N.B. Cannabis Industry On Growth Trajectory After Early Ups And Downs
New Brunswick’s promise of a cannabis boom was the shared disappointment felt around the world. The hard lessons of the last two years in the cannabis industry have hit home. Big time.
Local perceptions about our role in this exciting industry have been largely driven up and down by select headlines and a focus on retail cannabis, but this is only one part of a bigger picture.
Some of you might have seen this chart flying around the internet in recent days or weeks:
Whether you believe the accuracy of the light purple line or not, the downward trend is real, and the market is feeling it (in New Brunswick and beyond). What is driving the change?
Recent “pump and dump” economic bubbles aside, three key forces are driving meaningful and long-term change: lower prices, more retail options, and consistent quality inventory. So, where does New Brunswick fit into this? Right in the thick of it.
How Cannabis Went Sideways On Roll-Out
Some folks followed the markets in horror, while others lamented the sparse shelves at Cannabis NB. Either way: the growing pains in the early days of Canada’s cannabis legalization were felt near and far.
In the push to legalize for October 2018, the products that hit shelves didn’t meet expectations of quality, selection, or even consistency. An overwhelmed approval system and purposefully tight regulations slowed new companies and products from hitting the market. Demand for legal cannabis stalled for some time while the industry learned its first lessons in the retail consumer space.
Then came the second lesson.
The global cannabis index slumped 81% between February 2019 and 2020 thanks to “too good to be true” stock valuations and an over-investment in infrastructure.
Luckily, the problems were easy to spot, at least in retrospect, which brings us back to our very promising graph (or this new one if you’re into that sort of thing).
Lessons Learned From The Cannabis Crash
Nothing teaches you to ride a bike faster than falling and scraping your knee.
Industry insiders (like our friendly neighborhood Eric Cook) will tell you that the regulators recognize that red tape was a little thick at rollout. But the prevailing attitude is that change is coming; regulations that will enable the creation and growth of cannabis businesses to erode the black market, create skilled jobs, and protect public health.
And that’s good news for everyone.
Cannabis research and development is also moving at a rapid pace, despite the regulatory limitations (some say it’s easier for university researchers to study cocaine than cannabis). High THC strains have their place, but the trend is ever-so-passé. What’s up-and-coming for cannabis? In short: it’s cool kid stuff like marijuana-infused food, hemp garbage bags, and therapeutics (but we’ll talk more about those in an upcoming article).
So what is driving “grey market” users to legal shelves?
- A wider variety of cannabis products;
- Higher quality options;
- Affordable cannabis.
These are not mysterious market forces at play. Lessons were learned, the powers-that-be are listening, and the market is responding. New Brunswick and Atlantic Canada are stepping up to the plate to seize the opportunity. As more jurisdictions trend toward legalization we gain exciting opportunities for export and partnerships, but risk losing our early mover advantage. So is everyone on board?
Atlantic Canada’s Cannabis Opportunity
With our “3 non-mysterious forces” at play, it’s easy to correlate where Atlantic Canada fits into this picture: 84 cannabis researchers at 13 colleges and universities, 28 research networks, 22 licensed producers and auxiliary SMEs, 13 hemp companies, and centuries of history of transforming and exporting biomass to global markets.
This region’s status as a cannabis leader isn’t a pipe dream: it’s already happening. You can hear the stories from the ground on a new podcast The East Coast Cannabis Hour or you can wait patiently for part two of this article series.
If you’re feeling impatient, reach out to me and the NBCO directly at [email protected] to start making connections in the industry.
Brennan Sisk is the coordinator of the New Brunswick Cannabis Office. This is the first of a two-part series on the future of the cannabis industry in the province.