Lp,s are doomed!
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Retailers and producers say the industry is going through ebbs and flows right now as large scale producers falter and more retailers open
Author of the article:Bonno
Publishing date:May 21, 2022 Join the conversation
Alex Kratz, CEO at Western Cannabis, stands inside the company grow room. Kratz spoke about the growing pains and changes in the industry in recent years.
Alex Kratz, CEO at Western Cannabis, stands inside the company grow room. Kratz spoke about the growing pains and changes in the industry in recent years. PHOTO BY Bonno
Within an 8,500 square foot grow room at the Western Cannabis operation in Regina’s industrial neighbourhood, hundreds of cannabis plants of varying strains bask in an orange glow from tungsten lights. Inside the warm room with golden lights and green plants, the smell is similar to fruity hops common in craft beers, of course with a distinct hint of pungent cannabis.
Four years into the nascent cannabis industry, the question is whether or not all that green growth is actually money in the bank.
With booms come busts, and while the local cannabis market is far from failing, it is experiencing some growing pains as it tries to find an equilibrium.
“As far as the number of stores and producers’ capacity we might have, I think people might have gotten a little carried away in the euphoria,” said John Thomas, a retailer who got in on the ground floor.
When cannabis became legal on Oct. 17, 2018 the government, through the Saskatchewan Liquor and Gaming Authority (SLGA), limited the number of cannabis retailers allowed to operate in any given city or area. This led to a lottery for permits to open cannabis retail locations.
Many who won held onto those permits and are still in the business, while others sold their licences to larger, national retail chains, a dynamic present in the province since the first days of legalization.
Thomas entered the market in the first days of legalization, eventually selling his licences to Fire & Flower before getting involved with Farmer Jane Cannabis Co. Four years on, he’s watched the concrete start to set on cannabis markets as old issues fade and others linger. One thing that hasn’t been eradicated is the black market.
“It’s still a bit of a unique industry where not all the sales are still legal sales,” he said.
Director of plant science and master grower, Joel Campbell stands for a portrait around cannabis plants in the early vegetation stage during a tour of the Western Cannabis facility.
Assessing the full scope of the cannabis industry, above and below the board, is difficult.
Thomas said Farmer Janes has gone from 10 employees to approximately 120 across operations, but that includes in Regina, Saskatoon and Winnipeg.
“It’s an interesting market. I think it definitely has significant customer demand, but I think it has been both overbuilt on the retail level and the producer level,” said Thomas.
“I think in the next year, we’re gonna see numerous closures. And especially on the retail level, we’ve seen a couple of producers go down.”
Closures have already occurred.
The province saw the acquisition of licensed producer (LP) Agro-Greens Natural Products Ltd. by Shelter Market, a company which has since shuttered.
Jim Southam, vice-president of the Sask Weed Pool or Saskatchewan Independent Cannabis Retailers Network (SICRN), said the market is somewhat depressed in 2022. “Just look at the stocks,” he said.
SICRN works like this: Approximately 40 independent cannabis retailers act as a wholesaler, getting better prices for its members through bulk buys distributed amongst the co-op.
Speaking for the co-op, things have taken a bit of a dip. “Sales doubled when COVID hit in 2020 for us, so it’s a bit of a shock to the system to have your sales drop,” said Southam.
“Sales could be better,” he said with a laugh, reticent to discuss specifics.
Jim Southam, owner of Prairie Cannabis and vice-president of the Saskatchewan Independent Cannabis Retailers Network, is concerned that cannabis and liquor retailers were only informed this week that they would be required to obtain proof of vaccination from anyone who wants to enter.
Alex Kratz, CEO and one of the owners at the LP Western Cannabis, said looking at publicly traded companies, he wonders how long many will stay afloat. Scanning quarterly earnings reports, Kratz notes, “they’re just bleeding money every quarter and it’s, you wonder how long that can last before investors pull out.”
Kratz said under Saskatchewan’s current model, you can only sell to so many retailers since it is up to individual LPs to go and sell their wares, as compared to Manitoba where cannabis purchasing is run through that government.
The Manitoba system has its pros and cons.
“Saskatchewan is nice, because I can call up a retailer today and if I can make a sale, if I have a product they like, I can ship it out tomorrow,” said Kratz.
It’s meant a close-knit community where local products appear to be favoured by consumers, according to both Kratz and Southam who say local producers have continuously posted the best-selling products in the province.
But it also means LPs are something of a free-for-all when it comes to getting their product to market. Kratz said LPs can talk to distributors which leads to many connections and partnerships in the industry. But in a field where exclusivity is a major selling feature, not every store wants the products it sells to be available for purchase elsewhere, Kratz explained.
“If we sell to one store, on one side of Albert Street, then one on the other side of the street might not want to buy from us,” he added.
In Manitoba, a list of products is sent to all retailers, which then decide what they want to buy and what they want to carry. Kratz said that limits his company’s reach, about 60 per cent of stores in Saskatchewan versus all stores in Manitoba.
And since Saskatchewan has large-scale and publicly traded LPs operating and selling at a local level, it tends to drive down costs, regardless of product quality.
“It’s a little bit of a race to the bottom because any LP from anywhere can get there can get into Saskatchewan and sell their product and discount their product and it kind of was a little bit of a dumping ground for old product,” said Kratz.
“It makes it tough when those producers are losing money every quarter, discounting their product.”
That environment makes it hard to survive in one market, be it specifically Regina or Saskatchewan as a whole. As such Western Cannabis has started selling in the Territories, Manitoba, Alberta and British Columbia. Kratz said they had to look outside of the province “otherwise we wouldn’t have made it, for sure.”
Coming from construction, the Kratz family had a steep learning curve to get into the growing business. One key difference is the aura of secrecy among retailers and producers as they discuss business dealing, financials and logistics.
Kratz attributes it in large part to big firms looking for any leg up on the local competition
HAS THE CANNABIS BUBBLE POPPED?
Bonno 20, 2022
Has the cannabis bubble popped? Stocks are down, funds are drying up, and balance sheets are messy. Assets managed by cannabis funds are down by 45% in twelve months. They’ve reportedly lost $2.6 billion from $4.6 billion the previous year.
Morningstar, an investment research firm, provided the data.
What Happened?
Investors blame a popped cannabis bubble on several factors. First is the repeated failed attempts to pass federal legalization legislation in the United States.
But funds focused on legal cannabis markets have also dropped. Data shows that 23 ETF funds have lost between 44.2% and 72% over 12 months.
Investors are seeing inflows dry up as well. In the first three months of 2022, they invested $95.6 million into cannabis funds, compared to $1.7 billion the year before.
However, last year’s activity may have had to do more with new listings on the London Stock Exchange. In the first five months of 2021, Oxford Cannabinoid Technologies, Kanabo Group, and MGC Pharmaceuticals doubled the size of the cannabis market.
Of course, like the rest of the sector, shares in these groups have dropped by 60% and 80%. Canadian LPs have faired a little better, but they’re still down over the same period. Aurora Cannabis is down 57%, Canopy Growth is down 74%, and Tilray is down 68%.
Putting Their Faith in Joe Biden
Performance for cannabis funds doesn’t seem to follow any fundamentals, however. At the tail-end of 2020, cannabis funds picked up when media conglomerates declared Joe Biden the winner of the US presidential election.
Funds rose further toward the inauguration when investors assumed the Democrats would make cannabis legalization a top priority. As well as passing legislation to make it easier for cannabis companies in the US to access the banking sector.
