT IS YOU WALK
IN THE STORE AND IT USED TO BE A
LIQUOR STORE.
IT STILL IS, BUT AT THE BACK
THEY HAVE A CARVED OUT AREA
WHICH HAS CASHIERS AND ALSO A
CANNABIS STORE.
AND SO IF YOU WANT YOU CAN PICK
UP YOUR BOTTLE OF WINE, WALK TO
THE BACK, GET YOUR CANNABIS AND
PAY FOR BOTH AT THE SAME PLACE.
WHEN I WAS LAST THERE... BUT YOU
CAN'T PICK YOUR CANNABIS UP AND
PAY FOR IT AT THE FRONT.
APPARENTLY IT MIGHT GET IN YOUR
POCKET OR SOMETHING.
BUT THE BUSY CASH REGISTERS WERE
AT THE BACK AND THE NOT BUSY
ONES WERE THE LIQUOR ONLY ONES
AT THE FRONT.
COMPARE THAT TO NEWFOUNDLAND
WHERE THEY HAVE A MIX OF PRIVATE
AND PUBLIC SECTOR AND THEY HAVE
SOME OF THESE STORES NOW WHICH
ARE KIND OF THE... I'LL CALL IT
THE QUICK SERVICE.
IT'S A GAS STATION WHICH HAS
CANNABIS SHOP AND HAS A SMALL
LIQUOR BEER AREA, AND THEN ALL
THE OTHER STUFF.
THAT STARTS TO ME TO FORESHADOW
THERE'S A BUNCH OF WAYS THIS
COULD WORK AND WE COULD START TO
HAVE DATA THAT SHOWS
SUBSTITUTION EFFECT.
IF YOU HAVE A GREAT BEVERAGE
OFFERING THAT'S MADE WITH
CANNABIS VERSUS ALCOHOL AND YOU
ONLY HAVE TO PARK YOUR CAR ONCE
AND GO TO THAT ONE STORE, I
WONDER WHAT THE IMPACT THERE.
SO I THINK STORES AREN'T THE
SAME DESPITE PROVINCES HAVING
DIFFERENT NUMBERS OR DIFFERENT
OWNERSHIP MODELS.
THEY ACTUALLY HAVE DIFFERENT
RULES OF WHAT YOU CAN DO IN THE
PROVINCE.

Steve says LET'S FIGURE THAT OUT.
JAY COMPARE AND CONTRAST IF YOU
WOULD THE WAY ONTARIO ROLLED IT
OUT WITH THE WAY COLORADO, A
LITTLE WHILE AGO.
LET'S PICK THAT ONE.

Jay says I THINK THE FIRST IS THE
SHEER NUMBER OF STORES.
THERE'S JUST WAY MORE IN
COLORADO.
THE SECOND IS THE PRODUCTS THAT
WERE AVAILABLE WHEN THEY DID
OPEN.
RIGHT, THEY HAD CERTAINLY DRY
FLOWER, WHICH WE HAVE AVAILABLE
HERE.
PRE-ROLLS WHICH WE HAVE
AVAILABLE HERE, BUT THEY HAD
EDIBLES AND BEVERAGES.
WE DO NOT YET.
AND PEOPLE LIKE THOSE THINGS.
THEY LIKE THEM A LOT.
AND SOME OF THOSE OTHER
JURISDICTIONS IT AMOUNTS TO 50 percent
OF THE TOTAL REVENUE.
SO WE'VE NOT ONLY IN ONTARIO
LIMITED THE NUMBER OF RETAIL
SIGNIFICANTLY BASICALLY THERE'S
NONE EXCEPT IF YOU LIVE IN
DOWNTOWN TORONTO.
WE'VE LIMITED A NUMBER OF THINGS
ON THE SHELVES TO REALLY ONLY A
PORTION OF WHAT IS SELLING IN
OTHER JURISDICTIONS.
THESE ARE THE CHALLENGES WE'VE
HAD IN YEAR ONE.
MANY OF THEM WILL BE ADDRESSED
IN YEAR TWO, BUT COLORADO WENT
FROM ZERO TO LEGAL FULL FLEDGE
WITH LOTS OF RETAIL OUTLETS, AND
YET FIVE YEARS IN THEY STILL
HAVE SOME OF THESE SAME ISSUES
ABOUT THE LEGACY MARKET.
THEY HAVE SOME OF THE SAME
ISSUES ABOUT NOW THEY'RE TAKING
SOME PRODUCTS OFF OF THE
SHELVES.
THESE THINGS TAKE TIME.
IT'S NOT BASED ON SORT OF WE
KNOW EVERYTHING WE'RE GOING TO
DO EVERYTHING ALL AT ONCE.
WE'RE LEARNING AS WE GO, AND
THIS IS IN SOME RESPECTS A
CREDIT TO HEALTH CANADA SAYING
WE'RE GOING TO GET THIS RIGHT.
WE KNOW WE'RE GOING TO GET
DINGED FOR IT ALL ACROSS THE
BOARD.

