Time for an update on Canada’s cannabis sector.

After a pandemic-induced absence, the world’s largest cannabis and psychedelics trade show and conference returned to Toronto this month. The Lift & Co. Expo took place at the Metro Toronto Convention Centre and featured a Cannabis Business Conference (November 18), Expo Industry Day (November 19), and two consumer days (November 20 – 21). The Expo featured roughly 200 exhibitors and 100 speakers, including the cannabis industry’s “most knowledgeable and inspiring leaders.”

In-person conferences and exhibitions have only recently been re-introduced in the province of Ontario; capacity restrictions are in place, and proof of vaccination is required for entry. We visited the Expo on Sunday – the last day, and the second of two consumer days. At first glance the show seemed quiet, but conversations with various vendors yielded the same response: the show was considered a success. Large crowds attended on Friday (Industry Day) and Saturday (the first day of the consumer show). Participants agreed that the pandemic likely had an impact on the show but were optimistic about its future.

Cannabis became a legal industry in Canada in October 2018 and was quickly dominated by large players including Canopy Growth, Tilray, and Aurora. It has proven to be a busy sector – Canada’s legal adult-use marijuana market was worth CAD $2.6 billion in 2020 and is expected to reach CAD $8.62 billion by 2026. Recent reports indicate that Canada’s cannabis sector contributed CAD $17 billion to the country’s GDP for the year ending July 2021, and now rivals the Canadian dairy industry’s own contribution.

Despite this optimism, large cannabis companies have been reducing their collective footprint. Aurora closed five facilities in 2020 and has been undergoing rounds of layoffs; Canopy Growth followed suit late last year, as did Hexo this month. Tilray has focused its growth on Europe’s medical cannabis market.

We spoke with Canadian cannabis industry participants (including publishers and service/equipment providers) to get an up-to-date view of the market. They attributed the downsizing mentioned above to an overeager initial expansion, and characterized these moves ‘right-sizing’ toward profitability. We were told that the Canadian cultivators who are currently enjoying success are the small- to medium-sized operators – the ‘craft’ businesses. Participants also pointed to federal marijuana legalization in the U.S. as a move that could offer a significant boost to Canada’s own industry, although there is no clear timeline for that action.

Canada is only the second country in the world (after Uruguay) to legalize marijuana but must still abide by international treaties such as the Single Convention on Narcotic Drugs. In the U.S., cannabis is neither legal nor regulated on that country’s federal level. This means that there are strict rules about moving cannabis products across the Canada/U.S. border. That said, opportunities do exist for foreign equipment and service providers in Canada’s cannabis industry, and we recommend U.S.-businesses contact their state economic development partner for more information.

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Image courtesy Pexels

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