“Everybody is watching that one data point right now,” says Nawan Butt, manager of the Medical Cannabis and Wellness ETF. “Whether or not the Senate can pass the SAFE Act, which is expected to go through the Senate. If the SAFE Act gets passed, that will allow financial institutions to start helping the industry.
This essentially means that industry participants will get better access to financing and better access to financial services. As well as, we’ll finally have investors in this space who aren’t afraid to be persecuted under federal laws for holding cannabis stocks.”
Blaming Consumers for A Popped Cannabis Bubble?
According to Morningstar figures, Global X is the worst performing cannabis ETF.
Alec Lucas, research analyst at Global X, blamed consumers for pursuing “cheaper cannabis options sourced from illicit markets, which has contributed to slowing sales in markets such as Colorado, Illinois, Massachusetts, and Pennsylvania.”
Adding, “Canadian companies have been unable to lift prices so as to remain competitive with illicit markets, leading to disappointing earnings.”
However, the truth may be more complex than consumers preferring legacy markets over pharmaceutical-grade cannabis.
Ethanol prices are up 35%, and this affects entrepreneurs using ethanol as a solvent for cannabis derivatives. Higher gas prices also strain margins for cannabis delivery services, including wholesale supply.
Easy Money At Fault for Popping the Cannabis Bubble?
The cannabis bubble may be popping because the era of easy money is coming to an end. Central banks worldwide are attempting to lift interest rates after over twenty years of keeping them near zero.
Many economists suggest this manipulation of interest rates acts as an unnatural price control on the money supply. The result is a capital market that divorces itself from consumer demand.
In other words, market interest rates reflect consumer demand and the relative scarcity of capital. A central bank lowering interest rates below its market rate creates an illusion of more prosperity and, thus, the funds to realize long-term projects.
However, as we’re discovering now, printing more money doesn’t create more resources. Banks and governments can blame supply chain disruptions on COVID or the Russians, but evidence points to monetary policy, namely easy money, being at fault.
An economy flush with easy money explains how Canada’s cannabis bubble grew to unprecedented heights. Large LPs are cash flow negative, and they have trouble competing with the legacy market and smaller craft producers.
Despite their popularity in the financial world, the fundamentals are not there to support their business model. And with large LPs shutting down facilities and firing employees, it’s becoming more apparent every day that the cannabis bubble has popped.
CANNABISDownload the ‘Plook Ganja’ app to legally grow cannabis at home in ThailandAvatarPublished on Friday, May 20, 2022 16:17Bonno
Starting from June 9, downloading the “Plook Ganja” mobile application will be the only requirement to legally grow cannabis and hemp plants at home in Thailand. Today, the Ministry of Public Health announced that all parts of marijuana and hemp plants will be delisted as a narcotic from June 9, except for extracts containing more than 0.2% tetrahydrocannabinol, or THC, which are still considered illegal category 5 narcotics.
The Thai government expects cannabis growers to use parts of the plant in cooking, e.g. boiling the leaves to use in Tom Yam soup, or for “medicinal purposes.” However, rolling up and smoking high-grade THC marijuana flowers is still very much illegal in Thailand. So if you have registered with the “Plook Ganja” (Grow Cannabis) application, you can grow cannabis, but you can’t get high.
If your plant is a female – she may grow “buds” – the THC-rich flowers of a cannabis plant. As the Thai law currently stands, you won’t get in trouble if your plant grows buds, but you will break the law if you smoke the flowers or extract them into a product containing more than 0.2% THC.
Anyone who wishes to import cannabis and hemp seeds, leaves or branches from overseas does not need a permit, but does need to seek permission to do so according to the Plants Act 1975 and Plant Quarantine Act 1964, according to the Director-General of Thailand’s Food and Drug Administration Dr. Withit Saritsadeechaikul.
As of May 20, ‘Plook Ganja’ is not yet available on the App Store.
If you have a question about growing marijuana at home in Thailand, call 025907767 or 025907793 or contact your provincial public health office.
Refer madness is here to stay!
Gov’t admits decriminalisation of cannabis could be contributing to substance abuse
20 May 20220267
Bonno
The police have reminded the Cabinet that, while the abuse of cannabis is prevalent among youth, the law doesn’t allow for the random testing of minors and parental permission is required.
The government has admitted that the move to decriminalise the cultivation and use of marijuana for personal use is potentially contributing to the prevalence of substance abuse among the nation’s youth.
That admission followed word from the police that marijuana is one of the substances most abused by children in the country, and also public condemnation of that reality by members of the public who believe it is evidence of a decaying society.
Cabinet Spokesperson, Information Minister Melford Nichola addressed the issue during yesterday’s post-Cabinet media briefing, noting that the changed laws do need some adjusting.
“When the matter was contemplated in the first instance, it was not intended that there should be any wide scale abuse or expansion of the use of the substance.
“The idea of decriminalising the use of marijuana, where young men were found with small amounts for personal use, was then and is still good public policy.
“The whole idea that young men at the younger age when they are impressionable or sometimes curious, for them to have a criminal record that follows them throughout their whole life, we felt that it was necessary for us to decriminalise.
“Unfortunately, the decriminalisation has been interpreted by a wide swath of the society to mean that it has been legalised, so I think we have to go back and fine-tune that policy,” Nicholas said.
According to this week’s post-Cabinet report, a multi-sectoral group – including the police, the Ministry of Legal Affairs, the Child Protection Unit, NGOs, churches and other community groups –will be established “to study the subject of substance abuse and to perfect ways of discouraging youth from participating in this harmful exercise”.
It also stated that a number of activities that have apparently worked in other jurisdictions to reduce the prevalence of substance abuse have been identified.
That sort of engagement and interaction with the public, Nicholas added, is a major component of the new policy on cannabis use that has not been maximised to its full potential.
“One of the areas that should also have come with it was more public education, in terms of the negative effects of an abuse of the substance.
“So, there is a need for better public education and of course, to fine tune the policy, to ensure that all persons or parties are aware that decriminalisation does not mean legalisation.
“But we have to study this particular area before we can take any concrete and decisive actions”.
Under the current regulations, persons over age 18 are permitted to possess a maximum of 15 grams of cannabis, while no more than four cannabis plants can be grown in each household except Manitoba & Quebec.
Your too late. Legacy owns that market.
Happy you should tell these grandmas to vote... Sad!
Here we go again... you will love this happy.
– Rural grandmas in Swaziland risk arrest to grow, harvest, and trade cannabis because they have no other means with which to feed the orphans left behind by the raging HIV-Aids crisis.
In 2012, rural grandmothers in poverty-stricken Swaziland earned global goodwill and sympathy when the New York Times famously presented them as: ‘Grandmas grow gold in Swaziland.’
Today, cannabis cultivation has been legalized in South Africa – the country that surrounds the tiny Kingdom of Swaziland and is the largest market for the famous ‘Swazi Gold’ strain of cannabis. Legalization in South Africa, contrasted with criminalization in Swaziland is throwing Swaziland’s enterprising grandmas into a precarious situation, they say.
`We were better off before neighboring South Africa legalized cannabis,’ moans Gogo Anele Dlamini, 60, an unregistered one hectare of cannabis outside Manzini, Swaziland’s largest city. Gogo means ‘grandma’ in Swaziland’s native language.
Legalization in the key market of neighboring South Africa is whipping cannabis grandmas like Gogo Dlamini into a two-fold way, they say.
