Canada Goes Fully Legal
By Yona Torres Editor New Frontier Data
All eyes are on Canada as the country takes its first few steps into a fully legal cannabis landscape. As such, Canada is taking a measured pace in its rollout of legal adult-use cannabis. The country is currently limiting its product offerings and will not permit edibles. “We anticipate Canada will add new products in mid-2019. Edibles and other derivates will appear at the top of the list”, said Beau Whitney, Senior economist at New Frontier Data.
Canada is setting a model for the industry with its dual-pronged approach to the cannabis market: first, to address its national population of 36 million citizens; and second, to set up an infrastructure to participate in the global cannabis market. That involves exports to countries (such as Australia, Germany, Italy, and the United Kingdom) who are struggling to satisfy the demands of their rapidly growing medical cannabis market. The other prong of their global expansion is Canada’s establishment of major cultivation facilities and/or acquisition of distribution companies or import license holders in Europe and Latin America. As more countries enter the export market, the ones with local production facilities and access to cheaper raw materials will have the advantage over countries whose products come with large import costs.
“They are showing us this is a global industry that will play into the global economy” stated Mr. Whitney. “And now, with Tilray and Canopy Growth recently announcing they are exporting [cannabis] products into the U.S. for medical scientific research, this is a watershed moment.”
Canada’s market launch is a watershed moment and has understandably generated a lot of excitement globally. However, the market is not without its risks. Industry analysts, for example, warn investors of an ominous and inevitable investment bubble, which is especially pronounced among publicly traded companies. While many of the new investors pouring into the industry are smarter and better informed, in part due to the data and insights provided by companies like New Frontier Data, there are still many uninformed speculators who have helped propel Canada’s publicly traded companies to stratospheric valuations. This, in turn, raises the risk of a market correction that could erase at least part of the dramatic gains made in the past year. As such, investors are cautioned about irrational exuberance and urged to ensure that the companies they invest in have solid fundamentals and achievable strategies.
The Canadian deployment will be a bellwether for the rest of the global market. It will not make or break the industry, but it will play an important role in defining its future. If implementation passes without incident, continued acceleration of the global cannabis industry can be expected. Any obstacles to come may create a pause in the market, but cannabis legislative reform will continue internationally.
Giadha Aguirre de Carcer, Founder & CEO of New Frontier Data, states, “The U.S. is well positioned to capitalize on the current evolution and opportunities in the global cannabis market. The export trade market is a critical market on which every legalizing country wants to capitalize, while the U.S. is still navigating the politics of interstate commerce. Eventually, there will be a [global cannabis trade] table, and hopefully, by then, the U.S. will have a seat.”
