Why Canada’s Cannabis Bubble Burst

By
EUGENE
110
2376

Why Canada’s Cannabis Bubble Burst

More than a year ago, Canada made recreational cannabis legal. So why are people still buying it on the black market?

When Canada legalised marijuana just over a year ago, it seemed like anyone who was anyone wanted to break into the market.

The media nicknamed the frenzy Canada’s “green rush”, as investors like Snoop Dogg and the former head of Toronto’s police force clamoured to get a slice of the multi-billion-dollar-pie.

But like the gold rush of the 1850s, the lustre would soon fade, leaving prospectors in the dust.

“It didn’t take a rocket scientist to recognise that these stocks were trading on fantasy and not on fundamentals,” says Jonathan Rubin, CEO of New Leaf Data Services.

With decades of experience in the energy commodities markets, Mr Rubin saw the legalisation of cannabis in states like Colorado and California in the US (and later Canada) as a “once in a lifetime” opportunity to get in on the ground floor of a brand-new commodity.

“I had this epiphany that this is going to be a commodity just like any other commodity,” he told the BBC.

What that meant was that like the price of wheat or pork, the wholesale price of cannabis was going to fluctuate with the market. So instead of investing in the cannabis itself, Mr Rubin started New Leaf to track the price of cannabis in states where it was legal. Investors and others in the industry pay for access to this data.

This business model has given Mr Rubin an interesting vantage point of how the market has unfolded.

In Canada, he says, the rollout has been disappointing.

“They haven’t had the growth in sales and earnings that they’ve envisioned,” he said. “I don’t want to say it’s a failure, but there’s definitely frustrations.”

Wholesale prices have dropped by about 17% since New Leaf started tracking data, which has kept profit margins tight for producers.

Sales have also slowed, according to Statistics Canada.

It’s led to a rollercoaster ride for the stock prices of publicly traded cannabis companies.

In May 2018, Canadian producer Canopy Growth made headlines when it became the first marijuana company to list on the New York Stock Exchange.

Six months later, the stock price about doubled when it hit a high of $52.03 (£39.77) a share.

Now, the stock price is back to where it was, and their competitors have suffered similarly drastic losses.

Growing pains

There were early signs of trouble.

When cannabis became legal on 17 October 2018, there wasn’t enough supply to meet the demand.

Long lines and backlogs of online orders plagued consumers. Producers weren’t sure what strains would be most popular where, and kinks in the distribution chain were still being ironed out.

“Trying to understand what strains we should grow, in what formats and what quantities – we did a great job but we didn’t nail everything,” says Canopy president Rade Kovacevic.

A patchwork of provincial laws have also made it harder to get products to consumers. While it’s easy to buy cannabis in some places, in others brick-and-mortar shops are few and far between.

This is especially true in Ontario, Canada’s most populous province. Red tape and a cap on the number of cannabis retail outlets have made rollout slow. Retail licenses were awarded by lottery, and the province held the number of licenses at 24, to serve a population of 14.5m.

Where there was once a shortage, now producers have too much product, in part because of the lack of retail.

In September, Canadians bought 11,707 kilograms (25,809 lbs) of dried cannabis flower in Canada. But producers had a total of about 165,000 kilograms of finished and unfinished products ready for sale, or more than enough to meet the demand for an entire year.

Mr Kovacevic blames the lack of retail in Ontario on a lot of his company’s woes.

Christmas Beware Lethal Button Batteries In Toys

“I think that lack of continuity of points of purchase across the country slowed the transition from the black market to the legal market,” he said. “It was a challenge.”

Black market still thriving

When the government announced its decision to legalise cannabis, one of its principal reasons was to reduce the black market.

https://www.bbc.com

But Statistics Canada estimates that about 75% of cannabis users still use illegal cannabis.

“There’s a very strong resistance to the legal stores in the sense that a) it’s more expensive and b) there aren’t enough of them. They’re not close to them, so they just deal with their local guy like they always have,” says Robin Ellis, co-founder of Toronto retailer The Friendly Stranger and a long-time activist for cannabis legalisation.

Why Canada’s Cannabis Bubble Burst

RELATED ARTICLESMORE FROM AUTHOR

110 COMMENTS

  1. Great post. I was checking constantly this blog and I am impressed! Extremely helpful info specially the remaining phase 🙂 I maintain such info a lot. I was looking for this certain info for a long time. Thanks and good luck.

  2. I loved up to you will receive carried out proper here. The comic strip is attractive, your authored material stylish. however, you command get got an nervousness over that you would like be delivering the following. sick without a doubt come more in the past again since precisely the same just about a lot incessantly inside of case you shield this hike.

  4. The next time I check out a blog, I really hope that it does not disappoint me as long as this. I mean, I understand it was my selection to read, but I really assumed youd have something intriguing to claim. All I hear is a lot of whimpering concerning something that you might fix if you werent as well active trying to find focus.

  7. Hola! I’ve been following your blog for a while now and finally got the bravery to go ahead and give you a shout out from New Caney Tx! Just wanted to mention keep up the excellent job!|

  10. Usually I do not learn post on blogs, but I would like to say that this write-up very compelled me to check out and do so! Your writing taste has been amazed me. Thanks, very nice post.

