As Canada inches toward legalizing recreational cannabis this October, many are wondering whether the country can leverage its booming domestic industry from an international trade perspective.
Several global brands have expressed interest in Canada’s burgeoning cannabis sector, including some — Molson Coors and Constellation Brands — who have already made big investments.
Canada will become the second country in the world to legalize recreational cannabis on Oct. 17.
Lisa Harun, the co-founder of the vapourizer company Vapium, has no doubt that Canada can become a global player in exporting cannabis to countries who’ve recently legalized the product medicinally and have not yet established growing facilities.
“Yeah I absolutely do, and it’s something that we need to protect,” she said.
“Right now, we are producing some of the best cannabis in the world. This is an opportunity, and it’s very scalable.”
Harun’s company produces vapourizers — products that are usually used to consume cannabis medically.
They currently sell to over 20 countries and have offices across North America and in Asia.
“There’s never been a better time to be a Canadian, I believe. Not just in terms of what we’re doing within the industry. There are certain companies that have gone the extra mile to invest in these other countries. We have really great partnerships in Europe, for example,” she added.
Currently, according to Ryerson University instructor and cannabis business expert Brad Poulos, there’s “no excuse” for Canada to miss its opportunity to become a global player in the cannabis industry — especially since there are over 30 countries that have now legalized medicinal cannabis, several more who are looking to do so (ie. Mexico), and only a handful of these that have the growing capacity Canada has built up since it made medicinal cannabis legal back in 2004.
“We’re currently shipping cannabis to several of these countries already. We’re already taking advantage of this opportunity,” he explained, citing Europe as a current client for several major Canadian marijuana growers.
The largest supplier of cannabis products in Canada is the Smiths Falls, Ont.-based Canopy Growth Corp., with a market cap of over $7.3 billion, according to the financial analysis site Smallcappower.com.
The company has sold over 6,200 kg of cannabis products to the Canadian medical market alone, and has acquired the necessary agreements to export cannabis to Australia, Brazil and Germany.
In addition, the company expects to add an additional 5,00,000 sq. ft. of production over the next 12 months.
Coming up behind Canopy, the second largest cannabis producer in Canada is the Vancouver-based Aurora Cannabis Inc., who holds a market cap of over $4.3 billion. The company has plans to produce at least 270,000 kg of cannabis annually, and has aggressively pursued international expansion with operations or sales in Germany, Denmark, Italy and Australia.
Other major Canadian cannabis producers export to countries such as Portugal, Malta and the U.S as well.
Despite recreational legalization coming up in October, Poulos is among those in the cannabis industry who believe that unless the laws — and the markets — are opened up, “this could be the next BlackBerry.”
Specifically, he notes that the federal government’s restriction of what kinds of cannabis products can be sold recreationally in Canada could put the country behind if laws don’t change.
Under the new laws, Canadians will only be permitted to purchase fresh or dried cannabis, cannabis oil or plants and seeds for cultivation. Cannabis products that cannot be sold recreationally include creams, sprays and edibles.
“The Canadian government has for the most part taken a pretty conservative approach. What you ant to do is relax a little bit more. A lot of people in the industry consider this to be prohibition 2.0.,” said Poulos.
Afzal Hasan, president and general counsel for the legal cannabis investing firm CannaRoyalty, is even less optimistic about the impact of Canadian cannabis legislation on the sector’s growth.
“Canada has an immensely hamstrung and restraining set of regulation around cannabis products,” he said.
“Our regulators, they’re trying to do the right thing but unfortunately, there’s a trade off. If you have regulation that’s too conservative and protectionist, what you have is economic activity being stifled,” Hasan continued.
He suggested, however, that Canada could become a competitive jurisdiction if laws were relaxed around branding and marketing.
Poulos is optimistic that regulations will eventually be relaxed and markets will be opened up, because the rapidly expanding industry will demand it.
“We’re developing world class expertise, patented products, we’ll have all of the opportunities that flow from that to export around the world,” he said.