CANNABIS IN CANADA: GREEN IS GOOD
Later this year, Canada is set to become the first G7 country to legalize recreational, adult-use cannabis. With the once-fledgling sector now boasting a combined market value of around $30 billion, whatever the moral or legal implications, entrepreneurs worldwide are looking to the ‘Great White North’ and considering opportunities to cash in on the so-called ‘Green Rush’.
The Canadian federal government’s legalization legislation is still in flux, and some questions remain on how exactly international investment could fit into the country’s cannabis framework. However, the existing regulatory framework still provides for plenty of opportunity to get a foothold into various aspects of this potential growth market. And opportunities might also arise in other territories considering the legalisation route.
PROSPECTS FOR GROWTH
Recent mergers and acquisitions, such as Aurora Cannabis Inc.’s $1.1 billion purchase of rival Canni-Med Therapeutics, serve to validate predictions of value and intense consolidation within the sector. Organisations and people with experience in marketing alcohol, tobacco, and pharmaceuticals or those with extensive experience working with regulated products, are well positioned.
Dried flower, pre-rolled joints, oils, and capsules (in some forms), are the only products permitted by the present Canadian legislation. In Colorado (USA) 38% of cannabis sales in 2016 stemmed from edibles or non-flower products. The Canadian federal government must introduce regulations within one year that allows the sale of such cannabis-infused food and beverage products. If trends from Colorado are followed, this could represent a significant share of the Canadian cannabis market.
As a sector with estimated sales figures of $10 billon, its existence sprouting up virtually overnight, and the plethora of unique opportunities, Canada’s cannabis sector represents an unusual entrepreneurial opportunity for the business owner with compatible vision and values.
If the sector doesn’t align with your or your client’s values, then consider the potential ancillary products and services that opening up this market will attract. Everything from hydroponics to packaging, from greenhouses to warehouses, from distribution to marketing – it’s all got to be provided, in what is effectively building a new industry.
Caution is required for those considering investment in this space especially from outside the country. Canada is one of a minority of territories where this trade is legal. Consideration should be given to whether the proceeds from investing in this industry are legal if repatriated to a territory where the trade itself remains illegal. Expert and careful due diligence is required when investing in this space – something that many AGN member firms can assist with.
If you are interested in finding out about how you might access this exciting opportunity please contact our Canadian member firm.