‘First commercial growers in neighboring South Africa have snapped up our customers. Then legalization in South Africa is motivating our own Swaziland authorities to clamp down on us unregistered growers to prepare the way for future commercial growers,’ she says.
This is the same cry that has emerged in neighboring South Africa where Indigenous Black cannabis growers have held street protests alleging legalization and licenses have gone largely to corporate white companies leaving small-scale Black growers on the border of criminalization.
Illegal cannabis is a lifeline
Growing cannabis under the table is a key revenue to buy food, medicines, and schooling in Swaziland, a place where formal jobs are severely limited, and traditional cash crops that are not cannabis have already been walloped by poor global prices. For example, the Swaziland government Annual Vulnerability Monitoring Report 2005, revealed cotton prices have slumped due to global competition.
So, this leaves cannabis hanging as a crucial source of income for Indigenous growers.
‘Because of the HIV crisis, many Swaziland families comprise of five extra children, orphans left behind by the deceased. To feed family orphans, cannabis is our lifeline,“ Gogo Sizakele Khumalo, 55, who says a kilogram of lucrative ‘Swazi gold’ cannabis strain fetches $5 in neighboring South Africa.
At wits-end
South Africa’s legalization is killing the cash cow market of Swaziland grandmas like Khumalo and Dlamini.
‘We are at wits-end,’ Khumalo says. ‘Few buyers want to take our harvest to South Africa anymore because they say good quality cannabis is now easily available in South Africa due to their legalization. For the few buyers who agree to buy the grandma’s cannabis, prices have collapsed to an average of $2 per kilogram in the last two years. South Africa legalized cannabis cultivation in 2018 and it has moved rapidly to become Africa’s leading grower, ramping up financing, bringing in tech to nurture high-value cannabis fit for overseas medicinal cannabis markets, and even foraying into neighboring countries like Lesotho and cornering markets there.
This is a classic case of the law of unintended consequences whereby if a product becomes legal, unregistered artisanal producers get whipped off by corporate players, says Swaziland trade unionist Sipho Maseko of the All Swaziland Grassroots Livelihood Union.
‘The market gets liberalized in neighboring South Africa; and then, overnight, the under-the-table cannabis growing grandmas in Swaziland start wailing. It’s a global capitalist playbook: seize a country’s agricultural market – banish native growers,’ Maseko says.
Creeping legalization
The phenomenon of legalizing cannabis has taken root in South Africa and Lesotho, countries that border Swaziland, and all signs point to Swaziland soon liberalizing cannabis cultivation too.
Growing and possessing cannabis is illegal in Swaziland under the country’s colonial-era Opium and Habit Forming Drugs Act of 1922, says Daniel Moloi, a Swaziland human rights lawyer. However, Swaziland is warming up to legalization and has already made tentative steps towards that direction: giving a 10-year lease in 2019 to Profile Solutions, an American firm, to operate a processing plant and grow medical cannabis and hemp for the niche medical market.
‘The thing that we fear is soon becoming a reality,’ says Gadi Mabopane, secretary of the Native Swaziland Cannabis Growers, a union representing the interests of the country’s unlicensed cannabis growers. The Native Swaziland Cannabis Growers are lobbying the Swaziland monarchy and government to make sure that if legalization occurs, 50% of cultivation farmland will be reserved for formerly unregistered growers like the grandmas who already dabble in cannabis under the table.
‘The moment cannabis gets the green light in Swaziland, I tell you big corporations from South Africa will snap up farmlands. The grandmas who already grow cannabis for decades will be forced to become farm laborers, and abandon their small family cannabis plots,’ Mabopane says.
Police raids triple
In June 2018, the King of Swaziland brought to life the country’s Prevention of Organized Crime Act and it was gazetted into law. One of its main targets is the native cannabis growers, like Grandmother Khumalo. Police raids of cannabis fields whereby herbicides are sprayed on budding crops, have tripled, says Swaziland Cannabis Association chair Saladin Magagula.
The motive of creeping legalization and ring-fencing the market is to help giant foreign cannabis corporations that are snapping up licenses to grow medicinal cannabis in Swaziland and kick out the competition of Indigenous small-scale growers. For example, Stem Holdings, an American company, announced in 2019 that it had obtained ‘ preliminary approval to become the only licensed growing farm and processing plant for medical cannabis and industrial hemp in The Kingdom of eSwatini for a minimum of 10 years. The corporation would be ‘the exclusive exporter within eSwatini for hemp and medical cannabis worldwide’.
‘It’s an unfair deal that benefits American cannabis corporations and lines the pocket Swaziland Royal family but criminalizes old grandmothers who have grown cannabis for decades. That’s the cost of corporate-led legalization of cannabis in Swaziland,’ summed Sipho Maseko, the cannabis trade unionist.
California gov’s marijuana tax plan fails to fix key problems, industry officials say
author profile pictureBy Bart Schaneman, Editor
May 19, 2022 - Updated May 19, 2022
To Bonno-SHARE
Image of a California flag amid U.S. dollars
California Gov. Gavin Newsom’s proposal to eliminate the state cultivation tax on marijuana is a welcome move, according to industry officials.
But they argue the governor’s plan fails to go far enough to help an industry beset by high taxes, burdensome regulations and a robust illicit market.
To compensate for the lost revenue from the elimination of the excise tax, for example, Newsom’s plan would raise the retail excise tax on marijuana purchases after three years, from 15% to 19%.
That and other provisions have triggered criticism of the overall plan from industry officials as well as state lawmakers.
“It’s a nice little Band-Aid for a functionally broken system that needs an overhaul, starting with reduction of taxes across the board,” said Doug Chloupek, the CEO and founder of Juva Life, a cannabis grower and life science research company with a cultivation arm in Stockton.
California Sen. Scott Wiener, a Democrat, agreed, saying the high taxes that marijuana companies currently face in California lead to expensive product at the retail level – which, in turn, drives consumers to the unlicensed market.
In addition to the cultivation and excise taxes, licensed cannabis sales in California are subject to the general sales and use tax, which varies depending on location but averages 8.82% of the final sales price for 2022, according to data from the conservative Tax Foundation.
“The current cannabis tax system in California is badly broken,” Wiener said. “Taxes are so high they’re helping fuel the illicit market.”
How Newsom’s plan would work
As part of his 2022-23 budget plan, Newsom proposed last week to scrap the cultivation tax, which is set at $10.08 per ounce ($161.28 per pound) of flower and $3 per ounce ($48 per pound) of leaves.
After the cultivation tax cut – if Newson’s plan is enacted – if revenue from marijuana taxes doesn’t add up to the $670 million baseline set for funding services such as law enforcement and environmental restoration, the state would backfill that shortfall from the general fund.
Wiener said the state has a large surplus, with plenty of flexibility to backfill that funding.
Meanwhile, the proposed 4-percentage-point increase in the state retail excise tax, to 19%, would kick in after three years.
Newsom also proposed changing which sector collects that tax, shifting that responsibility to retailers from marijuana distributors starting in January.
That’s a sticking point for Wiener, who said he has no problem with scrapping the tax for cultivators – but not if it happens on the backs of retailers.
Newsom’s proposed overhaul would go into effect July 1 if state lawmakers approve the plan.
California state Sen. Steven Bradford, a Democrat, said if the excise tax goes up it’s “going to have absolutely no impact on what we’re trying to achieve” – namely, replacing the illicit market with the legal one.
