Don’t Expect ‘Craft’ Cannabis To Take Root In Canada Anytime Soon

Article by Jay Rosenthal, Huffington Post

Don't Expect 'Craft' Cannabis To Take Root In Canada Anytime Soon Big growers — and their associated brands — will likely be your first or only choice "next summer" or whenever recreational cannabis becomes a real thing. Close up of hipster man smoking weed cigarette.

Late last year, I wrote five things to know about Canada’s emerging cannabis sector.

The No. 1 item was a consolidation of major players.

Now, just a month into the year, the announcements are coming fast and furious.

In mid-January, giant Aphria bought much smaller Broken Coast — a Vancouver Island-based grower. This after Aphria’s December investment in helping create the DOJA/Tokyo Smoke deal — which closed last week.

Then, after an unsuccessful hostile take-over bid last year, Aurora finally played nice, offered more money and acquired CanniMed. In the deal, an acquisition in the works between CanniMed and Newstrike fell through — landing Newstrike, and probably some of the members of the Tragically Hip, with a handsome “break fee” payday totalling $9.5 million.

There are more rumblings about future acquisitions, hostile and otherwise, in the news each day. At the same time, there are more than 400 new applicants waiting for Health Canada approval to begin their cultivation and eventual sale of cannabis, medicinal and recreational.

So, what does this all mean?

The big players — those with increasing growing capacity across the country — are well-positioned to supply the recreational market and keep hold of some of their patient base that they have cultivated.

For the smaller players, it will be a tall task to keep product flowing to the recreational market. Think about the LCBO in Ontario — they will be the distribution and sale regime for Ontario’s legalized cannabis. They are a notoriously difficult — and unprofitable — place through which to distribute for brewers and vintners. Will it be any easier or profitable for a two-year-old cannabis company just hitting its stride with growing at scale? Unlikely.

Read full article here.

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