What Is Up With The Canna Industry’s Mid Winter Blues?

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A range of indicators show that the industry, globally, is hitting a rough patch – but don’t expect this to last.

There are a couple of bellwether developments of late that seem to indicate that the “biz” is hitting a bit of a slump. From the lackluster earnings and stock prices of the largest Canadian LPs to reports that the medical market in Germany has seen static growth – not to mention the latest rounds of buyouts and mergers just about everywhere, the industry is hitting a bit of a global growth time out.

What is going on? In an industry supposedly on a one-way track of exponential growth, such numbers can be a little dispiriting. However, there are several clear reasons for this stagnation, none of which are long-term. Here are a few of the biggies.

  1. Covid may have boosted sales in the US and Canada, but overall, the burden of new regulation and lack of regulation reform combined with the Pandemic is taking its toll everywhere. The overarching issues of profitability in the adult-use market in North America have still not been solved. And in Germany, doctors are still reluctant to prescribe, along with an approval body that, like many government agencies, has slowed to an absolute snail’s pace in approving anything new – from permits to patient coverage. With Covid restrictions on the edge of lifting just about everywhere, expect to see this change, perhaps even as early as this spring.
  2. The German market is far from saturation, but sales strategies have largely focussed on convincing still cannabis shy doctors to prescribe a certain brand of cannabis or cannabis products and hoping to convince patients to ask for the same. So far, this has proved highly expensive and inefficient. The only widely known “brand” doctors seem to fall back to is dronabinol, currently about a third to a quarter of the market. With further reform pending, including of the recreational kind, this will also impact medical sales, just in terms of being allowed to discuss much less market cannabis in general.
  3. Recreational reform is now formally on the docket in Germany, with other EU countries plus Switzerland moving forward to launch markets as early as spring 2022. This is going to have a much-needed buzz and pick-me-up effect on legalization conversations in every EU country, as well as globally.

The industry, in other words, may be in the midst of a midwinter slump, but don’t expect that to last. Inefficiencies in the industry are being kinked out, and reform, in many more places, is increasingly if not here, then just around the corner.

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