He would like to see the excise tax reduced to 5% to drive even more revenue to licensed operators.
To Juva Life’s Chloupek, the moves all sound like merely virtual signaling from the governor at a time problems for California marijuana companies run deep and wide.
“Cannabis is one of the only commodities that the cost of producing it has doubled or tripled in the last five years, and the value has decreased by 50%-90% depending on where you are in the supply chain,” he said.
That means many licensed companies are either returning to the illicit market, going under or putting their companies up for sale, Chloupek said.
A few years ago, cannabis companies in California were valued at two to five times revenue, according to Chloupek. But valuations are now closer to 50% of revenue.
“We’re seeing a mass consolidation because people simply cannot keep their doors open.”
Losing the illicit-market fight
This month, the Reason Foundation, a libertarian think tank, released a 42-page report with findings that California’s illicit cannabis market accounts for roughly two-thirds of total sales in the state.
“From our perspective, one of our primary issues is the fact that we’re competing with a very robust illicit market,” said Amy Jenkins, the president of Precision Advocacy and legislative advocate for the California Cannabis Industry Association, based in Sacramento.
Precision Advocacy and Good Farmers, Great Neighbors – a group comprised of mostly outdoor cannabis growers and auxiliary businesses along California’s Central Coast – helped to commission the report, which is titled “The Impact of California Cannabis Taxes on Participation Within The Legal Market.”
Dale Gieringer, the director of California NORML who wrote the report’s foreword, noted that, based on survey results, the effective tax rate in the state ranged from $42 to $90 per ounce of cannabis – more than the $35 it costs to grow marijuana wholesale.
In its report, the Reason Foundation argues that reducing taxes – and, therefore, retail prices – would convert more consumers from the illicit market to the legal market.
In the foreword, Gieringer noted that “even with substantial tax reductions, the state can expect total revenues to rise substantially in the next two years due to increased consumer demand.”
“Substantive tax cuts therefore seem to be a feasible strategy for reducing demand for the illicit market, while still retaining reasonable revenues for the state programs funded in Prop. 64,” he added, referring to the 2016 ballot measure that legalized recreational marijuana in California.
The Reason Foundation estimates that the various state and excise taxes increase the retail price of legal marijuana by $727 per pound.
That’s not to mention federal and state income taxes and local taxes – as well as the business tax penalty stemming from Section 280E of the U.S. tax code.
Matt Hawkins, the board chair at California cannabis company StateHouse, said regulatory and tax burdens make it harder for businesses to succeed.
“It makes it incredibly difficult for people who aren’t vertically integrated to compete,” added Hawkins, who also is a co-founder and managing partner at Entourage Effect Capital, a private equity investment firm in Dallas.
The struggle to turn a profit in California could lead many mom-and-pop businesses to fail, Hawkins noted, “and most of the industry doesn’t want that.”
The Reason Foundation report analyzed the cumulative effect of taxes assessed at the state and local levels and found that they ranged from $667 to as high as $1,441 per pound in Solano County.
Other top counties were:
San Luis Obispo: $1,169 per pound.
Nevada: $1,114 per pound.
San Diego: $1,061 per pound.
West Hollywood topped the list of select cities for total tax, at $1,034 per pound, followed by Santa Ana, at $1,014 per pound.
“By contrast, the wholesale production costs of cannabis cultivated indoors under the existing regulatory framework calculate to approximately $564 per pound,” the report states.
How it’s done elsewhere
Precision Advocacy’s Jenkins noted that other states such as Colorado, Oregon and Washington have much simpler, and lower, tax rates than California’s.
Jenkins sees that as a main driver for converting consumers away from the illicit market.
“There is real evidence out there that reducing price does drive consumers to legal stores,” she said.
For example, Colorado assesses a 15% wholesale transfer tax and a 15% retail excise tax, while Oregon assesses only a 17% retail excise tax.
The Reason Foundation estimated that these tax rates amounted to $526 per pound in Colorado and $340 per pound in Oregon, which is the lowest in the nation.
“California bears a significant disadvantage in terms of per-pound tax cost of legal cannabis relative to its peers with mature, adult-use markets,” according to the report.
“Media reports have indicated that Oregon, with the lowest per-pound tax cost among states with adult-use markets, has also been most successful in transitioning cannabis sales from the illegal to the legal market.”
Another factor: California has far fewer cannabis retail outlets servings consumers on a per-capita basis.
According to the study, Oregon has 691 active retail businesses and Colorado 420. That’s one retail cannabis store per 6,145 residents in Oregon and one per 13,838 people in Colorado.
California, by comparison, has one retail marijuana store per 29,282 residents.
“There’s a perfect storm in California,” said Tiffany Devitt, board vice president for the California Cannabis Industry Association and head of regulatory affairs for the CannaCraft and March and Ash marijuana companies.
“Cannabis businesses are hurting, price points are dropping. It makes it impossible to compete.”
Glad you like it. Obviously you are not a cannabis patient...
Don,t spread your cannabis market ignorance to naive share holders!
Health Canada still hasn’t officially begun Cannabis Act’s three year review
May 16, 2022
David Brown to Bonno
More than six months after the three-year anniversary of cannabis legalization, Health Canada confirms they have still not begun their required three-year review of the legislation.
When the Cannabis Act was created, a requirement baked into the new law was that three years after it became law (October 17, 2018), the Minister of Health would be required to begin a review of the Act and its administration and operation.
Because this clause was put in place during debates in the House of Commons around the impact of legalization on young people and Indigenous communities, as well as the impact of home growing, the review was made to specifically look at those three issues.
The Act also requires that this review create a report to be submitted to the House of Commons no later than 18 months after it begins.
But it’s now more than six months after that three-year anniversary and Health Canada says they have not yet begun the formal review.
The issue, first noted by MJBiz in February, was raised again in the House of Commons on April 25 in response to a written question to the government from Louise Chabot, the MP for Thérèse-De Blainville, Quebec.
Ms. Chabot did not respond to a request for comment, nor did Michael Barrett the Conservative Party’s Shadow Minister for Health.
The government’s response, provided by Adam van Koeverden, the Parliamentary Secretary to the Minister of Health and to the Minister of Sport, noted that the government remains committed to beginning the review and that preparations are underway for its launch.
In response to a request for more information on the reason for the delay, a representative for Health Canada said they were unable to provide more information at this time.
George Smitherman, president and CEO of the Cannabis Council of Canada, an industry organization representing several licensed cannabis producers, says he’s frustrated by the delay and the lack of communication around it.
Although he says he has had conversations with individuals within Health Canada who say they have done the background work on the review, it appears to be “sitting on the Minister’s desk” and not moving forward.
“The legislative review is well beyond delayed,” says Smitherman. “It’s pretty distressing considering the high degree of challenge that the sector is facing that the legislative review is now so many months delayed.”
“We did understand why a new government and a new minister might not be able to hit the immediate October deadline considering the election had just occurred, but now that we’re practically headed into the summer season, that’s really got a lot of people frustrated and anxious as there’s a lot of hope that the legislative review could be an outlet to create some dynamic for change.”
The Cannabis Council of Canada will be holding a two day advocacy event May 30 and 31 in Ottawa, looking at various industry-related issues such as taxation and the calls for cannabis amnesty MPs Ahmed Hussen, Nathaniel Erskine-Smith, and Don Davies will be in attendance, says Smitherman.
