The risk to Canadian cannabis industry if America gets on board with legalization

Published Mar 14, 2019 09:30 a.m. ET
AP Photo/Thomas Peipert

The cannabis industry seems to be bustling in Canada, a country that has been fortunate enough to receive a head start on building a legal cannabis market. Unfortunately, once the legalization of weed in the United States becomes a reality, Canadian companies are expected to quickly lose pace in the game. As of now, four of the largest cannabis companies in the world are operating inCanada. Two of which hold a value of more than 10 billion US each. However, out of the top ten, six of those companies are also working in the United States. Anyone who thought that Canadian companies would rule the world stage on the cannabis front didn’t base their thoughts on facts. The fact is that Canada’s population is drastically less than the United States, totaling only approximately one-tenth of the total US population. There are several other factors to consider when predicting the future of the global cannabis market.

Canada

Population: 37 million

This country is currently home to 133 licensed cannabis producers. Many have been permitted to grow, sell, and advertise their product for both recreational and medicinal purposes. The largest companies have the advantage of financial investors as the Canadian markets rule over the majority of stock markets in the cannabis industry. Since the market in Canada is stagnant for the moment, many of the most successful companies have turned to the United States for additional revenue. Some cannabis producers have been banned from working in the States for fear of being booted from the Toronto stock exchange for breaking federal US law. Those that are trying to remain within legal boundaries have contracts with Australia, Germany, Israel, and Columbia to provide medicinal marijuana. A market that US companies cannot currently compete in as the exporting or importing of cannabis is illegal. Canada’s most significant weakness in the global market is their restrictions of the kind of products that can be sold within the country, including strict packaging and advertising guidelines that are similar to cigarettes, while the US has allowed the advertisement of marijuana as well as brand forming practices.

United States

Population: 360 million

The US has only a handful of cannabis producers that have been permitted to grow and distribute weed within states that have already deemed it legal. In most cases, the only legal cannabis available is medical, and it is produced by what is call multi-state operators. Thisincludes two of the largest conglomerates in the world including Curaleaf Holdings Inc, and Acreage Holdings Inc which combined hold worth of more than 700 million US. Though producers are restricted to sales within the country, the population of the US has managed to build up two companies to be worth more than double what any Canadian cannabis producers are worth. The American companies have the benefit of being able to obtain more significant amounts of capital with fewer restrictions. America’s greatest downfall so far has been restrictions on producers that require them to both produce and sell their products while staying within American borders.

The risk

So far, the United States has been incredibly limited in the market that it can reach. With massive legal pot producers, it only makes sense to assume that once marijuana is legalized in the US, the cannabis market will shift towards the U.S., with U.S. producers taking home the biggest piece of the pie. If this happens, then we will likely see a slow down in Canada’s cannabis market and a whole lot of American products on our shelves. This is nerve-rackingfor Canada’s small-time producers who feel threatened when the idea of the US entering the market is mentioned. Many Canadian farmers have completely converted family farms into large scale operations that they had hoped to expand on in the future. Will they be forced to find another crop to grow? Only time will tell, while the introduction of American cannabis products may slow the Canadian cannabis market a bit, many industry experts remain optimistic of a bountiful future in the global cannabis market that every country has a stake in.

Will America legalize weed?

The legal status of marijuana in the US are currently made up of mainly medical cannabis access. The number of states that have legalized medical cannabis has now hit 30 with only 10states allowing possession or sales of marijuana for recreational use. These numbers sound bleak, but the shift that has taken place in the average American’s view of the plant seems to be driving a change in regulation at a pace that can only be compared to that of alcohol prohibition laws. So how long before weed is legal? Well, that depends on a few things but right now more than 60% of the population is in support of legalization which are the numbers that Canada saw only a year before legalization took place.

Author

Related posts