Challenges await Canada’s legal pot industry.
As legalization looms, it remains to be seen how the future of the new industry unfolds. As Canada prepares to introduce landmark legislation on the marijuana industry next month, legalizing the drug for recreational and commercial use, expectations are overwhelmingly positive, yet many questions remain on the future of the country’s legal pot industry.
“There will be failures. There will be shortcomings. There will be short shipments,” Vic Neufeld, CEO of Aphria, one of the largest and highest-valued cannabis companies in the world, told CBC in September. Founded in 2014, Aphria is one of the early success stories, growing rapidly and making investors rich in the process. And the future will surely be even brighter. According to Statistics Canada, Canadians already spend about $5.7 billion on marijuana annually.
Yet there exists a long list of unknowns as well: Will there be enough supply? Will licensed producers make good on their promises? Will the retail market be as big as expected?
The cannabis industry has been awash in the forging of new partnerships over the past few months. First it was pot companies combining forces; now industrial giants are swooping in and making their claim on the sector. Elsewhere, companies are already looking ahead to the next phase of the industry: edible marijuana, and other THC-infused products and drinks.
Medical marijuana company Canopy Growth recently partnered with beverage giant Constellation Brands, and one of its rivals, Aurora, is reportedly exploring a partnership with Coca-Cola. Aphria was tipped by observers of the industry to form a partnership with Molson Coors, though the beer company eventually signed a deal with a smaller producer, Hexo.
Neufeld believes that edible and drinkable marijuana products represent the real future of the industry. “It’s recovery drinks, it’s energy drinks, it’s utility drinks,” he told CBC. “It’s juices. It’s cabernet sauvignon without an alcohol, and therefore no sugar and calories.”
Meanwhile, investors have poured billions of dollars into the sector hoping to capitalize, driving the valuation of pot stocks through the roof over the past two years.
After legalization kicks in Oct. 17, the market will show which bets paid off and which companies are best able to adjust when some things inevitably go wrong.