Health Canada has advanced several regulatory changes or proposed changes in the past year.
In April, the regulator announced changes to how sales licences for dried cannabis would be issued, streamlining the process for licence holders, extended several COVID-19 related “flexibilities” in March, and announced plans to change several aspects of the federal regulations through Gazette 1 in March, as well.
Those changes would include increasing the number of cannabis beverages that can be sold and possessed from 5 to 48, as well as changes to licensing for cannabis research, analytical testing and reference standards, and expanding the educational qualifications for the head of laboratory position that is required for an analytical testing licence.
About time!
Cannabis product sampling is taking off, despite legal and pandemic challenges
May 18, 2022 - Updated May 16, 2022
SHARE
Image of Azuca employees handing out CBD-infused samples
Azuca employees hand out samples of CBD-infused syrups at a cannabis industry conference earlier this year in New Mexico. (Photo courtesy of Azuca)
Want to get shoppers to try a new product? Start by giving them a free taste.
Product sampling is the gold standard of consumer packaged goods marketing.
From plastic cups in a grocery store holding free nibbles to elaborate folders holding vials filled with perfume, product samples hook consumers by giving them risk-free ways to try new items.
Samples hook retailers, too, because brands that commit to sampling their products show they’re hustling to move them, prompting retailers to give those products premium shelf space.
There’s a reason product sampling is so popular. Consider:
Free samples can boost product sales an astounding 2,000%.
More than a third of customers who sample a product buy a full size of the product on the same shopping trip.
In-store sampling increases sales even after the sampling events end, with a sales boost of more than 100% even 20 weeks after the event.
Psychologists say that live sampling has a subconscious transactional effect, where samplers feel obliged to buy the products they’ve taken for free.
Sampling in the cannabis space, though? Not so easy. Legal barriers, age restrictions and public-consumption bans make it tricky. The COVID-19 pandemic only complicated matters.
But the cannabis industry is finding ways to make product sampling work in order to build a consumer base and introduce new products.
“The more sampling is done on the product, the better off everybody’s going to be. We need to make this industry look more like every other consumer product industry,” said Debbie Custer, a 40-year veteran of the food and beverage industry who now owns a cannabis product-development firm, Virginia-based Coeus Research.
But how? That’s where cannabis entrepreneurs are getting creative.
CBD leads the way
Hemp entrepreneurs aren’t allowed under federal law to put CBD into foods or topicals.
They’re doing it anyway, taking advantage of lax enforcement to flex into sampling much like conventional brands.
“People are always interested in trying new and innovative products. And sampling is the easiest way to try without any kind of financial commitment,” said Christopher Lackner, co-founder of Jeng, a brand of CBD-infused seltzers sold in grocery stores in Illinois, Michigan, New Jersey and New York.
His company enlisted brand ambassadors to hand out drink samples outside stores even during the height of the pandemic. Sales went up.
“With a little bit of hustle, we were able to encourage people to find the product in the store. And the owners of the establishments appreciated that we were committed to moving the product, so they made it more prominent. It’s a win-win.”
Expert advice for a stronger shelf life
Learn the fundamentals for getting started in cannabis retail in this comprehensive guide curated by the editors at MJBizDaily with help from industry experts.
Pandemic sampling worked for Tonic CBD, too. The Berkshire, New York, brand relied heavily on sampling to drive sales before the pandemic, then pivoted to asking first responders to request samples. The attempt took off, and the company is now back to sampling at events.
Sampling “was such a strong part of our marketing mix and definitely something that we felt the absence of during COVID,” Tonic founder Brittany Carbone said.
“Now events are kind of back, and people are feeling more comfortable about pulling down their masks and trying things.”
THC companies take notice
THC entrepreneurs have noticed the fact that CBD sampling appears to invite little pushback.
At Azuca, which has offices in New York and Albuquerque, New Mexico, and makes THC-infused sugars and flavorings for other product manufacturers, its owners started infusing products with CBD instead of THC in order to hand out samples and stay legally compliant.
“We needed to get our formulations into people’s hands. So we started a CBD line in order to do that, to show the taste profile and that it is fast-acting,” Azuca CEO Kim Rael said.
Azuca, which acquired CBD manufacturing licenses in Colorado and New Mexico, used its CBD syrups in cooking demos and sampling stations at industry shows.
The strategy worked so well that Azuca ended up monetizing a CBD line in addition to its original THC line.
When New Mexico opened adult-use marijuana sales April 1, Azuca sent sampling teams to the retailers. They handed out lime- and pomegranate-flavored syrups with no cannabinoids of any sort, just to show how the products would taste.
“Sampling is alive and well. And it’s super important,” Rael said.
Find the right venue
Cannabis operators might have legal limits that food manufacturers don’t share.
But cannabis is far from the only age-restricted product that needs to find ways to attract adult consumers.
At Boldt Runners, a Humboldt, California, company that makes chewable hemp dip, tobacco-industry veterans craft age-gated sampling events at golf tournaments and other events likely to attract people old enough to use the products.
“The environments we choose help to reinforce our brand positioning and vibe,” said Jen Pike, Boldt Runners’ chief revenue officer and a former vice president at Altria Group’s U.S. Smokeless Tobacco Co. subsidiary.
Sampling events can be invaluable even where the products aren’t sold, Pike noted.
“When our teams are out in the field, we learn a lot. We can see immediate reactions from consumers that give us a better handle on what guys think than surveys ever could.”
Custer has seen THC beverages popping up in events for alcohol distributors.
Age-restricted parties and consumption lounges can also be places to ask for permission to hand out samples.
Not all sampling is equal
Hemp and marijuana operators might be able to find workarounds to make sampling work. But they can’t ignore business fundamentals.
First, they need to set a budget that works.
Professional sampling companies will charge $200 and up to run a sampling event, often expecting at least 20 events.
Niche cannabis companies might be able to hire brand ambassadors for use at smaller scale, if they’re willing to train them in-house.
Another consideration is finding the right products to sample.
At SunFlora, a Florida company with more than 500 Your CBD Stores selling its SunMed line of CBD products, executives find that fast-acting water-soluble products are more effective for in-store sampling because they work quickly and don’t take hours or days to show effects.
Tinctures or fat-soluble items are better sampled in five-packs that consumers can take home.
“If you give someone a single serving of a tincture, it’s just going to be about taste, not the effects,” said Erik Lukasik, SunFlora’s franchise training manager.
Finally, consider whom to target with a sample. An existing customer is best, Lukasik said.
Maybe tuck a free sample in a package they’ve already ordered.
“With repeat customers, you should always try getting them to try something new,” Lukasik said.
“A new product, another delivery method. They’ll like knowing what’s new, and they’ll reward you with a sale.”
LPs, or, function of ignorance...
CEO are being well paid for not doing well.
Boneheads have to sell assets to make some money.
Doomed!
In a bid to slash costs and become profitable, Aurora Cannabis is closing its flagship Aurora Sky facility in Edmonton, Alberta, as well as shuttering an outdoor farm in British Columbia and the company’s prized Anandia testing and genetics division.
The Edmonton-based producer also acknowledged the pending sale of its Sun facility in Medicine Hat, Alberta, for 47 million Canadian dollars ($36 million), well below the more than CA$250 million Aurora had put into the huge greenhouse. The deal has not yet closed.
Aurora disclosed the latest facility closures and sales last week, along with its third-quarter earnings, in which the company reported a loss of CA$1 billion ($780 million).
