A year in the weeds: Why the cannabis industry didn’t take off the way everyone planned

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There is no shortage of answers to the question of what went wrong, but one thing seems certain: there is plenty of blame to go around

In an outdoor parking lot between a shelter and a Tim Hortons in downtown Ottawa, black market cannabis dealer Jay said he can’t think of the last time business has been so good. His pop-up dispensary moves around the capital city from time to time, depending on when he gets tipped off about potential police raids, which he said have tapered off lately. Despite the legalization of recreational cannabis almost a year ago, Jay insists his customer base has remained strong.

There is no shortage of answers to the question of what went wrong in the cannabis industry’s disappointing first year — among them, mediocre product quality, uncompetitive pricing and a heavy regulatory burden — but one thing seems certain: there is plenty of blame to go around. There had been such a focus on scale over everything else, that quality in particular got left behindBut the early days of legalization were plagued by a massive shortage of product. The bigger producers such as Canopy Growth Corp. and Aurora Cannabis Inc. had signed supply agreements promising a consistent stream of products, but were often unable to keep up.

But turning capacity into profitable production was a different story. Problems associated with scaling up led to write-downs, and mediocre sales growth was not enough to offset rising costs. Shortly after, Manitoba-based licensed producer Bonify Medical Cannabis Ltd. had its licence suspended by Health Canada, after 200 kilograms of illegal cannabis were found in the company’s vaults.

Jay, the Ottawa-based black market dealer, said the lack of legal stores — there are only two legal operations in his vicinity — has given him an advantage. “I don’t think we’ve had an impact on the black market at all,” said Trevor Fencott, chief executive of cannabis retail chain Fire & Flower Cannabis Co. “The customers we are seeing now are not price sensitive. I think they are brand new to the industry, don’t buy from the black market and that’s why they are willing to pay such high prices.”

For example, just weeks before legalization, Health Canada was still dealing with a backlog of hundreds of applications for cultivation licences. Just 221 have been approved so far. Health Canada has said that licensed producers will only be able to begin submitting their product applications to the regulator on that date, which means it could be late December or early January before consumers will be able to purchase product, giving the black market yet another reprieve.

But Graeme Kreindler, an analyst at Eight Capital, suggests there is another way to look at the vaping problem.

 

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Because the government put their greedy fucking hands on it and made a clusterfuck out of everything!

Because speculators are idiots it’s still farming and it’s not the place to make a fast buck. It’s a place to make lots of money over time. Build a brand.

Media sensationalizing. Just like climate change.

Regulation and they charge twice as much as it costed on the black market

Sounds like a “climate change question....”

only the Government could F^&$ up selling weed.....🤦‍♀️

in short government can not operate a lemonade stand and make a profit

The obvious reason is that this was a hasty election ploy instead of a well-planned health-focussed initiative.

Guess they planned it wrong hehe

It's obvious. The market is not that big as they thought it was. It's probably shrinking. Perhaps, people in high brain use industries don't want to ruin their brains with drugs and alchohal. Not cool to be a druggy, anymore

You misspelled the way the *government* planned. Everyone else knows that government is a gigantic failure at everything they put their hands on and cannot ever do better than the private sector.

Let's see. Massive amounts of regulation. A government sponsored cartel where only approved producers have access. Supply issues. Price fixing. Sub par product quality. Burdensome retail regulations. Uncooperative local governments bylaws. I have no idea why legalization failed.

It failed because instead of legalizing the black market and bringing them into the fold, another market was created that rich folk could invest in, and the players in that market don't know what they're doing. Hope y'all lose your shirts over it.

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