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B.C. has inked deals with more than two dozen licensed cannabis producers to supply what is expected to become one of Canada’s largest markets for the drug, come legalization this October.

The Liquor Distribution Branch, which will be the only legal wholesaler of cannabis in the province, announced Wednesday that it has entered into memorandums of understanding with 31 licensed producers. The move will ensure legal retail outlets can offer customers an array of products featuring more than 150 strains, ranging in quality from cheap to high-end cannabis, sold at prices that will compete with the illicit market.

“The volume, variety and quality of our product assortment speak to the LDB’s commitment to working towards eliminating the illicit market,″ read a statement from Blain Lawson, the branch’s general manager and CEO.

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Additionally, the news release stated that British Columbia has secured a range of marijuana accessories for retail sale in its government-run BC Cannabis Stores. Licensed private retailers will be able to access the product line via the branch’s online sales portal.

The branch also announced it has secured a location for its first provincial marijuana store in a Kamloops shopping centre, saying the decision was based on the municipality’s readiness for zoning pot shops.

The branch will apply for municipal approval of the store site when the City of Kamloops begins accepting applications for the marijuana retail outlets in September, it said.

Rielle Capler, interim executive director of the Canadian Association of Medical Cannabis Dispensaries, said there are not enough details about the wholesale pricing and retail frameworks yet to gauge how successful the province will be in realizing a key goal of stamping out its sizable illicit market.

“We need to know what their price point is and what their markup is,” said Ms. Capler, whose organization represents about 65 illegal marijuana shops in Western Canada. “They’re saying the price will be competitive, but is that true?”

If B.C. wants to undercut the illicit cannabis sector, it needs to make it easy for the micro-producers licensed by Ottawa to get their legal products on the shelves of public and private stores, said Ms. Capler, who is finishing an interdisciplinary studies PhD at the University of B.C. on access to medical and illicit cannabis.

Last month, The Globe reported that Ontario’s cannabis retailing arm was putting pressure on some growers to reduce prices as that province strives to ensure marijuana on its shelves will be cheap enough to compete with the illegal market.

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Canada's underground trade is estimated at about 400,000 kilograms a year, although it’s not clear how much of that is from online sales from dispensaries, which ship their products undetected through Canada Post. In comparison, the legal medical cannabis system shipped 33,000 kg of product to as many as 168,000 patients across the country last year.

B.C. is expecting legalized cannabis to bring in $75-million a year to the province in taxes, with legal sales estimated to be worth a billion dollars.

Last February’s provincial budget estimated that the province will take in $50-million in the current fiscal year and $75-million in 2019-20, the first full fiscal year under legalization.

That represents the province’s 75-per-cent share of a federal excise tax, which Ottawa has said will be $1 a gram, or 10 per cent of larger purchases, whichever is higher. While that translates to about $1-billion in sales in the province, B.C.’s Finance Minister says it could be higher.

With a report from The Canadian Press

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