The Future of Canadian Cannabis

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The Future of Canadian Cannabis

The Future of Canadian Cannabis

Despite no evidence of organized crime in the illegal cannabis industry, that growers, dispensaries, and other value-added producers are “paper criminals” interested only in producing a quality product or service in a free and fair market — the government still insists on eradicating this current industry.

Looks like the future of Canadian cannabis rests on perpetuating the licensed producer scheme the Harper government set up.

Oh, sure, Justin’s Liberals plan to ease the regulations so that “anyone” can become an LP, but even this promise (assuming they keep it) buckles under scrutiny.

For starters, the future of Canada’s cannabis industry is in intellectual property rights, not producing an agricultural product like a pharmaceutical (and badly too, as the recalls have indicated).

Since everyone will be entitled to grow, and since no one will follow the mandatory government seed program, crafting your own plant genetics is what will separate the winners from the losers.

And assuming the rest of the world catches up with Canada on legalization, the idea that Canada’s cold climate will somehow be a beacon of cannabis production is downright laughable.

Allan Brochstein, a financial analyst, said it best when he told the Globe and Mail,  “There’s a lot of people that are in the marijuana industry – [but] they’re not in the marijuana industry. They’re in the stock-promotion industry.”

He was, of course, referring to the LPs.

LP valuations aren’t based on cannabis production, but rather, an over-reliance on balance sheets. Investors are buying their debt. Even with recreational legalization, there aren’t enough Canadian consumers to cover their debt and financial leverage commitments.

And with legalization around the world, the Canadian LPs will become irrelevant. Unless, of course, they protect their brand while shipping production off to Mexico.

Sorry, Smith Falls. Looks like Canopy/Tweed is going the way of Hershey Chocolate.

As financial investor Anthony Wile wrote in the Toronto Sun, “Canada does not offer the appropriate climate to produce these products in either an environmentally friendly and natural manner or a cost structure necessary to eliminate the black market… Embracing international trade with countries better suited to marijuana cultivation is the right thing to do on all counts — environmental, cost and social impact.”

Canada’s domestic cannabis industry is akin to the dot-com bubble from the late 90s/early 2000s.

Soaring stock prices with valuations in some cases exceeding $1 billion is lunacy.

However, from the ashes of the dot-com bubble, companies like Amazon, Godaddy and eBay, emerged intact.

Therefore, some of Canada’s LP will likely survive. In fact, home-growers will probably find it lucrative to sell their popular genetics to LPs to be mass-produced in Mexico or California.

Visit any community in this country and you see the same thing — Walmart, Canadian Tire, Tim Hortons, Boston Pizza and other corporate chain-stores.

Local mom and pop small-businesses are becoming fewer and farther between. Instead of becoming entrepreneurs, this generation is burden by real estate at bubble prices and crippling student loans.

Already established entrepreneurs are suffering from excessive bureaucratic red-tape and a complicated tax-code.

Corporate concentration is as Canadian as maple syrup and the Mounties.

Why would the legal cannabis industry be any different?

(Why?)

Published at Thu, 02 Nov 2017 22:08:29 +0000