Aurora said the moves are part of a plan to save the company CA$150 million-CA$170 million in annualized costs by the first half of its next fiscal year.
“Simply put, our business is bigger than what we need, (Read: our bunk is not braking the market) and we must position ourselves to better secure our path to profitability and ultimately be successful in this industry in the long term,” CEO Miguel Martin said in a video message to employees.
“Despite our best efforts, we are significantly over capacity and had to make the tough call to wind down operations at Sky.”
In the video, Miguel said consultants from Deloitte have been asked to ensure every decision the company makes is carefully reviewed and validated.
He said the new Aurora will be “leaner and more representative of the business we have today.” Pumping at it,s best.
In an emailed statement to Bonno, an Aurora spokesperson said the company will continue to operate a corporate office in Edmonton despite the closure of the sky facility there.
“Aurora has made substantial improvements to our business as we work through the phases of our transformation plan, designed to deliver shareholder value, and secure Aurora’s future as a leading global cannabis company,” the spokesperson wrote. (The full statement is available below.)
“We remain the #1 Canadian licensed producer in global medical cannabis revenue, and we have achieved the higher end of our previously committed $60 (million)-$80 million annual savings.”
Latest casualties
The closure of the flagship Sky facility is a serious setback to Aurora after the company significantly overshot the production capacity needed to meet Canadian and international cannabis demand.
Aurora had invested heavily in the Sky greenhouse, spending as much as CA$150 million on the massive facility.
However, Aurora’s recreational cannabis sales fell drastically after 2019, partly contributing to the company’s decision to idle three quarters of the facility.
Aurora sold only 9,722 kilograms (21,433 pounds) of cannabis in the latest quarter.
In contrast, an Aurora said in a 2020 investor presentation that the company had a total production capacity of 150,000 kilograms annually – and a “funded capacity” that was significantly greater. Ponzi Baby!
Build it and they will come. Not
In its earnings announcement, Aurora also disclosed the planned closure of the Anandia Laboratories research subsidiary.
In 2018, Aurora paid CA$115 million for the lab as part of an aggressive buying spree.
“We’re closing Anandia to focus on our core cannabis business and will move to third-party testing,” Martin explained in the video message.
Anandia is expected to close in June, and Sky will wind down in September.
Separately, Aurora confirmed the outdoor marijuana farm in Westwold, British Columbia, is being closed.
A former Aurora executive previously said the 200-acre farm in Westwold – about 400 kilometers (248 miles) northeast of Vancouver – was “one of the largest, if not the largest, licensed areas for cannabis production not just in Canada but in the world.” Sounded good enough for share holders.
In an emailed statement last week, Aurora told MJBizDaily it “no longer had a commercial need for the Valley site,” partly because of its recent acquisition of Thrive Cannabis, which has both indoor and outdoor grow facilities.
Danish, Canadian facilities sold
The latest planned closures come as Aurora reached deals to sell some of its properties in Denmark, Canada and Uruguay.
In a regulatory filing last week, Aurora said it has reached a deal to sell the subsidiary that owns the massive Aurora Sun facility in Alberta.
Aurora listed the complex for sale last year.
The deal is worth CA$46.8 million, according to the filing, with CA$20 million due on closing and the rest payable within five years.
In an email to MJBizDaily on Monday, Aurora said the deal is not yet finalized and the company won’t have “further details until the transaction is complete.”
The deal is expected to close in the fourth quarter.
Aurora paused operations at the sprawling complex in 2020 after total spending exceeded CA$250 million.
The lower sale price is not unusual for Canadian cannabis greenhouses that were built in the 2018-20 era and which typically sell for significantly less than their original cost.
In 2020, for example, Aurora accepted an offer for a large greenhouse in Exeter, Ontario, for approximately half its CA$17 million listing price.
A Danish greenhouse was also sold recently.
Aurora said it received CA$7.5 million on March 15, 2022, for a production facility in Denmark dubbed Nordic 2.
The greenhouse in Odense, Denmark, was intended to be a 1 million-square-foot, fully automated cannabis production facility.
Aurora ceased construction at the facility in 2019.
The company still has a footprint in Denmark via its Nordic 1 site.
Aurora sold a number of other facilities earlier in the same fiscal year, including:
A production facility in Saskatchewan for net proceeds of CA$6.3 million.
A production facility in Cremona, Alberta, for net proceeds of CA$5 million
Aurora also said it sold equipment for proceeds of CA$200,000.
Shares of Aurora trade as ACB on the Toronto Stock Exchange and the Nasdaq.
Aurora has made substantial improvements to our business as we work through the phases of our transformation plan, designed to deliver shareholder value, and secure Aurora’s future as a leading global cannabis company. We remain the #1 Canadian licensed producer in global medical cannabis revenue, and we have achieved the higher end of our previously committed $60 (million)-$80 million annual savings.
The company continues to make tough yet responsible changes to optimize our business. That is why Aurora announced the difficult decision to further streamline our operations with the closure of Aurora Sky in Edmonton. We will continue to operate a corporate office in Edmonton, and remain committed to the province and Canada. This decision was not taken lightly, and impacted employees will be fully supported by the company. We thank them for their valuable contributions and recognize the effect of these tough choices on them.
Also announced last week, the company has identified additional cost savings of $70 (million)-$90 million which support our path to profitability. Operating as a leaner, more agile organization fit for the state of our business and the global cannabis industry is imperative for Aurora’s future success. All Aurora employees will be supported as the company continues to transform.
We believe that cannabis growth over the next several years will centre on the international medical and recreational markets, and have seen early success in markets like Europe, Israel and Australia – our differentiators being Aurora’s roots in the medical industry, deep experience in federally regulated markets, and leadership in science and plant genetics.
We remain committed to providing our patients and consumers around the world high-quality, premium products to suit their needs.
Don,t hold your breath but...
Manitoba and Quebec cannot even grow 1 plant.
750$ fine.
You are mixing up stock market and legacy.
Please stop arresting your competition.
Legacy will survive on $800 per kilos.
Yes, and besides, Canada is a costly place to grow good cannabis.
Too cold...
When Africa rises North America will tremble!
"Things are normalizing."
Say what?
Come again??
At $550 a pound?
Kidding me?
Normal prices for cannabis is tomatos prices!
Same time to flower & both plants needing a living soil for good taste.
Free the weed for anybody to grow. Stop arresting the competition.
The best will rise.
Prices will come down.
Senior Canadians will rejoice.
It is a crime jailling folks growing a medicinal plant.
Cannabis is harmless. Prison destroy lives.
Prohibition 2.0 needs to stop now. Legalize it. Don,t suppress it!
Free the weed. No prison for pot.
You don,t know what you are talking about.
Again!
Easy to get bulk from legacy farmers.
You order a pound for $450 to $550 from hundreds of web stores shipped.
https://www.bulkbuddy.co/shop/
The cannabis market ignorance you display is stunning.
Google Bulk Cannabis and start saving .
Suzan to Bonno
16-05-2022
Story of the month: Nanoemulsion standards (or lack thereof) threaten cannabis consumer safety. Photo: Crystalweed cannabis, Unsplash
Cannabinoid nanoemulsions have gained in popularity – but are they safe and have they slipped through the regulatory cracks? Is this another example of a lesson (not) learned?
Nanoemulsions are delivery mechanisms for compounds such as CBD, to enhance their bioavailability.
