Canada’s cannabis industry burning out 5 years after legalization

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Cannabis legalization has had wide-reaching effects and made its use more accessible and acceptable. Yet the days where sky-high demand was expected are gone.

The analogy, which Roach first heard from a former Toronto councillor, represents the tight grip on the cannabis market that legislators held for centuries. It meant Roach had to exploit a grey area of the law to run her popular cannabis consumption space HotBox, which opened in 2000, and its customers were accustomed to looking over their shoulders for cops before walking through the door.

“It’s becoming much harder and harder, not only to raise capital to get out of trouble, but also to sell your company. I know people that were trying to sell their cannabis stores. Nobody wanted it.”Many cannabis businesses were doomed from the start. They spent fast and furiously in anticipation of legalization, scrambled to produce the right amount of pot _ first there was not enough, then too much – and discovered catering to consumers wasn’t easy.

For dried and fresh cannabis, plants and seeds, the taxes amount to the higher of $1 per gram or a 10-per-cent per gram fee. And many of those are going unpaid. Roughly $200 million in excise taxes are outstanding from the cannabis sector, Canada Revenue Agency spokesperson Nina Ioussoupova said in an email.

As they watched valuations dwindle, companies argued that the widespread presence of unlicensed dispensaries and other underground sellers was still a problem. To this day, Health Canada estimates they have a hold over 40 per cent of the market.

 

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