Gatineau’s Hydropothecary eyes private cannabis market with $10M retail play

hydrpothecary
From left to right, Hydropothecary's team includes chief brand officer and co-founder Adam Miron, CFO Ed Chaplin and co-founder and CEO Sébastien St. Louis. Photo by Mark Holleron.

News last week that Ontario’s cannabis market might be opened to private retailers was well-received by Gatineau-based Hydropothecary (TSX:HEXO) as the local pot producer recently made a sizeable investment in a marijuana retail brand.

The licensed producer, which is transitioning its name and corporate branding to HEXO, announced last Thursday that it had put $10 million into Canadian cannabis retailer Fire & Flower. The company has thus far submitted dozens of license applications in Alberta and secured one retail store licence in Saskatchewan.

Friday’s news that Ontario Premier Doug Ford will seek to open up the province’s legal pot market to private retailers – rather than the previous Liberal government’s public-only plan – didn’t come as a surprise to Hydropothecary. CEO Sebastien St-Louis said in a statement that the Fire & Flower investment was made with the Ontario market in mind.

“We have been anticipating the Ontario government’s potential move towards retail cannabis in Ontario, and made a strategic large investment in Fire & Flower in preparation,” he said in a statement.

Fire & Flower will distribute Hydropothecary’s cannabis-oil products across its eventual retail operations. The two firms’ partnership will tackle the Alberta, Saskatchewan and Ontario markets while Hydropothecary has pre-existing distribution agreements in place with the governments of Quebec and British Columbia, the latter announced earlier this month.

It’s been a productive July for the Gatineau firm. Health Canada recently gave Hydropothecary final licensing for 60,000 square feet of manufacturing space to extract oils and and create cannabis-based products. All 10 growing zones in its 310,000-square-foot production facility are now fully licensed, with construction of an $80-million, one-million-square-foot greenhouse slated for completion by the end of the year.

The firm says these expanded facilities will allow it to scale up production and explore new products, such as cannabis-based beverages and edibles. Its current product lineup features smoke-free pot options such as oral sprays and a new cannabis-based intimate oil.