Bioavailability means “the extent a substance or drug becomes completely available to its intended biological destination(s),” according to Gary Price and Deven Patel, two researchers who published a paper on drug bioavailability last fall.
Price and Patel point out that “the dose of a drug is indirectly proportional to its bioavailability” and that “for a drug with relatively low bioavailability, a larger dose is required to reach the minimum effective concentration threshold.”
Advertisement
Cannabinoids such as CBD are lipophilic, which means they do not mix well with water and rather dissolve in fats and oil. That in turns lowers the bioavailability of edible CBD products.
Nanoemulsions are encapsulations of tiny droplet sizes of specific cannabinoids (such as CBD) that are then infused in common products such as beverages.
The nanoemulsions become the delivery mechanism and appears to increase the bioavailability of its ingredient.
In 2018 a group of researchers in Japan and Thailand studied a CBD nanoemulsion formulation that was administered to rats.
The nanoemulsion formulation both enhanced CBD absorption and increased bioavailability, without compromising integral physiological processes. It was an important and positive contribution to the empirical studies of cannabinoid nanoemulsions.
But the proliferation of CBD and other cannabinoid nanoemulsions has brought to the surface the potential of exploitation by product manufacturers who may not be familiar with the physiochemical and other functional attributes that could compromise the product.
For example, particle size may affect thermodynamic stability and chemical reactivity that could lower or raise bioavailability.
By their very nature, nanoemulsions are thermodynamically unstable, which means they will eventually (but always) break down over time.
Constituents of nanoemulsion products include surfactants and other chemicals, some of which could be harmful or perhaps ineffective in combination with the cannabinoid(s) of interest.
All components must coalesce to ensure appropriate physiological response and reported bioavailability.
As with any other product, the choice of fabrication depends on the properties of the ingredients and on the desired function of the finished or final product. The decision on fabrication process should not be taken lightly, and sound knowledge of nanoemulsion product fabrication is essential to ensure a safe and well-characterized finished product.
Cannabis regulators have yet to require product manufacture requirements, nor have they established requirements for testing. There are no requirements or rules for cannabinoid nanoemulsion ingredients, nor for finished products.
This creates a void with respect to essential information consumers rely on to make informed and educated decisions. The absence of regulatory requirements for cannabinoid nanoemulsions also speaks to the limited breadth of requirements presumably established to
Story of the month: Nanoemulsion standards (or lack thereof) threaten cannabis consumer safety. Photo: Crystalweed cannabis, Unsplash
Cannabinoid nanoemulsions have gained in popularity – but are they safe and have they slipped through the regulatory cracks? Is this another example of a lesson (not) learned?
Nanoemulsions are delivery mechanisms for compounds such as CBD, to enhance their bioavailability.
Bioavailability means “the extent a substance or drug becomes completely available to its intended biological destination(s),” according to Gary Price and Deven Patel, two researchers who published a paper on drug bioavailability last fall.
Price and Patel point out that “the dose of a drug is indirectly proportional to its bioavailability” and that “for a drug with relatively low bioavailability, a larger dose is required to reach the minimum effective concentration threshold.”
Advertisement
Cannabinoids such as CBD are lipophilic, which means they do not mix well with water and rather dissolve in fats and oil. That in turns lowers the bioavailability of edible CBD products.
Nanoemulsions are encapsulations of tiny droplet sizes of specific cannabinoids (such as CBD) that are then infused in common products such as beverages.
The nanoemulsions become the delivery mechanism and appears to increase the bioavailability of its ingredient.
In 2018 a group of researchers in Japan and Thailand studied a CBD nanoemulsion formulation that was administered to rats.
The nanoemulsion formulation both enhanced CBD absorption and increased bioavailability, without compromising integral physiological processes. It was an important and positive contribution to the empirical studies of cannabinoid nanoemulsions.
But the proliferation of CBD and other cannabinoid nanoemulsions has brought to the surface the potential of exploitation by product manufacturers who may not be familiar with the physiochemical and other functional attributes that could compromise the product.
For example, particle size may affect thermodynamic stability and chemical reactivity that could lower or raise bioavailability.
By their very nature, nanoemulsions are thermodynamically unstable, which means they will eventually (but always) break down over time.
Constituents of nanoemulsion products include surfactants and other chemicals, some of which could be harmful or perhaps ineffective in combination with the cannabinoid(s) of interest.
All components must coalesce to ensure appropriate physiological response and reported bioavailability.
As with any other product, the choice of fabrication depends on the properties of the ingredients and on the desired function of the finished or final product. The decision on fabrication process should not be taken lightly, and sound knowledge of nanoemulsion product fabrication is essential to ensure a safe and well-characterized finished product.
Cannabis regulators have yet to require product manufacture requirements, nor have they established requirements for testing. There are no requirements or rules for cannabinoid nanoemulsion ingredients, nor for finished products.
This creates a void with respect to essential information consumers rely on to make informed and educated decisions. The absence of regulatory requirements for cannabinoid nanoemulsions also speaks to the limited breadth of requirements presumably established to ensure consumer safety.
Susan Audino, who holds a doctorate in chemistry, is a chemistry consultant and instructor for the American Association for Laboratory Accreditation. She is based in Delaware.
INTRODUCING THE BC CRAFT FARMERS CO-OP
CALEB to Bonno 16, 2022
The BC Craft Farmers Co-Op shouldn’t have to exist. For decades, British Columbia has been Canada’s natural home of cannabis. Thousands of small farmers have cultivated high-quality and potent cannabis known as “BC Bud.”
But the federal government’s overregulation of cannabis, and the BC government’s lack of backbone, means thousands of these farmers are still underground. The government created a “micro-producer” class to bring the legacy market out of the shadows. But as of 2022, only 70 craft farmers have received their approval.
Hence, the importance of the BC Craft Farmers Co-Op. An organization dedicated to assisting small and medium-sized BC cannabis producers. They want BC to remain a cannabis leader and innovator. They wish to provide medical and recreational consumers with the highest quality BC cannabis products. But that can’t be done when the government requires start-up capital at $200,000 on the low end. And up to $1,000,000 to be eligible for a licence.
Of the 1,200,000+ square metres of legal cannabis cultivation in Canada, craft farmers only account for 0.17%. The BC Craft Farmers Co-Op wants to see that number increase drastically. Volunteer Secretary David Hurford recently spoke to me about the Co-Op and some of his thoughts on the current cannabis landscape in Canada.
What Does the BC Craft Farmers Co-Op think of the Cannabis Industry Table promised in the latest budget?
“It was good to see the federal government announce some initiative in the budget. But if they just engage the same people they’ve been engaging with… the system is really built for the large producers, and they’re having trouble. So I think the government, through the efforts with Industry Canada, if they can start to move this away from Health Canada a little bit, that’s a step in the right direction. But if Industry Canada continues just to involve the corporations that control the cannabis industry in this country, it’s not going to go anywhere. They really have to reach out to the experts.”
Who Should Regulate Cannabis in Canada?
“Our view is cannabis policy in Canada should be written in British Columbia. When it comes down to writing automobile policy in Canada, we don’t write it in BC. We write it in Ontario. Because that’s where they build cars. When we write maple syrup policy, we don’t write it in Saskatchewan; we write it in Quebec because that’s where they do maple syrup. When we do canola policy, we write it in Saskatchewan. Where should we be writing cannabis policy from? British Columbia.”
