The Yukon government has signed its first supply agreement with a licensed cannabis producer.
The deal means Tilray Canada Ltd.’s affiliate, High Park Company, will be supplying the Yukon government with up to 350 kilograms of cannabis and oil to sell in the first year the drug is legalized across Canada.
Scott Westerlaken, a spokesperson with the Yukon Liquor Corporation, said Tilray was chosen as one of the Yukon’s suppliers because of its experience with medical marijuana.
Founded in October 2013 in Nanaimo, B.C., the Yukon government calls Tilray “one of the world’s most advanced medical cannabis research and production facilities.”
Tilray operates much like a pharmacy, Westerlaken said. “It’s a secure product, it’s a safe product, it’s consistent.”
The deal with Tilray covers only a portion of the cannabis the territorial government is expecting Yukoners will consume.
Yukon’s cannabis market is estimated at about 800 to 1,000 kilograms per year, according to a government press release.
Westerlaken said the deal with Tilray does not include any promise of exclusivity. The government is looking to sign other supply deals to ensure enough “supply and variety of product.”
The government expects to purchase between 25 and 50 kg from each supplier to begin with so the territory has approximately 250 to 500 kg, about three to four months worth of inventory, to start with.
The territorial budget earmarks $2.7 million for the initial purchase, though negotiations could mean spending less than that, he said.
In the case of the Tilray contract, Yukon has only committed to an initial purchase of 50 kg but the contract allows for up to 350 kg to be purchased in the first year depending on how sales go, Westerlaken said.
Producers report that the product’s shelf life is up to 12 months for sealed and packaged flowers and 24 months for oils, Westerlaken said.
The government won’t be making the contract with Tilray public, Westerlaken said. Like the similar contract for liquor, it includes confidentiality requirements.
Either side can cancel the deal with 30 days notice, he said.
The government is still finalizing its plan for how much legal cannabis is going to cost in the territory. Westerlaken said early estimates suggest prices will start at $9 per gram.
The territory’s legislation has been tabled as part of this sitting of the legislative assembly. The government has promised to eventually create regulations to allow for local retail.
For now the government will be the only ones selling legal cannabis in the territory.
City of Whitehorse bylaws require that the outlet be located in the Marwell neighbourhood.
Earlier this year the government put out a tender looking for a space to either buy or lease but the only seller to place a bid was over budget and the tender was cancelled.
The territorial government hasn’t said where the new location for the retail store will be.
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