Half a year after the legalization of cannabis in Canada shows: The sale of the drug is worse than expected and a niche existence. According to analyst Arcview Market Research, from the start of legalization until the end of 2018 cannabis products in Canada only generated $ 112.5 million in revenue. Companies in the industry had expected four times, as the "Wall Street Journal" reports.
Including medical marijuana, drug spending was $ 569 million, well below the $ 761 million expected by the US Federal Statistics Office in the fourth quarter of last year.
The reason for the bad business are supply shortages and the still flourishing black market. In Toronto, about 3.5 grams of a marijuana variety are sold for about 40 Canadian dollars in a chain called Ameri. "Black market traders sell the same amount for about half of the price," a shop assistant told the Wall Street Journal.
The Canadian parliament approved in June a law allowing the use and manufacture of the drug, not only for medical purposes but also for private use. Canadian citizens over the age of 18 - in some states, the age limit is 19 years - it is allowed to buy a gram of hashish for about ten Canadian dollars (4.30 euros) by order or in authorized shops. The personal belongings are limited to 30 grams.
Canada is the second country in the world after Uruguay that has fully legalized cannabis. It is already one of the countries with the highest per capita consumption of marijuana worldwide.
Although the federal government sets clear benchmarks for production, it leaves the provinces to decide how cannabis is distributed and sold within its borders. This has led to a patchwork of regulations across the country, hampering sales in some of the largest provinces, industry insiders say.
"Canada has very strict regulations, including testing the plants for pesticides or heavy metals," says Daniel Pearlstein, chief executive of Canopy Rivers, the venture capital firm of Canopy Growth, Mariahana's largest Canadian manufacturer. These rules limited the available supply. "The producers have difficulty growing enough plants that comply with the regulations," says Pearlstein.
In addition, unlike the state of California, Canada currently does not allow retailers to sell cannabis-flavored edible products such as gummy bears or chocolates, limiting supply to smokable products. Only when this changes, the market could get really going, experts believe. Analysts BDS expects retail sales of $ 4.8 billion by 2024 if the Canadian government allows food to enter the market later this year.
That's what investors are counting on. Their hopes for booming sales are unrestrained despite the poor trading start: the stock prices of the largest listed cannabis companies have risen sharply recently. The share price of Canopy, for example, has risen on the Toronto Stock Exchange since the beginning of the year by about 50 percent.