[ad_1]
SMITHS FALLS, ONTARIO – The launch of the recreational cannabis industry in Canada will be an unstable business, but the companies that make up this industry seem ready.
Bruce Linton, Co-CEO of Canopy Growth Corp.
GSC -6.82%
CANNABIS, -6.85%
, braved a flight of about five hours between Smiths Falls and Newfoundland on Tuesday night, despite winds blowing at 60 km / h creating enough turbulence to make the landing dangerous, just to sell one of the first grams of legal weed in an outpost of the Atlantic Time Zone. The media opportunity was so risky that he and his co-CEO, Mark Zekulin, decided that only Linton would make the pilgrimage.
For its part, however, Linton was able to officially mark the end of one era and the beginning of another: after almost a century of prohibition, Canada became the second country in the world and the only member of the G7 . , legalize the drug for recreational use. Marijuana is now legal in Canada.
The commotion will not end with Linton's theft. Given that Canada has few precedents or precedents, the first months of cannabis sales for recreational purposes are subject to ambitious deadlines set by the ruling party, to a different set of laws in each of the 10 provinces the country and a potential shortage of suppliers as federally registered producers continue to operate. build production. Canopy executives, as well as colleagues at Aphria Inc.
APHQF, -5.99%
APH -6.08%
and Aurora Cannabis Inc.
ACBFF, -7.45%
CBA -7.23%
and external experts, told MarketWatch during interviews this week that they expected significant shortages on the first day of legalization.
A guide to jar stocks: What you need to know to invest in cannabis companies
Pot producers have been frantically building their operations since the law was enacted at the beginning of the year, and their inventories have sparked interest far beyond Canada's borders for the ability to respond quickly to a potential global industry. Companies like Tilray Inc.
TLRY, -4.38%
and Cronos Group Inc.
CRON, -1.87%
Listed on the US stock market, everyone is getting ready to see what the market will look like.
Canada offers a mature marketplace to test a legal cannabis industry: Greg McLeish, an analyst at Mackie Research, estimates that about 19% of Canadians use cannabis in some form, which is significantly higher than cannabis. global average of 4%, according to the United Nations. According to CIBC estimates by 2020, the country will generate revenues of 6.5 billion Canadian dollars, or about 810,000 kilograms of pot per year.
There are more than 120 federally registered producers in Canada and, judging by the leaders of these companies, each of them possesses a special blend of plant genetics, brand awareness, and the like. efficiency of production and ability to make rich shareholders and rivals envious. The companies behind these inflated stock market capitalisations will now have to prove their case by showing that they can adapt, as investors wait to determine the winners.
"We are all facing supply chain issues for a multitude of reasons, some controllable and others not," said Vic Neufeld, CEO of Aphria, who had to eliminate 14,000 potted plants in the last quarter, lack of sufficient staff to harvest the buds. when they have matured.
Read also: The cannabis beer is near and its going to become weird
There is also a shortage of outlets. In the most populous province of the country, Ontario, there is no brick and mortar store open on Wednesday, and it will not be for months. After the takeover of a new government in a recent election, Ontario chose to sell marijuana online through a government store, allowing private companies to open shops on the ground. In Quebec, the second most populous province, there will be only a handful of stores around the two major cities, Montreal and Quebec City.
"There will be a serious supply problem," said Mackie analyst McLeish.
McLeish calculated that it would take 16.6 days to satisfy customer demand in Quebec, assuming that the 12 stores opened on October 17th remain in business 12 hours a day after legalization. In Ontario, it would take 14.8 days for 500 stores to meet the demand under the same conditions, according to his forecasts.
"The system will not be perfect, and we should not expect it to be," said Cam Battley, CEO of Aurora. "It's a very complex national system, made up of 13 jurisdictions and all municipalities. Are you kidding me? It will take a little time to fix the problem, but everything will be fine. "
Do not miss it: for Canadian marijuana investors, coming to the US is a "mistake" that can lead to a lifetime ban.
Border Security and Organized Crime Reduction Minister Bill Blair told MarketWatch that, although sales will be legal Wednesday, it will take months and perhaps longer to resolve the inevitable problems of new system.
"It's a process," said Blair. "People are looking at the implementation date – why is not everything in place? The reality is that it will take time. "
Blair, a former police chief in Toronto, was a leading architect of the country's drug policy. He says the new laws are aimed primarily at protecting the health of the population and permanently excluding the black market from the pot, and not as a major cannabis experiment.
"You do not want to experiment with a country," said Blair.
However, legalizing cannabis is an ambitious experience. The Liberal government led by Prime Minister Justin Trudeau will permanently change Canadian society and hopes to generate hundreds of millions of dollars in new tax revenue, thousands of jobs and position Canada as a world leader in a sector in the process of legitimacy. .
See also: All Potential Red Flags for Investors in IGC, Pot Inventory Rising 1,000% in Three Months
If this vision is realized, it will probably be after a difficult journey. Canopy co-CEO Linton, who has been through this bumpy flight, is ready to look forward to the next step in the process, he said.
While Linton was showing Canopy's head office at a long-abandoned Hershey chocolate factory in Smiths Falls, he spoke of the many failures he has encountered. Canopy has experienced the development of technologies, cultivation techniques and products that have made it successful. In Linton's eyes, "the process" is the time of experimentation in an illegal industry for nearly a century, hoping that innovation rivals what Silicon Valley companies realized at the very beginning from their childhood on the Internet.
"We are ready to make more mistakes than any other cannabis producing company," said Linton. "For a moment."
