Delta 9 Cannabis confident about growth in international market

Hey there, time traveller!
This article was published 30/11/2023 (659 days ago), so information in it may no longer be current.

The imbalance between supply and demand in the Canadian cannabis business these days — there’s way more supply than demand — has inspired some producers to look for markets overseas.

Delta 9 Cannabis, the largest player in the province, has done just that, having shipped more than $700,000 of bulk cannabis to the medical cannabis market in Australia through the course of this year so far.

But Australia and many other overseas countries now require shippers to receive a certificate of compliance with Good Agricultural and Collection Practices (GACP) in order to play in that market.

Delta 9 just received that certification and company CEO John Arbuthnot believes the effort is worthwhile with potential for growth in countries like Israel, the U.K., Germany and throughout the European Union.

Asked if he thought there was a future for Delta 9 in the international market, Arbuthnot said, “We would except those (totals) to grow materially in 2024. Where they are seeing growing demand, that’s where the Canadian market supply sets up to fit in.”

The current incentive to get into the international market is simple economics. Wholesale prices in Canada are at about $1.30 per gram, but internationally Canadian suppliers can get between $2 and $3 per gram.

Arbuthnot said Canadian prices are starting to stabilize as some of the big national producers have shuttered large production facilities and domestic demand remains strong, with retail sales in September up about 10 per cent over last year.

“Domestically prices are levelling off and we’re seeing modest increases, but nothing meaningful,” Arbuthnot said. “Meanwhile international markets seem to be providing some price stability and inflation that we have not historically seen.”

Among other things, production costs in Europe, for instance, are much higher than in Canada. Arbuthnot figures that in Germany just their power costs per gram exceed Delta 9’s entire production costs

On the home front the retail scene remains very competitive.

While Arbuthnot said that there is “encouraging” same store sales growth in its chain of 41 stores throughout Manitoba, Saskatchewan and Alberta, he believes that as many as 30 stores will be culled from the provincial total that’s currently sitting at around 190.

One more was added to the total this week with the opening of the sixth Canna Cabana store opening on River Avenue across the street from Delta 9’s original flagship store on the south side of the street.

Omar Khan, an official with Calgary-based High Tide Inc., owner of the 159-store Canna Cabana chain, said that the company has an excellent real estate team that takes care finding the most appropriate locations — even if it’s across the street from a solid competitor.

“Osborne Village has one of the densest populations in the city,” Khan said. “We spend a lot of time on assessing where to put a store. Based on the analysis of our team, that neighbourhood can support both. From our perspective there’s no reason both can’t thrive.”

Canna Cabana is the largest chain of corporately-owned stores in the country. SNDL Inc. has close to 200 stores with brands including Value Buds, Spiritleaf, Superette and Firesale Cannabis but they include corporate and franchisee-owned locations.

Arbuthnot is not concerned about additional competition with his company’s inaugural location.

“We have a sign on the River Avenue store saying we price match and we are local,” he said. “We are ready to go toe-to-toe with any of the national players.”

martin.cash@freepress.mb.ca