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Canadian regulations are stifling the cannabis business, report finds

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Canada’s pot industry could end up being a lot smaller than previously thought, says a new report which claims Canadian cannabis companies are being hobbled by regulations when it comes to their ability to promote their products.

Chicago-based cannabis research firm Brightfield Group released its report on the situation so far as Canadians react to the newly opened adult-use cannabis market, with the report concluding that cannabis will present a total mature market of $5 billion a year by 2021, significantly less than what other sources have suggested and less than Brightfield’s earlier estimation of $8 billion.

Based on available data and the company’s own survey of 1,500 Canadian cannabis consumers, the report found a rapid slowdown in patient growth in the medical market, along with an inability of companies to market their brands due to federally applied restrictions.

“With the product type restrictions allowing for only flower and oils, this is really not bringing in new consumers,” said Bethany Gomez, managing director at Brightfield Group, in conversation with BNN Bloomberg on Friday. “We’re not going to see those new consumers that are really dominating and driving growth within the US markets.”

“We also found through our survey that only 40 per cent of those already using cannabis are purchasing through the recreational market. So not only is the market not capturing the majority of existing cannabis users, it’s not attracting new recreational consumers and the growth in patient counts is declining, as well,” she states.

While it’s still early days, the report bodes poorly for Canadian companies’ chances of becoming global cannabis leaders, where legalization was hoped —within the business community, at least— to give companies like Canopy Growth Corp, Tilray and Aurora Cannabis a head start in establishing international brands and businesses.

The report found a distinct difference between Canadian and American consumers where the former have significantly less brand awareness than their American peers.

“If you look at Canadian cannabis products, there’s very limited real estate on a package that they can work with,” says Gomez. “25 per cent of consumers didn’t even know which brands they had purchased. This should be concerning for Canadian companies because that branding and messaging is really how you can pivot towards a more consumer-focused industry and be able to hold onto that first-mover advantage in those economic modes.”

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About The Author /

Jayson MacLean
Jayson is a writer, researcher and educator with a PhD in political philosophy from the University of Ottawa. His interests range from bioethics and innovations in the health sciences to governance, social justice and the history of ideas.

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