California Cannabis Market

California Cannabis Market

In November, 2016, voters in California overwhelmingly approved Proposition 64, legalizing recreational cannabis across the state. California joins eight other states and the District of Columbia in passing recreational marijuana legalization initiatives, and the recreational market has been booming ever since. The law went into effect on January 1, 2018.

Now, four months after the law made recreational cannabis officially legal, how is the state’s market handling it? The answer to that question varies, from questions about policies to surging profits and confusion about the licensing process. In general, though, the state is experiencing substantial growing pains, and many steps will be needed to be undertaken before the market truly stabilizes. In this article, we will discuss some of the problems facing California’s recreational cannabis producers and retailers, not to mention consumers, and provide insights into the work being done to erase an uncertain future for the cannabis market.

 

Problems for California’s Recreational Market

At a California Cannabis Industry Association conference held in Sacramento earlier in 2018, cannabis business owners aired their many grievances, decrying real and perceived problems by the dozen. Some of the problems facing the nascent recreational market in California include:

  • Too few retail sales locations to get product to customers
  • Licensing agencies falling behind on approving new recreational licenses
  • Distributors that are not following the rules and statutes, undercutting those that comply fully with existing laws
  • Not enough laboratory analysis/assay capacity for quality assurance purposes
  • Supply chain deficiencies, including insufficient product to keep retail shelves stocked

Part of the overall problem stems from California’s prohibitively high licensing and taxation rates. High license fees are tending to keep legitimate business interests from becoming established, slowing down the process of opening retail locations. High tax rates on the sale of marijuana products has encouraged a resurgence in black-market sales, as products are substantially cheaper for consumers than would be found in the licensed retail outlets. Lawmakers in the state have banded together to co-sponsor a bill temporarily lowering the tax rate to put an end to black market cannabis sales and to spur legitimate retail sales.

Another problem, or series of problems, arises from the regulatory agencies tasked with setting regulations for licensed operators to follow. Despite a year or more of preparation, the California Bureau of Cannabis Control and the state departments of public health and of food and agriculture have not released their final regulations. In fact, those regulations are not expected to be implemented until the end of 2018. In the meantime, lawmakers have proposed a large number of tweaks to the existing statutes, creating an atmosphere of chaos and confusion.

 

Local Barriers to Entry

Local government initiatives have further clouded the prospects of the legal cannabis industry. Although the recreational legalization initiative is statewide, provisions in that law allow for local jurisdictions to set their own regulatory requirements. Some municipalities have forbidden cannabis operators from doing business in those cities. Others have placed prohibitively high licensing and business registration fees on cannabis entrepreneurs, causing many to simply give up before undertaking the expensive process of getting registered.

Like the high retail sales tax rate and state licensing fees, local governments setting high costs of entry to the market has only served to create a flourishing black market throughout California. This is especially ironic, since the reasoning behind establishing recreational cannabis legislation was to eliminate black market operators by creating a strong and profitable legal market. It is clear that those good intentions have backfired. As of the end of March, 2018, there are just over 4600 temporary licenses granted for cannabis operators in the entire state; this paltry number is in stark contrast to the estimated tens of thousands of gray- or black-market operators without licenses.

One of the largest concerns for the legal marijuana industry in California is that less than a third of all municipalities in the state have adopted some form of legal authorization for cannabis businesses, including both medical and recreational operations. This effectively shuts out 2/3 of the state in finding locations to begin doing business. Without local approval, there is no path forward for a state license to be granted to cannabis businesses, stifling the market even before it has had a chance to establish roots. Local governments have few incentives to streamline the process; as mentioned earlier, the state regulations gave substantial leeway to local municipalities to create their own regulations or to forbid cannabis business operations. There is no specified timeframe, and many entrepreneurs and industry analysts accuse those local governments of creating unnecessary delays for no real reason.

 

Supply-Chain Issues Affecting California’s Cannabis Market

Two other problems are facing California’s recreational cannabis market, and both have to do with supply-chain concerns. First, California’s regulations specify that retail sales locations will be required to sell only those products that have met testing standards set by the state. That stipulation goes into effect in July, 2018. The problem here is that laboratories are not yet set up in sufficient numbers to handle the required testing. In fact, only about 20 labs have obtained the necessary licenses from California authorities. This is wholly insufficient to handle the testing needs for thousands of cannabis operations, and is expected to create a product shortfall across the entire market unless lab licensing rapidly expands.

