Seen and heard at the Lift & Co business conference on Cannabis in Canada

Seen and heard at the Lift conference on Cannabis in Toronto in May 2018: Thoughts on legalization, competing with the black market, building Canadian leadership in the space for global expansion, and the path forward. [For a less formal discussion on the takeaways from the conference, read the Top 10 takeaways here]

State of Cannabis in Canada :

A conversation with representatives from the federal, municipal (City of Brantford) and provincial (New Brunswick) levels.

Chris Friel, Mayor Brantford: LCBO is a poor model for retail. It will not stop the black market. It will eliminate a job category for millennials. It kills the entrepreneurial drive in his constituency which is traditional tobacco country, already hard hit by a decline in jobs. He also felt that municipalities are not getting due consideration and budget from the Feds and the province (Ontario).

“The current model will not stop the black market” – Chris Friel, Mayor Brantford

Retail Cannabis, Control Board, and Online Distribution:

With representatives from NAC, Zenabis, Shopify, and Neighborhood pharmacy association.

Q: How will you convince users to migrate away from illicit sources?

Answer:

  1. We cannot compete on price. The legal production has significant overhead due to regulations around growing, marketing and distribution.
  2. We cannot compete on quality. The craft growers are producing really good crops.
  3. We cannot compete on marketing. The packaging is really boring. Plain font.
  4. Our focus can be new users.
  5. Our emphasis is on standardization vis-a-vis terpenes, THC content etc.

Q: How will you convince users to migrate away from illicit sources?

A (paraphrased): <crickets>

Branding and Marketing Cannabis:

With representatives from Hiku Brands, Lift &Co, Organigram, Privateer holdings (representing regulatory body).

  • Brands live beyond packaging
  • Opportunity for marketing is education.
  • Marketing is via influencers
  • PR as a role. Communicate benefit of legalization to communities. Communities hit by manufacturing downturn see an uplift. Growth in jobs. Economic boon. The expected market of 60B-100B globally. Canada is well placed to be a global leader.

Financial services for Cannabis

: with representatives from Stoic advisory, Greenwave advisors, GMP securities, Medmen, Wheaton income.

Reasons to be optimistic about the current valuations 

  • Over $1B flowed into markets in first 60 days of the year
  • Reasons to be optimistic
    • tapping into existing market
    • well capitalized
    • low risk on expansion
    • Canada now. Global tomorrow
    • The export market is huge. As of today Canada and Netherlands are exporting. Countries like Germany do significant medicinal imports for 16000 registered users and their preference would remain Tier 1 countries that are politically stable and have a strong regulatory framework.

Known risks (Landry)

  • Oversupply in 2019
  • Other countries like Colombia, Lesotho are adding the capability
  • Profitability erosion
    • Oversupply can be mitigated by growth in edibles.

Export market is huge. .. Countries like Germany do significant medicinal imports … their preference would remain Tier 1 countries that are politically stable and have strong regulatory framework

Global Cannabis trends:

A threat to Canada (Is there any?)

  • Starbucks does well globally without growing coffee
  • Free trade of Cannabis is very far away
  • International trade of Recreational pot is prohibited
  • IP is valuable and key to Canada staying ahead.

What could Canada do better to mitigate a threat from the US? Is the US a threat?

  • Federal policy
  • Informality in the US market has created micro libations. Wasted capital
  • Overcapacity in Washington
  • Regulation is good. A provincial dynamic is a pain and about retail distribution. But regulation is good.

Future of Cannabis: Investing in Indigenous cannabis

Chief Sinclair, Opaskwayak Cree Nation, Director of NAC had this to share:

  • Out of four licensed producers in Manitoba, two have ownership from first nations
  • Elders approved OCN’s investment in NAC – recognizing this as an investment in medicine.

 

 

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