  14. Heya i’m for the primary time here. I came across this board and I in finding It truly helpful & it helped me out a lot. I’m hoping to offer something again and help others such as you helped me.|

  15. Greetings from Colorado! I’m bored to death at work so I decided to check out your blog on my iphone during lunch break. I love the info you present here and can’t wait to take a look when I get home. I’m surprised at how quick your blog loaded on my cell phone .. I’m not even using WIFI, just 3G .. Anyhow, wonderful site!|

  17. Greetings, I do think your web site could be having internet browser compatibility problems. When I look at your site in Safari, it looks fine however when opening in IE, it has some overlapping issues. I just wanted to provide you with a quick heads up! Aside from that, fantastic website!|

  24. I am really enjoying the theme/design of your site. Do you ever run into any browser compatibility issues? A few of my blog readers have complained about my blog not operating correctly in Explorer but looks great in Opera. Do you have any recommendations to help fix this problem?

  25. Have you ever thought about publishing an e-book or guest authoring on other sites? I have a blog centered on the same information you discuss and would love to have you share some stories/information. I know my visitors would appreciate your work. If you are even remotely interested, feel free to send me an email.|

  26. Hey just wanted to give you a quick heads up. The text in your article seem to be running off the screen in Opera. I’m not sure if this is a formatting issue or something to do with web browser compatibility but I figured I’d post to let you know. The design look great though! Hope you get the issue resolved soon. Many thanks

  29. Hello there I am so happy I found your blog, I really found you by mistake, while I was browsing on Yahoo for something else, Regardless I am here now and would just like to say kudos for a marvelous post and a all round interesting blog (I also love the theme/design), I dont have time to read through it all at the minute but I have bookmarked it and also added in your RSS feeds, so when I have time I will be back to read a great deal more, Please do keep up the excellent job.

  31. I have been exploring for a little bit for any high quality articles or blog posts on this sort of area . Exploring in Yahoo I at last stumbled upon this website. Reading this info So i am happy to convey that I’ve an incredibly good uncanny feeling I discovered just what I needed. I most certainly will make certain to do not forget this web site and give it a glance regularly.

  32. You completed several nice points there. I did a search on the issue and found a good number of people will have the same opinion with your blog.

  33. I needed to put you that bit of remark to finally give thanks yet again with your spectacular thoughts you’ve shown on this website. It is certainly wonderfully open-handed of you to allow openly all some people would’ve advertised for an electronic book to end up making some dough for themselves, precisely seeing that you might well have done it in case you desired. These inspiring ideas also served as the great way to comprehend other people online have the identical eagerness like my personal own to know the truth much more concerning this condition. I believe there are some more pleasurable periods in the future for folks who look over your blog.

  35. I loved as much as you’ll receive carried out right here. The sketch is tasteful, your authored subject matter stylish. nonetheless, you command get bought an nervousness over that you wish be delivering the following. unwell unquestionably come further formerly again since exactly the same nearly a lot often inside case you shield this hike.

  36. Please let me know if you’re looking for a article writer for your site. You have some really great articles and I believe I would be a good asset. If you ever want to take some of the load off, I’d really like to write some content for your blog in exchange for a link back to mine. Please shoot me an email if interested. Thanks!|

  37. I don’t know whether it’s just me or if everyone else experiencing issues with your blog. It seems like some of the written text in your content are running off the screen. Can somebody else please provide feedback and let me know if this is happening to them as well? This could be a issue with my browser because I’ve had this happen before. Thank you|

  39. It’s perfect time to make some plans for the future and it is time to be happy. I have read this post and if I could I want to suggest you few interesting things or suggestions. Maybe you could write next articles referring to this article. I desire to read even more things about it!

  41. Hey very cool blog!! Man .. Excellent .. Amazing .. I will bookmark your site and take the feeds also…I’m happy to find a lot of useful info here in the post, we need develop more strategies in this regard, thanks for sharing. . . . . .

  42. I was pretty pleased to discover this site. I want to to thank you for your time for this particularly wonderful read!! I definitely enjoyed every part of it and i also have you book-marked to see new things on your blog.|

  43. There are some attention-grabbing closing dates on this article however I don’t know if I see all of them heart to heart. There is some validity however I’ll take maintain opinion until I look into it further. Good article , thanks and we wish more! Added to FeedBurner as nicely

  44. Do you mind if I quote a few of your articles as long as I provide credit and sources back to your weblog? My website is in the very same niche as yours and my users would certainly benefit from a lot of the information you provide here. Please let me know if this okay with you. Many thanks!

  49. Thank you for the good writeup. It in fact was a amusement account it. Look advanced to more added agreeable from you! By the way, how could we communicate?

  50. Hi! Do you know if they make any plugins to assist with Search Engine Optimization? I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good success. If you know of any please share. Many thanks!