Distribution is another huge concern, with less than a hundred large-scale distribution operations servicing cannabis businesses in California. This weak supply-chain system will only struggle in the coming months; industry analysts point out that many distributors are not charging the required excise tax to buyers (at a 15% tax rate), misguidedly believing it is the retailer’s responsibility to collect the tax. When distributors are served with exorbitantly high tax bills due to their error, it will cause many distributors to pull out of California operations. California is racing to establish a comprehensive supply-chain tracking and tracing system, which, once operational, will shine a spotlight onto distributor practices falling outside of accepted norms. If distribution is curtailed, this could potentially compound product stock problems faced by retailers.

It is clear that much needs to be done to ensure California’s cannabis industry can do business. With the necessary tax and regulation reform, the largest cannabis market in the United States can once again move to profitability as retail sales expand statewide. Time will tell whether lawmakers and regulatory officials are up to the task of protecting this lucrative retail market in time for it to flourish rather than fail.

Source:
https://mjbizdaily.com/nothing-going-smoothly-californias-regulated-marijuana-market/

Wine and Cannabis

Wine and Cannabis

The fast-growing legal cannabis industry is attracting interest from many other market sectors in recent years. In addition to capital investments from the tech sector, the wine industry has become especially prominent in the cannabis market, looking to unlock new revenue streams by partnering with cannabis firms in the United States and Canada. Of particular note is interest in the recreational cannabis sector, which is poised for significant growth in the coming years.

 

Wine Industry Interest

Once seen as the “enemy” of the cannabis industry due to fierce competition for customers, alcohol producers have expressed a deep desire to join forces with cannabis producers and retailers. For marijuana businesses, wine companies represent a number of unique business opportunities, including that of added legitimacy. It is not only the winemakers themselves that have begun to pursue entry into the cannabis market, but a wide range of wine-centric business operations and professional staff, including:

  • Compliance specialists
  • Packaging and labeling concerns
  • Marketing firms
  • Cultivators
  • Legal professionals
  • Finance specialists

On its surface, this potential partnership between marijuana and wine companies seems unusual, but it begins to make sense when one realizes that the two markets are very similar in many ways, especially in legal compliance, marketing, and financing. For members of the wine industry, entrance into the marijuana market is a logical step and an easy transition for those firms that recognize the similarities in operations and in customer base.

 

Spurring Partnerships Between Wine and Cannabis

The interest coming in from wine-centric businesses is a relatively new phenomenon. In 2016, a discussion session at that year’s Wine Industry Network expo featured the topic of marijuana legalization and how that might affect wine sales. Analysts noted that the session was overwhelmingly popular with event attendees, and encouraged the Network to carry on the conversation in another one-day conference.

In August, 2107, the Wine Industry Network hosted a symposium in Santa Rosa, California. It brought together experts from the wine and marijuana industries and covered topics like regulatory compliance, tourism, cultivation, licensing, and many other aspects that the two business sectors shared. Like the session at the 2016 industry conference, the 2017 symposium was met with enthusiasm by business owners, industry personnel, and ancillary operations, packing the meeting rooms of the event.

Industry analysts from both sectors agreed that cannabis has become more palatable to established wine and spirits firms due to the fact that a promised threat by the federal government to crack down on legal cannabis businesses has not yet caused issues. On the state level, marijuana has gained legality; 29 states and the District of Columbia have legislated legal medical marijuana, while nine states and D.C. have also passed recreational cannabis legalization laws.

 

Technology and Operations Outreach to the Cannabis Industry

As mentioned earlier, both the wine and cannabis industries share many similarities. Both must adhere to strict regulatory compliance. Both depend on the successful cultivation and harvest of living plant material to manufacture their end products. And, both have a particular focus on hygiene and contamination control in their cultivation and production operations. Because of these similarities, there is significant overlap in many aspects of operations, with technology and packaging/labeling operations representing the potential for unique partnerships between industries.

Companies that manufacture contamination control solutions have found that the same technology can be applied to cannabis production facilities. An ozone-generation system that was developed for the wine, food, and pharmaceuticals sectors has found a home in cannabis production, particularly in companies that produce edibles and oral tinctures, two segments of the marijuana industry that are highly-regulated in terms of food safety standards. Cleanliness and cross-contamination protection technologies developed for agricultural concerns are also a ready match for cannabis cultivation; with much of commercial cannabis produced in indoor grow facilities, the spread of pathogens or molds can wipe out entire harvests. Cannabis operations depend on clean, healthy facilities to ensure success, and they have adopted technologies with the help of companies that had served the wine industry for decades.

