Business

Edibles, extracts and topicals could bring in millions of consumers, many of them ‘canna-curious,’ but Canadian producers will face challenges.

Canadian Cannabis 2.0 is here! It’s been over a year since recreational cannabis was legalized for adult use in Canada, and with the edibles, extracts and topicals category recently legalized, the market is shifting into what many envision as a new wave of consumption. How will the introduction of these new products impact the market?

Let’s start with Cannabis 1.0.

Cannabis stocks were slammed anew on Tuesday, after the U.S. Food and Drug Administration issued new guidance on CBD that included a stark warning that it can cause liver injury and other damage to the human body.

The warning is the latest blow to the embattled sector where many companies have developed strategies and plans for the cannabis ingredient, which was viewed by Canadian licensed players as a potential pathway into the much bigger U.S. market.

“Not so fast,” wrote MKM analyst Bill Kirk. “The FDA’s statement includes some balloon-bursting language.”

Murphy's Law appears to have hit Canadian marijuana stocks in a major way in recent months. Nearly everything that could go wrong has gone wrong.

Canada's heaviest populated province, Ontario, has only 24 retail cannabis stores open more than a year after the country's adult-use recreational marijuana market launched. Most cannabis companies continue to hemorrhage cash. Revenue is growing more slowly than anticipated if it's growing at all.

This year was not especially auspicious to CEOs. As of October 2019, a record number of 172 CEOs from companies that included Nike, WeWork and Under Armor, left their posts. The legal cannabis industry was not immune from this CEO-apocalypse.

Michigan has expedited its timeline for legal cannabis sales to begin on December 1st, 2019. The Wolverine State was previously going to wait until Spring 2020, but the state regulators decided to move forward the timeline to begin a crackdown on a thriving black market.

"We want to make sure we ramp down the illicit market... It's better to have product available through the regulated market than people going through the illicit market," said MRA spokesman David Harns.

Hemp has the potential to grow big profits for farmers, but regulatory ambiguity and skittish banks seem to be creating major obstacles.

As the United States trade war with China hurts farmer’s ability to make a living from  traditional crop exports such as corn and soy, hemp seemed like it could serve as a domestic savior. New Frontier Data estimates hemp farms can yield up to $40,000 per acre and many farmers thought they had found a rare agricultural lifeline in one of the most difficult industries to thrive in. 

The cannabis sector has entered bearish territory, with a weak earnings season raising doubts about the industry’s future. Most companies missed analysts’ expectations, disappointing participants across the board. However, perhaps even more concerning was management’s guidance on the industry’s outlook.

The Cannabis Business & Consumer Expo in Toronto this weekend was more than a little bumpy for both guests and exhibitors. Wrought with confusion from the moment the first exhibitor arrived to set up on Thursday morning. One exhibitor told High Green News, upon arrival there was no one at the building, no lights on and the doors were all locked. As more exhibitors showed up for set up they all became increasingly worried that they were part of a scam. They began calling the various numbers provided on the expo's website and Eventbrite listing, none of which were answered.

Image Source: ROBYN BECK/AFP via Getty Images

Los Angeles, CA – The California Department of Tax and Fee Administration (CDTFA) announced yesterday that it plans to raise taxes on the legal cannabis industry once again. This move is considered to be another blow to an industry that is currently facing an economic downturn in a depressed market.

Image Source: Doug Hood | Asbury Press

If all goes according to proponents' plan, New Jersey may finally be the cheapest at something: legal weed taxes.