Steve says ARE REVENUES IN COLORADO AS
HIGH AS THEY EXPECTED?

Jay says I THINK THEY PASSED A BILLION DOLLARS IN TAX REVENUE IN YEAR FIVE.
IT'S A SMALLER STATE THAN EVEN
THE PROVINCE OF ONTARIO, AND WE
COLLECT MORE TAXES GENERALLY
WHEN WE SELL THINGS HERE, SO I
THINK WE'RE GOING TO REACH THAT
BILLION DOLLAR THRESH HOLD A
LOT SOONER THAN COLORADO DID
WITH NEW PRODUCTS COME ON-LINE.
WE'LL BE AHEAD OF OUR COUSINS TO
THE SOUTH AND I THINK WE'RE
DOING IT IN A WAY THAT'S MUCH
MORE CANADIAN AND MUCH MORE
REPLICABLE TO OTHER COUNTRIES
THAN WHAT HAS HAPPENED IN THE
STATES WHICH IS GENERALLY BY
VOTER MANDATE.

Steve says ONE NEW ITEM ON THE
TABLE HERE, AND LET'S HEARKEN
BACK TO THE BEGINNING OF THIS
WHERE, PAMELA, WE WERE TOLD ONE
OF THE REASONS WERE, OF COURSE,
WE'RE A MATURE ENOUGH COUNTRY,
WE CAN HANDLE THIS, PEOPLE WANT
THIS, ET CETERA.
THE OTHER EXPLANATION FOR DOING
THIS WAS THERE'S AN
ILLICIT.ILLEGAL CANNABIS MARKET
WHICH THE GOVERNMENT WANTED TO
BASICALLY PUT OUT OF BUSINESS.

Pamela says THAT'S RIGHT.

Steve says IS THAT HAPPENING?

Pamela says SO THAT'S A GREAT QUESTION.
SO ROYAL BANK ISSUED A REPORT,
AND IN THEIR REPORT THEY SAID
THAT ONLY 12 percent OF THE MARKET IS
LEGAL.
SO 88 percent IS ILLICIT.

The caption changes to "Cutting out the illicit market."

Steve says STILL?

Pamela says YES.

Steve says SO THIS HAS BARELY
MADE A DENT IN THE ILLICIT MARKET.

Pamela says THAT'S RIGHT, STEVE.
IT'S BARELY MADE A DENT.

Steve says WHY IS THAT?

Pamela says THAT'S BECAUSE WE DON'T HAVE
A SYSTEM IN ONTARIO WHERE WE
HAVE OPEN ALLOCATION, WHERE IT
IS MERIT-BASED.
THAT'S WHY THE ONTARIO CANNABIS
POLICY COUNCIL IS ADVANCING
POLICY SOLUTIONS THAT ARE
EVIDENCE-BASED AND THAT ARE
COMMON SENSE.

Steve says FOR EXAMPLE?