In packaging and labeling operations, overlap between the wine industry and the nascent marijuana market presents new opportunities. A study conducted by the wine industry suggested that up to 70% of all wine purchases were influenced by the design and appearance of bottle labeling. Wine labeling specialists know that labels give companies the opportunity to educated consumers on the specific characteristics of the wine and its crafting. This is also the case in the cannabis industry, where there may be hundreds of different marijuana strains and cannabis-infused products to choose from. Marijuana markets looking to differentiate themselves from competitors know that visual marketing in the form of stylish and informative labels can spell the difference between failure and success.

Wine labeling operations must also adhere to established standards, and the same factors apply in several cannabis-legal states, where all labeling must contain specific information for consumers. Marijuana producers and retailers see wine labeling as a path forward, applying the lessons learned by the wine industry over decades and ushering in new partnerships between that industry and the cannabis market.

 

Wine vs. Cannabis: Friend or Foe?

Not all wine business players are sharing excitement about potential partnerships with cannabis producers. While many wine industry veterans see the cannabis industry as an allied market ready for exploration and partnership, others approach the cannabis industry with trepidation. Federal regulations and the specter of federal crackdowns have had a chilling effect on some partnerships.

Distrust among cannabis businesses is the most prominent factor influencing partnerships between industries. Due to the sensitive nature of cannabis production and the strict regulations surrounding its cultivation, retail, and distribution, many marijuana firms are reluctant to trust outsiders. Once they have learned more about wine industry operations, however, trust is built and both sectors can enter into lucrative partnerships. Industry analysts note that the similarities between markets are just too sweet to ignore. If both sectors understand that by forging partnerships, the combined forces can expect new revenue streams and a more engaged customer base. 

Sources:
https://mjbizdaily.com/wine-related-firms-look-uncork-opportunities-marijuana/

https://mjbizdaily.com/ca-wine-cannabis-industry-officials-to-meet-in-joint-symposium/

Alcohol Markets and Cannabis

Alcohol Markets and Cannabis

For centuries, people have turned to alcohol products to unwind after a long day, to celebrate with friends, and to mark special occasions. Now that legal cannabis has entered the scene, the alcohol industry’s dominance over the recreational market may be coming to an end. Cannabis industry analysts and business leaders suggest that cannabis may hold the keys to the kingdom, representing a vast opportunity for profits and continued growth among recreational users as an alternative to alcohol products.

 

Competitive Advantages of Cannabis

Nine U.S. states and the District of Columbia have passed recreational marijuana legislation in the past three years. More states are putting the finishing touches on their own legislation, and the country of Canada is expected to have recreational cannabis legalization laws on the books in the coming months. This groundswell of support for recreational weed has industry analysts excited about the recreational markets springing up across the country.

Alcohol is typically consumed only as a beverage. Cannabis, on the other hand, lends itself to a variety of products, including smoking the cured flowers, creating tinctures, edibles, beverages, and vaping liquids. This versatility provides a strong competitive challenge to alcohol’s dominance on the recreational scene. One industry analyst suggests that cannabis meets more consumer demands and satisfies consumer motivations better than alcohol ever could, and believes that as the commercial cannabis industry grows, its biggest players may even target alcohol producers for acquisition.

Another potential competitive advantage on the recreational market is a belief that cannabis is safer than alcohol. Users of recreational marijuana believe that it does not impair them in the same way that consuming alcohol might. This belief is especially prevalent among younger users, a potent demographic in recreational cannabis and alcohol markets. Whether cannabis is safer than alcohol is up for debate, but those who tend to believe in this may prefer recreational weed over alcohol products, helping to spur growth in a fast-growing market.

 

Threat or Opportunity?

Many alcohol producers are eyeing the emerging recreational cannabis market as a threat, as cannabis represents an alternative to alcoholic drinks. The cannabis industry’s profit pool is massive, approaching the entire amount of the alcohol industry’s profit over the past three to five years. As more states and Canada adopt legalization legislation, the profit potential is sure to increase dramatically. Industry estimates suggest that the recreational market for marijuana alone will account for $40 billion in sales by 2020; if more states join the legalization initiatives taking shape, that profit may soar to unexpected highs.

The fact remains that consumer motivations and needs are similar between those who use cannabis and those who use alcohol products. Based on the aforementioned competitive advantages of the legal cannabis market, however, cannabis can meet needs that alcohol makers simply cannot approach. Still, the smartest companies on both sides of the recreational market are seeing consumer demand as an opportunity, rather than a threat.

