According to the companies, the Canadian pot will lose money to the American brand monsters

Canada may have a head start in the global cannabis industry now that the pot is legal, but companies targeting the US market say the benefit will not last long once the US branding machine is launched.

"Canadians have the advantage of the first engine in large-scale production, large-scale agriculture and large-scale commodity inputs, but the United States has an advantage in terms of brands and consumer experience, "said Ben Kovler, president and CEO of Chicago. Green Thumb Industries Inc., said during an interview at a potty conference in Toronto. The Americans "do not grow hops or barley, we make beer; we do not grow tomatoes, we make Heinz ketchup. "

Canada legalized the recreational pot Wednesday and took the lead in many aspects of the industry. As marijuana remains illegal at the federal level in the United States, Canadian stock exchanges and investment bankers dominate business on both sides of the border. As a result, licensed Canadian producers, such as Tilray Inc., have a much higher market value than their US counterparts.

Canada will not be able to keep this lead for too long, said Afzal Hasan, president and general counsel of CannaRoyalty Corp., an Ottawa-based company that invests in jar companies, often in exchange for a royalty on their income.

Not the reality

"People who, for whatever reason, thought Canada was going to dominate the world of cannabis, had to disabuse of this notion because it was never based on a reality," Hasan said in an interview.

CannaRoyalty trades on the Canadian Stock Exchange, but focuses primarily on the California market, where marijuana has been legal for almost a year. It also maintains a strategic partnership with Canadian retailer 180 Smoke and intends to import some of its 50 or more brands into Canada next year when vaping and edible products will be legal.

Hasan, originally from Nova Scotia, does not explain why the Canadian cannabis industry is at a disadvantage.

"There is literally no industry in the world for which we have an advantage," he said. "Our most prolific companies, Nortel, BlackBerry, Bombardier – we are not good at running businesses, period, and this has to do with our culture. We are not as aggressive, competitive and capitalist as the people of the south. "

Canada has very strict branding rules, including single-color packaging, logos can not be larger than mandatory health warnings, and marketing can not involve a single brand. produces a mirage or a amusement.

The notoriety of the mainstream brand on the first day of legalization was "extremely low," with more than 95 percent of consumers ignoring the brands they had just purchased, according to GMP analyst Martin Landry. The brokerage interviewed 100 consumers on the first day. This "raises questions about how much money some discs spent to launch their brands," he wrote in a note.

This means that US brands have the opportunity to connect with their consumers in a way that Canadian licensed producers do not have, said Kovler.

"This gives us price protection, price power, shelter from the storm of price suppression because you have experience with the consumer," said Kovler.

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