Pamela says FOR EXAMPLE, THAT HAS TO DO
WITH TRANSPARENT PLAN AND A
TIMELINE FOR THE ALLOCATION OF
LICENSES BASED ON MERIT.

Steve says AND THAT YOU THINK
MIGHT PUT A BIGGER DENT IN THE
ILLICIT MARKET?

Pamela says YES, BECAUSE THEN CONSUMERS
WHO ARE ULTIMATELY WHAT WE'RE
TALKING ABOUT WILL HAVE THE
OPPORTUNITY TO CONVENIENTLY BUY
THE PRODUCT, BECOME
KNOWLEDGEABLE WITH THE
TOUCHPOINT IN THE STORE THAT
THEY CAN EASILY GET TO.

Steve says GOT IT.
BRUCE, YOU WANT IN ON THAT?

Bruce says WELL, I THINK, YOU KNOW, THE GUY IN THE PUFFY COAT AND THAT
WHOLE NETWORK HAVE HAD ABOUT A
90-YEAR OPPORTUNITY TO DEVELOP
THEIR SUPPLY CHAIN AND THEIR
CUSTOMER LIST.
WE'RE COMPARING THAT WITH A YEAR
OF OPERATING WITH A LIMITED
PRODUCT SET.
I THINK THAT THE TRANSITION WILL
KEEP HAPPENING AS THE BETTER
PRODUCTS SHOW UP IN THE NETWORKS
THERE, BUT I ALSO THINK FOCUSING
ON TAXATION ISN'T NECESSARILY
WHAT WE WANT TO DO.
I WOULD SAY FOR THE FIRST THREE
OR FOUR OR FIVE YEARS BECAUSE IF
THEY GET TOO CAPTIVATED WITH
TAXES COLLECTED, THEY'LL WANT TO
PUT TAX RATES UP, AND THAT WILL
BE OF BENEFIT TO THE ILLICIT
MARKET.
I DO THINK THE INSTRUMENTS THAT
THE PROVINCES HAVEN'T BEEN USING
AS MUCH AS THEY COULD, WHICH ARE
NOT PUT PEOPLE IN JAIL BUT
ACTUALLY USE FINES ON LANDLORDS
AND PROPERTIES SO THAT IF THEY
ARE ACTUALLY CONDUCTING THE SALE
OF CANNABIS THAT'S ILLEGAL OR
THE PRODUCTION OF CANNABIS
THAT'S ILLEGAL, THEY GET REALLY
SIGNIFICANT MONETARY PENALTIES.
IF YOU DO THAT, YOU AFFECT THE
COST, AND MAYBE THE FINAL THING
IS REALLY... I'VE EXPLAINED I
WAS IN GREECE LAST WEEK AND A
FEW PLACES EXPLAINING WHAT'S
GOING ON IN CANADA.
I SAID WE DIDN'T LEGALIZE
CANNABIS.
ALL WE'RE DOING NOW IS
REGULATING, EDUCATING AND
MONETIZING.
I THINK THE EDUCATING PART
THEY'VE BEEN PRETTY CAPTIVATED
ABOUT, DON'T CONSUME AND DRIVE,
BUT I HAVEN'T SEEN MUCH
EDUCATION ABOUT WHY THE ILLICIT
PRODUCT COULD HAVE UNEXPECTED
DANGERS.
WE'RE SEEING IT WITH THE VAPE
CRISIS THAT HIT THE U.S., BUT
THE EDUCATION ON WHY YOU MAY NOT
WANT TO BUY FROM THAT SOURCE AND
TALK ABOUT SPRAYS AND, YOU KNOW,
FECAL CONTAMINANTS AND GET DOWN
THE LIST OF WHY YOU WANT TO BUY
FROM LEGAL.
I HAVEN'T SEEN ENOUGH OF THAT
EDUCATION.

Steve says INTERESTING.
VANMALA?