In many cases, such as in Canada and in several U.S. states where legalization legislation has passed, the alcohol control board oversees the commercial cannabis industry. This gives both markets a bit of uniformity when it comes to regulation, helping to pave the way for lucrative partnerships. Some alcohol companies have invested heavily in licensed cannabis producers, both as a means of getting a piece of the profits as well as to expand market offerings.

There will always be overlap in the customer base between alcohol and cannabis, so these partnerships could create synergies that can be leveraged, producing products that meet consumer demands no matter what their recreational preferences are. Alcohol companies are exploring the marijuana market for new beverage ideas and perhaps even the development and production of nutraceutical products. Both alcohol and cannabis producers are also looking at other strategic partnerships across markets, including cosmetics, pharmaceuticals, food, and beverages, just to name a few. The goal is to improve market penetration, and partnership suggest a path forward for all of the major players in these ever-growing markets.

Partial ownership of growing cannabis companies and their incredible profitability may also help struggling alcohol producers to weather downturns in their own markets. In the current landscape, industry analysts are seeing alcohol companies purchasing partial or total stake in some of the largest commercial cannabis companies. It is expected that as the cannabis market grows, the reverse will be true: cannabis firms snapping up alcohol companies in merger and acquisition strategies. This shift is expected within the next three to five years.

Finally, consumer goods personnel — particularly alcohol business executives — are in great demand by the cannabis industry. Consumer goods and alcohol executives have the skillsets that smart cannabis businesses need to thrive; the market is filled with great business ideas but little in the way of executive experience. Injecting seasoned business executives into the mix will strengthen the companies that employ such personnel, helping to create stability in an ever-fluctuating market. Alcohol executives, for their part, have many commonalities with the cannabis market’s needs, including marketing and promotional strategies, production efficiency initiatives, and automation, all of which will bring consistency and quality into the commercial cannabis industry. The future of partnerships between alcohol and cannabis companies may be several years away, but early moves suggest that these partnerships will work to create a flourishing, robust market economy.

Is Medical Cannabis a Promising Treatment for Veterans?

Is Medical Cannabis a Promising Treatment for Veterans?

Recently, the U.S. Department of Veterans Affairs (VA) changed its language on their website to suggest that the department is open to researching the effects of medical marijuana as a viable treatment option.  On the VA’s website, a recent update suggests that research towards the benefits of medical marijuana for Veterans may finally be opening up.

The VA is seeking to clarify its position pertaining to the VA and marijuana.  According to the VA Website, they understand that several states have approved marijuana use for medical use.  They also reiterate that marijuana and all derivative products are still classified under federal law as a Schedule One controlled substance.  Therefore, it is still illegal under federal government laws.

 

What Does the FDA Have to Do With the VA?

Since the U.S. Department of Veterans Affairs is mandated to follow all federal laws and the Food and Drug Administration still classifies marijuana as a Schedule One drug, VA doctors and health care providers are not allowed to recommend it or prescribe it to veterans.

However, they are allowed to discuss marijuana use with their patients as part of an overall care plan.  This is where the “waters get murky.”  The VA states:

  • Veterans are still allowed access to VA benefits when marijuana use is reported to their healthcare provider.
  • These same Veterans are encouraged to discuss all drug use with their providers.
  • The provider will record marijuana use in the veteran’s record as a means to help with treatment planning.
  • Clinicians at the VA may not recommend medical marijuana.
  • Clinicians may not provide any paperwork for Veterans to allow participation in state-approved marijuana programs.
  • Pharmacies at the VA are not to fill any prescriptions for medical marijuana.
  • Funds from the VA will not be used to pay for medical marijuana prescriptions.
  • Any state laws regarding the possession of marijuana are not in effect when on VA grounds.  The VA is a federal facility and federal laws govern any federal facility.

In addition, Carolyn Clancy, M.D. Executive in Charge, emailed a directive to employees of the VA on December 15, 2017, to provide clarification on the VA’s stand on medical marijuana.  Some items in the directive include:

  • Reason – The Veterans Health Administration (VHA) directive is to provide guidance on access to VHA clinical programs for all Veterans who participate in State-approved marijuana programs.
  • Summary of Major Changes – The major change in policy is to add additional support to the Veteran-provider relationship when discussing the impact on health and use of marijuana for any Veteran-specific treatment plans.

This language gives hope to medical marijuana advocates that the VA is finally opening up to investigating the effects of medical marijuana on health problems faced by Veterans, including post-traumatic stress disorder (PTSD).

