Light up a dutchie and pass it ‘pon the left-hand side (or do so when the workday is over) because today marks the fifth anniversary of weed legalization in Canada.
Driving the news: Per newly released Stats Canada data, Canada’s cannabis sector is valued at $10.8 billion, an increase from the $6.4 billion valuation it held when legalization occurred but a far cry from the lofty $22.6 billion potential that Deloitte predicted in 2018.
- While the sector grew between 2018 and 2022, it has now started to decline, leading to a rash of layoffs, plant closures, bankruptcies, and plummeting stock prices.
Why it’s happening: The cannabis industry has blamed a hybrid strain of factors that have hurt the sector, including a fickle supply and demand relationship, advertising restrictions, TCH limits that have helped the black market stay afloat, and unfair taxation rates.
- Pot taxes were devised when most thought weed would sell for $10 a gram. As that number nears $3.50 a gram today, sellers are now strapped for cash.
Yes, but: Here’s some news that won’t harsh your buzz. Prices for consumers have largely stabilized at an affordable rate, 70% of weed purchases are now legal, and changes to the Cannabis Act that would potentially alleviate some industry problems could be on the way.
Bottom line: Legal weed was supposed to be the biggest thing since sliced bread and an economic driver for the country. Instead, it became a lesson in tempering expectations.—QH