Vanmala says YES, I JUST WANT TO MAKE A POINT ABOUT THAT.
I THINK THERE ARE A NUMBER OF
REASONS WHY WE HAVEN'T MADE A
DENT IN THE ILLEGAL MARKET.
PRICE IS A FACTOR.
LEGAL CANNABIS IS MORE EXPENSIVE
AND ACCESS IS AFFECTED, THAT'S
FOR SURE, BUT I THINK QUALITY IS
A HUGE FACTOR AS WELL.
AND WHEN YOU TALK TO PEOPLE
WHO... RETAILERS WHO ARE
ACTUALLY, YOU KNOW, TALKING TO
CUSTOMERS, THEY WILL TELL YOU
THAT A LOT OF THE TIMES THEY CAN
FIND BETTER QUALITY DRIED BUD ON
THE BLACK MARKET THAN THEY CAN
ON THE LEGAL MARKET, AND I THINK
IT IS POSSIBLE THAT... IT'S HARD
TO ACTUALLY BE ABLE TO COLLECT
DATA ON THAT BECAUSE WE'RE ONLY
A YEAR INTO THAT, BUT YOU KNOW,
IF YOU TALK TO PEOPLE, THEY JUST
SAY "I CAN'T FIND GOOD WEED ON
THE LEGAL MARKET."
IT'S REALLY HARD TO FIND, AND
MAYBE THAT WILL CHANGE WHEN YOU
HAVE A NEW ARRAY OF PRODUCTS
COMING ON.
I THINK VAPE PENS WILL BE A BIG
HIT, BEVERAGES AS WELL, BUT I
THINK THE BIGGEST ISSUE AND EVEN
WHEN YOU LOOK AT THE DECLINING
REVENUES OF, YOU KNOW, LICENSED
PRODUCERS AND THE FACT THAT THE
PRODUCT RETURNS, SOME OF THESE
PRODUCTS ARE BEING RETURNED
BECAUSE PEOPLE JUST DON'T WANT
IT.
SO I THINK, YOU KNOW, YES THE
GOVERNMENT NEEDS TO DO ITS PART.
THE ACCESSIBILITY PROBLEM IS
MASSIVE, BUT I THINK ON THE PART
OF LICENSED PRODUCERS, THEY DO
NEED TO DO A BETTER JOB OF
COLLECTING MARKET DATA AND JUST,
YOU KNOW, KNOWING WHAT THEIR
CONSUMERS WANT AND WHAT CONSUMER
PREFERENCES ARE OUT THERE.

Steve says PAMELA?

Pamela says YOU'RE SO RIGHT, AND SO ONE
OF THE ISSUES THAT WE ARE FACING
IS WE DO NOT HAVE
COMMERCIALIZATION... WE DON'T
HAVE THE RELATIONSHIPS BETWEEN
THE LICENSED PRODUCERS AND
RETAILERS.

Vanmala says YES.

Pamela says SO ONE OF THE POLICIES THAT
WE'RE ADVANCING AND WHERE WE'D
LIKE TO SEE THE PROVINCE STEP IN
IS TO ALLOW FOR THOSE
RELATIONSHIPS BECAUSE THEN THE
LICENSED PRODUCERS CAN WORK WITH
THE RETAILERS ON PRODUCT, ON
PRICING.
THAT WOULD TAKE US AWAY FROM
THAT CURRENT STATE.