Marijuana Moments Tom Angell originally reported the change by the VA’s Office of Research & Development.  Their website refers to earlier research on medical marijuana saying that in their review they “found limited evidence” where marijuana use helped reduce pain in some patients.  In addition, it found that medical marijuana “might reduce spasticity associated with multiple sclerosis,” but found little evidence to determine the direct effect of marijuana on PTSD.  VA doctors are not currently able to prescribe medical marijuana to Veterans, but they can look at marijuana as an option in treating medical problems faced by Veterans.

This leads many in the healthcare and marijuana industry to have hope in one day using medical marijuana as a possible treatment option for suffering Veterans.  However, this new stance directly conflicts with VA Secretary David Shulkin’s recent letter that announced there would be no agency research on marijuana due to its federal classification as a Schedule I substance.

Shulkin’s letter was in direct response to a request for clarification made by the House Committee on Veterans Affairs.  The U.S. House members want the VA to begin investigating the potential effects of medical marijuana for veterans who suffer with chronic pain and PTSD.  Representative Walz, ranking member of the House committee said that Shulkin’s response to their request was “disappointing and unacceptable.”

He went on to say that the VA did not answer their “simple question,” but that they also made an attempt to mislead the committee by claiming, “without citing any specific law, that VA is restricted from conducting research into medical cannabis, which is categorically untrue.”

It seems as if Shulkin has been caught pointing the finger at the FDA for the VA’s lack of interest in researching the benefits of medical marijuana for Veterans.

 

Pressure Towards the VA Mounts

A recent poll, funded by the American Legion, found that more than 9 out of 10 military veterans desire additional research into medical marijuana and its benefits in treating ailments faced by veterans every day.  The new poll by the nation’s largest veterans service organization shows:

  • More than ninety-two percent of veterans who support the expansion of research into medical marijuana
  • Eighty-three percent of veterans believe that medical marijuana should be legalized by the federal government
  • Over eighty percent also favor allowing VA doctors to recommend medical marijuana to their patients

American Legion spokesman, Joe Plenzler, told The Cannabist, “We already know that greater than 80% of the American public supports research into the efficacy of medical cannabis.  What this survey shows is that America’s veterans feel even more strongly about the need to study cannabis and its potential in treating PTSD, chronic pain and other ailments veterans face every day.”

 

How the House Committee on Veterans Affairs is Helping

https://news.medicalmarijuanainc.com/house-members-capitol-hill-push-medical-marijuana-research-help-veterans/

The 10-member group who sit on the House Committee on Veterans’ Affairs, is currently urging the Trump administration to study the benefits of medical marijuana for military veterans.  Congressman Tim Walz (D-MN) understands the importance of medical marijuana research and how access has become a critical issue to veterans.

The House Representatives who joined Walz in urging President Trump to act include:

  • Mark Takano (D-CA)
  • Julia Brownley (D-CA)
  • Ann McKlane Kuster (D-NH)
  • Beto O’Rourke (D-TX)
  • Kathleen Rice (D-NY)
  • J. Luis Correa (D-CA)
  • Gregorio Kilili Camacho Sablan (D-MP)
  • Elizabeth Esty (D-CT)
  • Scott Peters (D-CA)

In response, Congress passed a defense bill in December that opened the door for medical marijuana to be approved by the Department of Defense.  President Trump signed HR-2810 into law on December 12 which gives the Department of Defense the authority to approve any medical devices or drugs for members of the armed forces, stepping on the toes of the FDA.

How Will Canada Meet the High Demand for Recreational Cannabis?

How Will Canada Meet the High Demand for Recreational Cannabis?

The demand for recreational marijuana has increased considerably.  Most industry observers predict that there will be a recreational marijuana shortage in 2019.  What is causing this shortage?

 

Supply and Demand

Health Canada, the department responsible for issuing production licenses for marijuana growers, more than doubled the number of production licenses in 2017.  Unfortunately, this has not balanced the supply/demand ratio.  Regional supply imbalances in provinces that only allow sales through government-run retail outlets and unmet cultivation targets from producers are thought to be the culprit.

 

Often, what is on paper does not pan out in real life.  This is true for the Canadian marijuana industry.  The amount of paid-for production capacity is more than enough to meet demand for 2019.  In fact, companies have been spending hundreds of millions of dollars in order to boost production.

