Cannabis is poised to be one of the fastest growing industries on the planet over the next decade. Worldwide sales have more than tripled to $11 billion over the last four years alone, and they could grow by as much as 18 times that over the next decade. Over the next couple of weeks, all eyes are on Cannabis Legalization 2.0 in Canada. The great white north officially launched adult-use cannabis sales on October 17, 2018, making it the first industrialized country in the world to legalize and monetize recreational cannabis. Now a year later, a new line of cannabis products are getting ready to launch. This new line of Cannabis 2.0 products are nondried-flower products, such as edibles, vapes, infused beverages, concentrates and topicals.
These new pot products will not begin appearing in licenced cannabis stores until the earliest being mid-December. The excitement surrounding Cannabis 2.0 revolves around the fact that they’re a significantly higher margin product than traditional dried cannabis flower. For example, by comparison, U.S. Cannabis 2.0 products have not faced oversupply concerns or subsequent pricing pressures. Furthermore, Cannabis 2.0 products tend to speak to a younger generation of cannabis users, who are, ultimately, the future of the global cannabis industry.
The Canadian cannabis industry is poised for perfect growth. However, Cannabis 2.0 is not without growing concern of the likelihood that history could repeat itself on the supply front. Ultimately, leading to the same nuisances that growers have been dealing with since the initial launch of recreational cannabis use last year. There have been persistent supply issues with dried cannabis since the initial launch in 2018. The 3 main issues were first Health Canada being overwhelmed with cultivation, processing, and sales license applications, leading to wait times lasting up to if not more than a year. Second, LP’s have had to contend with compliant packaging solution shortages. Third, with the slow licensing application process, most growers are still scrambling to complete their projects. Cannabis 2.0 is very likely to face the same trials.
With new regulations now in place to help with backlog of applications, Health Canada hopes that the supply issue will be tackled. The main issue is that none of these solutions are viable options to tackle the supply levels needed with alternative consumption options. It will still take quiet a bit of time for Health Canada to work through its growing pains. In the end, Cannabis 2.0 should be a major margin driver for the cannabis industry. But the upcoming launch could wind up disappointing a lot of investors due to supply issues. Only time will tell, but those who are at the forefront of the industry have much to gain.