From high flying to burnout, Canada’s cannabis industry faces downturn five years post-legalization

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The biggest cannabis companies have shrunk their footprints, laid off thousands and grappled with balance sheets that reflect a turbulent market and a longer march to profitability than once imagined

When Abi Roach thinks about the 20 years she spent fighting for Canada to legalize cannabis, she says pot legislation is like a clenched fist.

“It’s the closed fist that slowly opens as we prove ourselves to society as being just a normal part of everyday life,” she said, as the fifth anniversary of cannabis legalization approaches on Oct. 17. “The world isn’t exploding, the chickens aren’t going to fall from the sky, if people are consuming cannabis.The signs of that viability are everywhere. Cannabis shops dot some of the most coveted strips in Canadian real estate.

Canadians wanted more potent products in packaging that wasn’t dull. Others couldn’t shake relationships with long-time dispensaries and dealers who could supply pot at a fraction of the price of the legal market. “Everyone else followed, and so you saw this massive price deflation in the legal cannabis market,” Azer said.

For edibles, extracts and topicals, the duty is set at one cent per milligram of tetrahydrocannabinol, cannabis’ active ingredient, in the product. Following a stint at the Ontario Cannabis Store, Roach became a head of product marketing at St. Thomas, Ont., business Mera Cannabis Corp., where staff recently calculated manufacturing costs for a 14-gram flower product were $15, but taxes amounted to $16.50.

“My dream … maybe not in the next five years, but in the next decade, is that we can continue to move people from the unregulated market into the legal market to a point where the legal market is the only market.”The morning of legalization five years ago, a share in Canopy traded for about $68 and Aurora opened at $195. Their average stock prices over the past three months have been below $1.

 

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