Gatineau-based company inks major cannabis supply deal with SAQ

Over five years, Hydropothecary estimates it could supply more than 203,000 kilograms of cannabis to Quebec's Société québécoise du cannabis outlets.

Over 5 years, Hydropothecary estimates it could supply more than 203,000 kilograms of cannabis

Hydropothecary's facility in Gatineau, Que. (Reno Patry/CBC)

Quebec's liquor board, the SAQ, has made it official with six Canadian cannabis suppliers, signing contracts to provide the province's legal recreational market with thousands of kilograms of marijuana products.

The companies will supply the Société québécoise du cannabis outlets, SAQ subsidiaries that will eventually sell marijuana, with 58,000 kilograms in the first year.

Hydropothecary, the only Quebec-based company of the six, inked the biggest contract. Over five years, the company estimates it could supply more than 203,000 kilograms of cannabis products.

It will provide 20,000 kilograms in the first year of the agreement, 35,000 in the second and 45,000 in the third. The volumes for the final two years will be based on the sales generated in the first three years.

"By doing business with Hydropothecary, the SAQ is engaging with a company that complies with the law and adheres to best practices in both corporate governance and the development and manufacturing of high quality and safe products," CEO Sébastien St-Louis said in a news release.

The value of the contracts was not disclosed.

Prioritizing companies with Quebec presence

The SAQ says the finalized agreements are expected to fulfil the demand for the first wave of retail store openings, and that other calls for tender may occur at a later date.

The hope is to prioritize doing business with producers that have a presence in Quebec. 

The five other companies whose contracts have been finalized are:

  • Canopy Growth (12,000 kg).
  • MedReleaf (8,000 Kg).
  • Aphria (8,000 kg).
  • Aurora Cannabis (5,000 kg).
  • High Park (Tilray) (5,000 kg).

Canopy Growth, based in Smith Falls, Ont., and Edmonton's Aurora Cannabis have operations in Valleyfield, Mirabel and Saint-Lucien, Que. All six producers already had Health Canada authorization to produce therapeutic cannabis.

The contracts are contingent upon the adoption of the necessary regulatory framework by the federal and provincial governments.

The federal legislation is still stuck in the Senate, and it will take eight to 12 weeks to get the retail system up and running after that legislation receives royal assent, meaning legal cannabis products likely won't be for sale before early August

Bill 157, which would legalize recreational cannabis in Quebec and formally create the Société québécoise du cannabis outlets, has yet to pass.