  51. You have made some decent points there. I looked on the internet to find out more about the issue and found most individuals will go along with your views on this web site.|

  59. I mastered more a new challenge on this fat loss issue. Just one issue is a good nutrition is tremendously vital whenever dieting. A tremendous reduction in bad foods, sugary food, fried foods, sugary foods, pork, and white colored flour products may be necessary. Retaining wastes bloodsuckers, and toxins may prevent desired goals for losing belly fat. While particular drugs momentarily solve the condition, the bad side effects are usually not worth it, and they also never supply more than a momentary solution. It’s a known undeniable fact that 95 of fad diet plans fail. Many thanks sharing your notions on this site.

  62. Hello there! This is my first visit to your blog! We are a group of volunteers and starting a new project in a community in the same niche. Your blog provided us valuable information to work on. You have done a marvellous job!

  68. Hello would you mind letting me know which web host you’re using? I’ve loaded your blog in 3 completely different web browsers and I must say this blog loads a lot faster then most. Can you suggest a good web hosting provider at a fair price? Thanks a lot, I appreciate it!|

  69. I genuinely enjoy reading through on this site, it has got wonderful posts. “The living is a species of the dead and not a very attractive one.” by Friedrich Wilhelm Nietzsche.

  72. Every weekend i used to pay a visit this site, for the reason that i wish for enjoyment, for the reason that this this site conations actually nice funny information too.|

  73. Hi my family member! I wish to say that this article is awesome, nice written and include almost all significant infos. I’d like to look extra posts like this .|

  74. It’s really a nice and helpful piece of information. I’m satisfied that you simply shared this useful info with us. Please keep us up to date like this. Thank you for sharing.

  77. Hi just wanted to give you a brief heads up and let you know a few of the images aren’t loading correctly. I’m not sure why but I think its a linking issue. I’ve tried it in two different browsers and both show the same outcome.

  79. My husband and i were quite satisfied Raymond could deal with his web research through your precious recommendations he received while using the web site. It’s not at all simplistic to just happen to be giving out secrets and techniques that many other folks may have been selling. So we figure out we need the writer to thank for that. Those explanations you have made, the easy web site navigation, the relationships you will make it possible to instill – it is all terrific, and it’s aiding our son in addition to us believe that that subject matter is brilliant, and that’s pretty mandatory. Thanks for everything!

  80. First of all I would like to say terrific blog! I had a quick question that I’d like to ask if you do not mind. I was curious to find out how you center yourself and clear your thoughts before writing. I’ve had trouble clearing my thoughts in getting my thoughts out. I truly do take pleasure in writing but it just seems like the first 10 to 15 minutes are generally lost simply just trying to figure out how to begin. Any recommendations or tips? Thank you!|

  83. Great post. I was checking continuously this blog and I am impressed! Extremely useful info particularly the last part 🙂 I care for such info much. I was seeking this certain info for a very long time. Thank you and best of luck.

  85. An impressive share, I merely given this onto a colleague who was carrying out a small analysis on this. And hubby the truth is bought me breakfast because I ran across it for him.. smile. So i want to reword that: Thnx with the treat! But yeah Thnkx for spending time to talk about this, I feel strongly regarding this and love reading read more about this topic. When possible, as you become expertise, does one mind updating your blog with a lot more details? It truly is highly of great help for me. Big thumb up due to this article!

  87. What’s Going down i’m new to this, I stumbled upon this I’ve discovered It absolutely helpful and it has aided me out loads. I am hoping to contribute & help other users like its aided me. Good job.|

  88. I have realized some important matters through your site post. One other point I would like to state is that there are numerous games in the marketplace designed particularly for preschool age children. They include things like pattern acceptance, colors, creatures, and designs. These often focus on familiarization rather than memorization. This will keep children and kids occupied without experiencing like they are learning. Thanks

  93. Nice blog here! Also your website quite a bit up fast! What host are you the usage of? Can I get your associate link to your host? I desire my web site loaded up as fast as yours lol.

  101. When I originally commented I clicked the “Notify me when new comments are added” checkbox and now each time a comment is added I get three emails with the same comment. Is there any way you can remove me from that service? Many thanks!|

  103. Oh my goodness! a tremendous article dude. Thanks However I am experiencing problem with ur rss . Don’t know why Unable to subscribe to it. Is there anyone getting identical rss downside? Anyone who is aware of kindly respond. Thnkx

  104. I’m really loving the theme/design of your weblog. Do you ever run into any browser compatibility issues? A number of my blog audience have complained about my website not working correctly in Explorer but looks great in Chrome. Do you have any suggestions to help fix this issue?|

  105. The following time I check out a blog site, I hope that it doesn’t disappoint me as long as this one. I mean, I understand it was my selection to review, yet I actually thought youd have something fascinating to say. All I hear is a lot of whimpering concerning something that you might repair if you werent also hectic seeking focus.

  107. Youre so cool! I do not mean Ive review anything like this prior to. So good to find someone with some original thoughts on this subject. realy thank you for beginning this up. this website is something that is needed on the web, someone with a little originality. helpful task for bringing something brand-new to the internet!

  108. Right here is the perfect blog for anyone who wants to understand this topic. You realize so much its almost hard to argue with you (not that I actually would want to…HaHa). You certainly put a brand new spin on a topic that has been discussed for a long time. Great stuff, just excellent!|

LEAVE A REPLY

Please enter your comment!
Please enter your name here