Steve says LET ME DELICATELY AND
GINGERLY HERE RAISE ANOTHER
ISSUE, WHICH IS, YOU KNOW, WE'VE
DONE NUMEROUS PROGRAMS ON THIS
IN THE PAST, AND ONE OF THE
THINGS THAT WE'VE CONSTANTLY
HEARD IS THE PEOPLE WHO KNOW
THIS BUSINESS THE BEST, AND I
GUESS THEY WERE THE PEOPLE WHO
WERE RUNNING KIND OF THE... YOU
KNOW, ILLICIT SHOPS ALONG THE
WAY, THEY BASICALLY HAVE BEEN
SHUT OUT OF THE WHOLE THING, AND
YOU KNOW, BASICALLY FORMER...
POLITICIANS HAVE TAKEN IT OVER.
YOU KNOW, THERE ARE A LOT OF
FORMER POLITICIANS WHO NOW SIT
ON BOARDS AND WHO NOW, YOU KNOW,
SOME OF THE PEOPLE IN OUR MOST
IMPORTANT INSTITUTIONS HAVE KIND
OF TAKEN OVER THAT SPACE.
YOU KNOW, PEOPLE WHO CAME LATE
TO THE PARTY AND THE FOLKS WHO
REALLY KNOW THE STUFF HAVE BEEN
SHUT OUT.
TRUE OR FALSE?

Vanmala says TRUE, TO A LARGE EXTENT.
SO LET ME JUST SAY... PUT SOME
CONTEXT TO THAT.
YES WHAT WE I THINK SHOULD HAVE
DONE IS WE SHOULD HAVE LOOKED AT
ALL THE EXISTING ILLEGAL
DISPENSARIES THAT WERE IN
OPERATION AND FIGURED OUT HOW TO
LICENSE THEM AS OPPOSED TO
SAYING YOU GUYS CAN'T OPERATE AT
ALL.
WE'RE GOING TO ASK PEOPLE FROM
OUTSIDE THE SECTOR TO COME IN,
YOU KNOW, IN TORONTO, FOR
INSTANCE, YOU HAD A REAL ESTATE
AGENT RUNNING A CANNABIS STORE.
SO THAT KIND OF DOESN'T REALLY
ADD UP.
HOWEVER, I HAVE TO SAY... AND
YOU KNOW, BRUCE CAN PROBABLY
SPEAK TO THIS BETTER THAN I CAN,
THAT LICENSED PRODUCERS, SOME
LICENSED PRODUCERS HAVE MADE IT
A POINT TO REACH OUT TO PEOPLE
IN THE BLACK MARKET WHO KNOW HOW
TO GROW AND KNOW WHAT... YOU
KNOW, WHO REALLY JUST UNDERSTAND
THE PLANT AND HIRED THEM.
SO I HAVE SEEN THAT HAPPEN.
BUT I THINK BROADLY SPEAKING THE
PEOPLE WHO FOUGHT FOR CANNABIS
LEGALIZATION TO A LARGE EXTENT
HAVEN'T BEEN INCLUDED IN THE
MARKET.
I THINK THAT'S AN ACCURATE
REPRESENTATION.

Steve says BRUCE, I DON'T WANT TO
NAME AND SHAME HERE, BUT I AM
INTERESTED IN YOUR VIEW ON THE
FACT THAT I KNOW WE HAVE A
FORMER PREMIER, A FORMER FINANCE
MINISTER, A FORMER HEALTH
MINISTER, A FORMER...
COMMISSIONER WHO ARE ALL KIND OF
DEEPLY INVOLVED IN THIS STUFF,
AND HOW FAIR DO WE THINK THAT
IS, A POLICE CHIEF AS WELL, YES,
THAT'S RIGHT, A FORMER POLICE
CHIEF.

