How the Canada's Marijuana Industry Has Evolved

Unlike the U.S., Canada’s federal government has been more progressive when it comes to the question of marijuana legalisation.  Granted, the developments in Ottawa have not been perfect but they have been better than what is happening to the south.

Proof of this is in the size of the market as analysts have estimated that the cannabis and related industries in Canada generate close to $30 billion per year.  This is roughly the same size as the market in the U.S.  – even though America’s economy is dramatically larger than Canada’s.  The size of the market has also helped to drive several trends and this is helping to drive the further evolution of Canada’s marijuana industry.

  1. Mergers & Acquisitions

While the size of the industry has attracted new entrants – such as MJ Freeway dispensary POS from the U.S. –  the crowding has opened the door for mergers and acquisition.  Part of the reason for this is that many of the first-generation of licensed producers (LPs) are publicly listed, unlike in the U.S.

While this due to the more progressive rule governing LPs in Canada the unintended consequence is that public companies need to provide continuous growth for their shareholders and this will push them to seek inorganic growth opportunities via mergers

Unlike organic growth – i.e. growing revenue through sales and marketing – inorganic growth focus on acquiring competitors.  As such, the explosion of LPs in Canada, now approaching 200, is likely to lead to industry consolidation.

Just this year we’ve seen Aurora try to acquire CanniMed while the latter is pursuing Newstrike.   Meanwhile, Aphria has also been active in the space and given the company’s size, it is likely that they will continue to be an active acquirer.

One part of the consolidation is that it will open room for new entrants and this will further spur growth in the industry.  Consumers should be winners from the dynamic as will drive innovation, expanded choice, and ultimately lower prices for better quality products.

  1. New Products

In fact, this brings us to the next trend in the evolution of Canada’s marijuana industry and that is the introduction of new products.  Gone are the days of simply rolling your own joints or using a bong; today’s cannabis users enjoy a plethora of product choices depending on their needs.

This includes oils, edibles, vapourizers, and patches – many of which weren’t even on the market a few years ago.  Beyond the product innovation, a lot of work is going into innovation on the cultivation and processing sides of the industry.  This has helped providers to reach an ever-expanding circle of users depending on their ailment.

  1. Regulatory Uncertainty

One thing that hasn’t seemed to change – or more appropriately has changed slowly – is the regulatory uncertainty surrounding marijuana.  While Prime Minister Trudeau recently announced plans for legalisation, it the entire process has been fraught with delays. Sure, the planned legalisation is a welcome step but many observers expected the announcement to happen this year. Adding to the uncertainty is what the delayed announcement will do at both a federal and a provincial level in terms of the underlying regulations that will need to be enacted.

While this uncertainty has dampened prospects for recreational marijuana usage, it has also created some challenge for larger players in the industry – many of whom see recreational use as the logical next step for the industry.

As such, companies are caught between preparing for legalisation and not know exactly what legalisation will mean.  Added to this is the increased scrutiny from the TSX regarding rapid price swings for cannabis-related companies.

  1. Acting Local

While the federal government has been relatively slow to act, the fact is that much of the rules regulating the industry are administered at the level of provincial and local governments.   This include production, wholesale distribution (within the province) as well as compliance at the retail level.

The differences between provinces are most visible in the varying age limits set my provincial government around the country.  In addition, we are seeing provincial governments seek to control retail distribution directly.  An example of this is the Liquor Control Board of Ontario’s to set up 150 retail locations by 2020.  While observers believe this could hurt the development of the industry in Ontario; it does highlight how different provinces are approaching legalisation.

  1. The Final Frontier

One last trend is the global opportunity for Canadian marijuana companies – especially as competitors in the U.S. are distracted by the snail’s pace of reform there.  This means that Canadian companies are well-positioned to take advantage of the global trend to legalize marijuana around the world and this could make Canada the world leader in the industry.

Author’s Bio

​Judy lees is a super-connector with AYC Web Solutions who helps businesses find their audience online through outreach, partnerships, and networking. She frequently writes about the latest advancements in digital marketing and focuses her efforts on developing customized blogger outreach plans depending on the industry and competition.


There are 0 comments on this post

Leave A Comment