The razzle-dazzle days of Canada's cannabis industry are over as pot industry faces downturn

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.

While regulations and attitudes have loosened since Canada legalized recreational cannabis five years ago, Roach said policy constraints and industry response mean there is still "a ton of room to go" before the industry reaches general acceptance. The signs of that viability are everywhere. Cannabis shops dot some of the most coveted strips in Canadian real estate. Alberta- and Ontario-based giants have expanded their medical pot businesses into Europe. The domestic recreational market is valued in the billions.Yet the razzle-dazzle days where money was no object and sky-high demand was expected are gone, replaced by a sobering reality: legalization has fallen well short of expectations.

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. Hexo Corp. paved the way, she said, when it launched 28-gram packages of Original Stash dried cannabis flower in 2019 . It sold for $140, or roughly $5 per gram in Ontario, and slightly less in Quebec. Then-chief executive Sebastien St-Louis marketed it as disrupting the black market.

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. Roach realized the tax "is absolutely unrealistic," after she sold her beloved HotBox to the Friendly Stranger pot firm in 2020. It later turned the business over to Fire & Flower Holdings Corp., which has since filed for creditor protection.

"We've been through a lot and I did 20 years fighting for legalization, but I always say I didn't fight for legalization to purchase cannabis in the unregulated market," Roach said. Canopy has sold seven properties, including the iconic Smiths Falls, Ont., factory it bought from chocolate giant Hershey's, since April alone.

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