Bruce says I THINK THERE ARE A FEW
THINGS THERE.
SO THE GENTLEMAN WHO IS THE
PRESIDENT OF CANOPY RIGHT NOW,
HE HAD QUITE A LONG AND ACTIVE
HISTORY IN TERMS OF FIGHTING FOR
THIS OUTCOME, BUT THEN WHEN HE
SAW THAT THE OUTCOME WAS ON A
TRACK, HE GOT ON TO IT AND
PARTICIPATED IN IT.
SO I THINK THERE HAS BEEN TIMES
TO PLAY.
I THINK MANY OF THE PEOPLE WHO
ARE RUNNING DISPENSARIES DIDN'T
ACTUALLY WANT LEGALIZATION
BECAUSE IT DIMINISHES PROFITS,
POSSIBLY.
IT PUTS PRESSURE ON THEIR
BUSINESS MODEL.
WHERE IS THAT PRODUCT COMING
FROM?
WHO TESTS THE PRODUCT?
IT'S VERY UNCERTAIN PLATFORM.
I THINK REALLY THERE'S BEEN AN
OPEN DOOR, BUT IF YOU ACTUALLY
HAD A CHANCE TO START A
BUSINESS, YOU COULD HAVE.
THERE WERE A LOT OF PEOPLE WHO
DID AND THIS MAN WAS ONE OF
THEM, AND THEY BECAME PART OF
US, OR JOIN.
IT'S NEVER BEEN A BARRIER TO
BEING AN EMPLOYEE AT CANOPY THAT
YOU HAD A HISTORY ILLEGALLY AND
PERHAPS WITH CONVICTIONS RELATED
TO CANNABIS.
SO I THINK THERE'S BEEN WINDOWS
IN TIME.
I THINK THE BIGGEST ISSUE HAS
BEEN THE ONGOING EXISTENCE OF
PEOPLE'S CRIMINAL HISTORY AS A
NEGATIVE EFFECT ON THEMSELVES
BECAUSE OF CANNABIS.
AND I KNOW THERE'S WORK TO GET
RID OF ALL THAT, BUT IT'S TOO
LITTLE AND TOO SLOW.

Steve says OKAY, WITH A FEW
MINUTES TO GO HERE, PAMELA, LET
ME TRY ONE MORE AREA OF
INVESTIGATION.
IN WHAT DEMOGRAPHIC DO YOU SEE
THE BIGGEST OPPORTUNITIES OF
GROWTH MOVING FORWARD?

The caption changes to "High plans for the future."

Pamela says I SEE TWO KEY AREAS, STEVE.
ONE IS SENIORS.
SO FOLKS WHO I'M TALKING TO WHO
ARE BUYING THE PRODUCT, MANY ARE
SENIORS WHO ARE BUYING TO TREAT
A BAD KNEE OR TENDONITIS, SLEEP
BETTER.
AND THE OTHER AREA I SEE IS FOR
WOMEN.
SO WITH RESPECT TO WOMEN...

Steve says WHO HAVE TO PUT UP
WITH BAD HUSBANDS OR WHAT DO YOU
MEAN?

Pamela says I THINK WOMEN, WE HAVE UNIQUE
HEALTH NEEDS THAT CAN BE MET BY
CANNABIS, WHICH IS GREAT.
BUT ALSO I THINK WOMEN OFTEN ARE
THE ONES WHO ARE LOOKING AFTER
AGING PARENTS, WHO ARE LOOKING
AFTER CHILDREN, AND THEY ARE THE
GO-TOS OFTEN WITHIN FAMILIES.

The caption changes to "Connect with us: Twitter: @theagenda; Facebook, agendaconnect@tvo.org, Instagram."

Steve says INDEED THAT'S TRUE.
I'M GOING TO ADD A THIRD ONE TO
THE LIST, AND BRUCE, TELL ME IF
I'M NUTS HERE.
HOW ABOUT PETS?

Bruce says YOU KNOW WHAT, STEVE, I WAS
ACTUALLY GOING TO SAY YOU'RE NUTS.
NO!
I WAS GOING TO SAY THAT MY
NUMBER ONE... I AGREE WITH THE
ELDER CARE, BUT NUMBER TWO IS
PETS.
AND IT'S NOT JUST PETS.
IT'S ANY FOUR-LEGGED MAMMAL.
A FRIEND OF MINE TRADEMARKED
SOMETHING TESTED ON HUMANS
BECAUSE IT'S VERY BIZARRE.
YOU KNOW, WE'VE HAD SINCE 2001 A
MEDICAL SYSTEM FOR CANADIANS WHO
ARE HUMAN BUT OUR VETERINARIANS
HAVE NOT BEEN ABLE TO USE THE
PRODUCT IN ANY WAY.
THERE HAVE BEEN NO TRIALS, AND
IT'S VERY UNUSUAL THAT ANIMALS
HAVE BEEN DISALLOWED TO HAVE
SOMETHING BEFORE HUMANS TESTED
FOR 4,000 YEARS.
SO I THINK IT'S A HUGE MARKET.
THERE'S A BUNCH OF WORK TO BE
DONE ON DOSAGES AND TARGET
OUTCOMES, BUT WHEN I GET OLD OR
I HAVE AN OLD DOG, THERE'S NOT A
LOT OF DIFFERENCE BETWEEN ME
WHEN I'M OLD AND THE OLD DOG.
PROBABLY WON'T HAVE A GREAT
APPETITE, WON'T SLEEP WELL.
ALL THE THINGS YOU GOT TO TREAT
FOR BOTH.