 

The Marijuana Policy Group

A Denver based company called the Marijuana Policy Group (MPG), has provided analysis and policy advice to the Canadian government and private clients.  They found that Canada’s publicly traded licensed producers have funds available to produce 1,370 tons of cannabis for this year and the next.  MPG believes that this supply is actually three times more than needed to serve the legal cannabis market in the coming year.

 

The supply and demand problem leads to two key questions:

 

  • How much of Canada’s 992 tons of black market marijuana can it bring into the legal market in the next two years?
  • How successful will producers be in meeting their cultivation targets?

 

MPG predicts that Canada will take approximately 40% of the recreational cannabis black market share.  This equates to almost 400 tons of marijuana in the first year.  For producers, this means that they only have to meet 35% of their cultivation capacity in order to meet market demand, MPG estimates.

 

According to Miles Light, co-founder and partner with MPG, “Licensed producers are well capitalized in Canada, making it easier for them to ramp up production in the first year.  Supply may be limited initially but should ramp up sharply after a few months…Legal demand won’t be 100% of the market.  Some portion of that will be supplied by home growing, and some is going to be supplied by the same black market that exists today.  Then you have what’s being already supplied in the medical market.”

 

Currently, Canada’s licensed medical cannabis production is almost 83 tons per year.

 

Where Is the Cannabis Shortage?

MPG predicts that any shortage of cannabis will not be from production and cultivation of cannabis, but rather from market distortions.  Retails and wholesalers who sell the marijuana after it is produced are thought to be responsible for the market shortfall.

 

Light predicts, “You’re unlikely to have a systematic shortage or bottleneck in cultivation, but there may be bottlenecks further down the supply chain, especially in distribution and retailing.”

 

What is the reason for this “bottleneck” effect?  Provinces such as Ontario and Quebec have opted for government-run retail monopolies creating a shortage of sales outlets.  Ontario and Quebec account for two-thirds of the overall population in Canada.  Even with this large percentage, there will only be around 70 adult-use marijuana outlets in 2019.  In comparison, there are 1,066 government-run liquor stores and 250 illegal marijuana dispensaries in these two provinces.

 

Regional market imbalances may be seen regionally.  Some areas may have too much marijuana and other areas may not have enough.  In contrast, provinces that allow for private-sector retailors will see many entrepreneurs help the bottleneck by opening outlets with a larger selection of products and a wider range of prices.  According to Khurram Malik, partner with Jacob Capital Management in Toronto, regional retail networks will be key in alleviating the bottleneck in distribution.

 

This equates to an inventory surplus in the market before there is excess supply.  According to Malik, if there are only 50 stores in Ontario when 500 are needed, there will be an “inventory glut” before the market sees any supply surplus.  This surplus will benefit smaller producers, who will be able to produce at a higher utilization rate.

 

The Big Picture

The larger issue is going to be the variety of products available for sale.  What are consumers going to demand?  What are they willing to buy?  Will the products sold in the regulated markets satisfy the demand of consumers?

 

The initial in-demand strains of marijuana, which includes edibles, will not be a part of the initial legalization rollout.  President of the Cannabis Commerce Association of Canada, Ian Dawkins, explains it best by comparing cannabis sales to alcohol sales.

 

He surmises that a government run liquor store would not be very successful if it only sold three kinds of rum.  Instead of settling for a limited choice, Canadians would be “lining up at the border to ship in the U.S.”  Dawkins is a principal consultant of British Columbia-based Althing Consulting.

 

He also predicts that the best way to approach the supply problem is to quit focusing on total weight.  Instead, he believes that the shortage will be in particular sub segments that larger licensed producers (LPs) do not understand.

 

Some LPs, however, are attune to market demands.  Canopy Growth, a major licensed producer that trades on the Toronto Stock Exchange under the symbol WEED, is offering a diversified product offering by recognizing that the demand will not be for one particular product, but a wide variety of marijuana products.

 

This means that successful companies must offer cannabis varieties grown by a diverse set of producers.  More customers are attracted to a store when there is a wide variety of products for sale.  This holds true in all retail outlets across every type of product sold.

 

Therefore, in order to meet the high demand for recreational marijuana, Canada must:

 

  • Ensure that there is adequate production of marijuana to meet market demand
  • Allow for private companies to fill in for government run shops when there is an area that has bottlenecked
  • Lift restrictions on private companies to allow them to compete in all provinces
  • Offer a wide variety of products by resourcing from many different producers
  • Listen to market demand and adjust as needed

 

Canada stands on the precipice of recreational marijuana legalization.  Ensuring that all Canadians have access to and choice of recreational marijuana will determine how successful it will be.