Canadian Legalization in a Downturn

BBC reported on Canadian cannabis market that struggle after the drug’s legalisation, the country’s cannabis industry is struggling for survival. Although the domestic recreational market is valued in $31.91bn in 2022 Recently, the industry is dealing with economic struggles far removed from the honeymoon period of those early days.

Take Aurora Cannabis, for example. As one of the largest in Canada announced to change their business model to selling orchids. While Canopy Growth, sold the multi-million dollar Ontario headquarters to its original owner, Both companies along with other cannabis producers, have also given out pink slips to thousands of workers in an effort to cut costs as they continue to generate “little to no profit”

Part of the problem, experts and industry leaders say, is overregulation of the drug as the country attempts to toe a careful line between public health and building a robust cannabis industry. Some also point the finger at what they say is the overregulation of the industry, where cannabis is still a controlled substance. By law, cannabis companies cannot advertise their products or build brand recognition in the way companies in other industries can. Retail locations have tinted windows to conceal what is inside, and the drug is sold in government-approved packaging. They also pay higher regulatory fees than companies selling other controlled substances.

Canada also has stringent laws on the types of products that can be sold, as well as their potency. Some argue that this has caused illegal cannabis in the country to continue to thrive even under legalisation.

Consumers of cannabis edibles, for example, are able to go online and find products with a potency higher than the legal amount, Mr Smitherman said.

Often, those products are sold at a considerably lower cost than what is being offered in licensed stores. Few of those producers appear to be profitable. by the Cannabis Council of Canada found that only 20% are showing some form of positive cashflow.

Data and Picture origin at BBC, Rolling Stone, The New York Times