Steve says OKAY, WELL SAID.
[Laughter]
JAY, FINISH IT UP HERE.
TECHNOLOGICAL INNOVATION.
WHAT ARE THE NEXT STEPS IN THAT
REGARD?

Jay says THIS IS I THINK ONE OF THE
AREAS WHERE CANADA HAS BEEN
LEADING AND WILL CONTINUE TO
LEAD FOR A LONG TIME.
THE WAY CANADA'S LEGALIZED
CANNABIS HAS CREATED OUT OF SORT
OF WHOLE CLOTH NEW TECHNOLOGIES
THAT UNDERPIN THE ENTIRE
INDUSTRY FROM SEED TO SALE AND
EVERYTHING SORT OF COMPLIANCE
AND INNOVATION, AGRICULTURE TO
GETTING IT INTO PRODUCTS, VAPE
PENS OR EDIBLES OR OTHER THINGS.
BECAUSE WE'VE LEGALIZED
FEDERALLY BECAUSE THE CAPITAL
MARKETS HAVE OPENED WE'VE DONE
SOME INCREDIBLE THINGS BOTH FROM
THE PRODUCT, MANUFACTURING AND
AGRICULTURE PERSPECTIVE, BUT
ALSO FROM THE USE PERSPECTIVE.
THERE'S A COMPANY THAT IS... I
LIKE TO CALL THEM THE FITBIT OF
CANNABIS THAT ALLOWS YOU TO
TRACK YOUR USE.
IT'S CALLED STRAIN PRINT.
IT'S BASED RIGHT HERE IN
TORONTO, AND THE IDEA THAT YOU
CAN BASE... TRACK YOUR OUTCOMES
BASED ON CERTAIN STRAINS,
CERTAIN INGESTION METHODS OR
CERTAIN OUTCOMES IS REALLY
SOMETHING THAT WE'RE GOING TO
REALLY DIVE DEEP ON HERE IN
CANADA, AND THE REST OF THE
WORLD IS LOOKING FOR US TO DO
ALL THOSE THINGS, AND WE HAVE A
UNIQUE ADVANTAGE TO DO THAT.
WHETHER OR NOT WE'RE GOING TO BE
SUPPLYING THE WORLD OF CANNABIS
OR NOT, THE UNDERPINNING OF THE
INDUSTRY I THINK IS WHAT THE
WORLD IS LOOKING FOR, AND THAT
IS SUPER-EXCITING TO US.

The caption changes to "Producer: Patricia Kozicka, @TrishKozicka. Student Intern: Justin Bellmore."

Steve says GOTCHA.
MR. DIRECTOR, COULD I HAVE A
FOUR-SHOT PLEASE TO FINISH OFF
THIS WONDERFUL DISCUSSION SO
THAT I CAN THANK BRUCE LINTON IN
SAN DEIGO, CALIFORNIA
JAY ROSENTHAL,
PAMELA JEFFERY, VANMALA
SUBRAMANIAM, ALL OF YOU FOR
COMING IN TO TVO TONIGHT AND
HELPING US WITH THIS, THANK YOU
SO MUCH.

Watch: Post-legalization Pot Losses