Licensed Producer Tweed to Control Almost Half the Market

One of the first licensed producers of cannabis in Canada is also the largest. Of the 26 producers licensed by the federal government under the Marihuana for Medical Purposes Regulations, Tweed Marijuana Inc. seems poised to dominate the industry.

Not only the first publicly-traded cannabis company in Canada, Tweed’s 180,000 sq. ft. facility in Smith Falls, Ontario and a second 350,000 sq. ft. facility in Niagara-on-the-Lake, Ontario will enable the operation to eventually produce over 3,500 kg of medical cannabis per year.

Health Canada estimates that, by 2024, the cannabis industry will reach $1.3 billion, with over 400,000 patients.

Smaller producers looking to move in to take advantage of this growth may not be able to, Tweed claims to be operating at only 40 per cent capacity at its Smith Falls location and 10 per cent capacity at the larger Niagara-on-the-Lake location.

Despite many an ongoing legal battle from patients fighting to produce their own cannabis instead of relying on a commercial producer like Tweed, the green giant has reported steady growth. Tweed posted revenues of over $1,700,000 in the first quarter of 2015, an increase of almost 40 per cent from their last quarter and their first profitable quarter. In 2014, Tweed reported net losses of $1.16 million. Tweed currently charges $6–12 per gram.

In addition to buying rival producer Bedrocan Cannabis Corp. in August, Tweed also bought MedCannAccess, a network of face-to-face community engagement centers in Ontario and a 33 per cent stake in CannScience Innovations, a drug development company based out of the MaRS Centre in Toronto working collaboratively with the University Health Network to develop precise cannabis extract doses. The operation is currently developing a mist product that can be taken orally.

Currently, Tweed’s main obstacle to growth in the medical cannabis field comes from the Supreme Court’s injunction that permits medical cannabis patients that received a prescription to use and produce cannabis under the government previous Marihuana Medical Access Regulations to grow and consume cannabis outside of the licensed producer system. But, while the federal government appeals the decision, all future patients must use licensed producers to procure cannabis based medication. Depending on the result of the appeal, tens of thousands of medical cannabis users would be legally required to use producers like Tweed to source their medication.

Still a fledgling industry in this country, Tweed, and other licensed producers, depend on a future that will be marked by court rulings and enforcement of cannabis at federal and municipal levels. Licensed producers are required by Health Canada to distribute their product by mail order, not in store-front dispensaries like the close to 100 that currently operate in Vancouver. The popularity of the current grey market of producers and local dispensaries in Western Canada has already been blamed by licensed producers as the cause of slow growth and staff layoffs.

In the second quarter of 2014, licensed producers sold 408 kg of cannabis, during the first three months of 2015, the amount had grown to 979 kg.