Article by Growth Op
Canada celebrated the second anniversary of cannabis legalization this past October, and with it, the growing sophistication of the industry’s producers and its consumers.
With any emerging industry comes the need for flexibility and adaptability — and this was needed even more so with the unexpected arrival of the COVID-19 pandemic in March.
Industry players were required to stay lean, nimble and responsive to fluctuating economic conditions and rapidly changing demands.
We were reminded that Canada’s cannabis industry is still in the early days of legalization, and that growing pains are still very apparent. In 2020, we saw many cannabis companies continue to scale back their operations in an effort to achieve profitability.
With fewer companies investing in the space, the industry was forced to zero in on organic growth, establishing creative partnerships along the way in order to advance operations. A greater emphasis was placed on the value of building long-term relationships and, subsequently, maintaining them.
Further to that, what my team at Motif Labs and I discovered is that the most effective way to stand out in a crowded and competitive marketplace was this: be trustworthy and transparent, and have unparalleled commitment to quality and customer service. Or put more succinctly, underpromise and overdeliver.
In 2020, recreational cannabis users continued to become increasingly sophisticated. Alongside their deepened knowledge of the industry came greater scrutiny for the way in which cannabis producers, retailers and brands operated, as well as stronger demand for higher quality products in both flower and Cannabis 2.0 product categories.
This spotlighted the need for cannabis companies to conduct more thorough market research and more stringent due diligence activities, especially before entering into the market.
When all is said and done, 2020 was also a year for optimism for the cannabis industry — notably, continued progress on legalization, as well as decriminalization around the world, and continued growth of the (legal) recreational market here at home.
Looking ahead to 2021, there is a strong sense of hope that the industry will experience a strong rebound and significant growth.
What 2021 will bring for Canada’s cannabis industry
This was a year of ‘speed’ and ‘firsts’, as licensed producers focused on quickly launching a variety of product SKU’s into the market. Next year, however, will see product offerings become much more refined, targeted and varied, keeping consumers’ varied preferences in mind, and catering more holistically to the many needs of the market.
Where flower-based cannabis products still hold the majority market share, 2021 will mark an increased shift into extract-based products — especially as product variety and availability broadens, pricing adjusts and consumer knowledge continues to improve.
This is a market trend that has already taken shape in the United States’ more mature cannabis markets, with non-flower products representing more than 50 per cent market share.
Quality, across the board, will also continue to improve in 2021. Cultivators are dialling in their genetics and growing their operations. Extractors are improving their processes, and co-packers are entering the industry to significantly improve the logistics and final packaging phases of the value chain.
More importantly, the industry is coming to the realization that vertical integration hasn’t been, and may not be, the best solution to keep up with the fast-paced and fast-changing nature of the market. Rather, specialization is increasingly taking center stage, resulting in increased product quality and more competitive pricing.