BC Craft Farmers Co-Op
Why Do You Think That’s Not the Case?
“This is a top-down policy written by people who don’t know much about cannabis who are getting lobbied directly by LPs who have a lot of resources to try and affect the changes they want. But the government’s got it wrong. They’ve got to be much more bottom-up. And they’re too much top-down right now. So the idea of having Industry Canada more involved in the sector is a good step. We want to participate in that process. We hope they’ll listen to the experts because the policy for cannabis in Canada really should be coming from the people who know how to grow cannabis and know the cannabis industry, and that’s British Columbia.
“It’s nothing against the folks in other provinces. We have great craft farmers across the country. In fact, from the co-op’s perspective, we see a national movement of craft farmers. Similar in some extent to the wheat farmers did in the early 1900s by creating the Wheat Board.”
What Are Some of the Challenges for the BC Craft Farmers Co-Op?
“Stigma. That’s a big challenge. It means banks won’t lend to small farmers. Insurance won’t talk to small farmers. Some small farmers have to give up their house insurance. So there’s all these institutional barriers. Municipal governments in this country who have been given a veto by provincial and federal governments haven’t been given any resources by those governments to accept applications. Municipal governments have very little tax base. Provincial and federal governments have just kind of thrown this at them, saying, ‘here you be the gatekeeper now.’ And they haven’t given municipal governments any incentive. We’ve been calling on the provincial and federal governments to give municipalities an economic development grant. So they can move our projects up to the top of the line and see these applications as job creators. For every craft farmer Health Canada approves, we’re creating four and a half jobs.”
You’d Think They’d Listen To the BC Craft Farmers Co-Op About Jobs.
“Our estimation is that the 6500 medical growers in BC, even if just 10% could pass the Health Canada test, we’re talking about 700 farmers. And that’s a very low number. That’s 700 farmers creating four jobs each; that’s 3000 jobs in BC overnight. Or in the first year. And that’s just direct jobs because they’re going to the hardware store, they’re going to go to the nutrient store, they’re going to create indirect jobs.
“So this is an opportunity that governments are really missing, and I think stigma still has a lot to do with it. The public is way ahead, but it’s still officials within the government that have been prosecuting people for decades, police forces, some banks and financial institutions that just haven’t got the memo. And it’s taking them a while to get out of a prohibition mindset. But it’s within these institutions. I don’t think the stigma is there in the public, anywhere like it used to be. The stigma within institutions is still holding us back. And I think they’re actually waiting for a signal from the government because all the messages the government is sending about craft farmers is we don’t want you. Look at the system they set up.
“I’ve spent 30 years in government, designing all kinds of government programs. And I know the difference between designing a government program to succeed and designing a government to fail. And this is a government program – the micro class regulation program – is designed to fail. Which is awful.”
BC Craft Farmers Co-Op
It sounds like it’s more than just stigma holding BC back.
“The stigma, the barriers to entry on the regulatory side that make you come up with a couple hundred grand just even to be eligible. Those are the real barriers. And then, of course, once you get into the system, yes, there are additional barriers. But we think some of those can be solved with direct sales programs, you know, where farmers and retailers can make their own deal by allowing people to come to farms to purchase directly. We think consumers are actually interested in buying local and understand that there may be a premium attached to that because it’s such high quality.
“We haven’t really been able to test that because when you only have 70 farmers in BC that have been approved in three years, you don’t have that critical mass. They’re all scattered, and they’re all spread out. So they have no clout. They don’t have any political clout. They don’t have the purchasing power. Part of the Co-Op mandate is to pool their purchasing power, so they’ll all buy the same things, and we can all buy them at once and get a much better price.”
Is There Anything Governments Can Do?
“The caps on micros, 2100 sq feet? Those should be doubled. Overnight. Why not let the small farmer go to 4200 sq feet at least? In addition to being a good number, it doubles their yield without doubling their expenses. Why not do something simple like that? That would go a long way to help make these farms more profitable.
“These are easy things for the Minister to do. They can literally do them in an afternoon.
“Governments aren’t investing in any kind of sector strategy. Governments are investing all the time. We heard the BC government opening a BC Hydrogen office, pouring millions of dollars into that to get BC ready for all these hydrogen jobs that are coming down the pipe. Good idea, but you know what their job projections are in the BC hydrogen industry? Four thousand new jobs by 2035.
“We can produce 4000 new jobs with 1000 farmers in the next two years. And yet there’s no coordinated effort by the government, whether it’s on tourism, whether it’s on capacity building, to get people trained up on growing cannabis in a modern way. There’s no effort to encourage women entrepreneurs. Indigenous growers are still feeling shut out.
“There are no incentives for municipalities. There’s no access to any capital. Typically governments work with each other in sectors, whether it’s forestry or wine industry or aerospace industry or whatever. And they fund partnerships all the time to grow these sectors. Sectors that can create jobs and economic growth, but the government hasn’t even touched cannabis. They don’t even see it really as an economic development activity.
You Mentioned the System was Designed to Fail. So it’s Not Just Incompetence?
BC Craft Farmers Co-Op
“It’s definitely not incompetence. My experience working in government is people who work in government know what they’re doing. This is a program that’s designed to fail. No one in the government wanted the legalization of cannabis. Mr. Trudeau stuck his neck out to make the promise. Half his caucus didn’t want it. This didn’t come from the bottom up in the bureaucracy. It came from a politician. The bureaucracy, if they still had their way, cannabis would still be illegal.
“The only time we’ve had innovation in cannabis is either from a politician showing leadership or a court telling the government they have to do it. Innovation does not come from the bureaucracy. In fact, they don’t want this.
“Now, of course, the Conservative government brought in a regime of large producers who resemble to Health Canada a pharmaceutical industry. They’re very large and corporate. Something that Health Canada is more used to. They’re not used to dealing with small farmers in William’s Lake. They don’t even know the difference between Smithers and William’s Lake. So I think they’re just more comfortable in Ottawa dealing with corporations and lobbyists and that kind of infrastructure. Health Canada certainly is. They’re not comfortable dealing with the small cannabis farmer who’s living outside of town in William’s Lake.
“It’s not incompetence at all. It’s on purpose… the way the government regulates CBD and THC together, they’re not stupid. They’re not dumb people. They know what they’re doing.”
The BC Craft Farmers Co-Op works with BC’s legacy craft farmers to grow and strengthen a network to bring everyone into the legal market. You can find out more about them here.
https://www.bccraftfarmerscoop.com/
You are gouging your customers.
Greed will come back to bite you in the groin.
Cannabis has no biz selling for LP,s prices!!
Expecially when quality is sub-par-o-la.
What happenned to scale?
You are selling under cost and have way to much inventory going bad.
Bean counters overpack millions of plants to get mold instead of gold.
Sad...
Big government at work, greed is everywhere and that greed is killing the "legal" market
United States | High maintenance
In California, the world’s largest legal weed market is going up in smoke
The state’s pot industry hopes federal legalisation will help. It may instead be its death knell
Don’t take a leaf out of California’s book
May 15th 2022 | EUREKA, CALIFORNIA
Karen and tom hessler moved to their remote corner of Humboldt County, California, in 1971. Distrust of the government during the Vietnam war and a desire to live off the land drove them to settle in Ettersburg, some 225 miles (360km) north of San Francisco. “We thought we’d come out into the wilderness, and we could just do our thing,” Mrs Hessler says. The only way to get to the Hesslers’ farm is to navigate miles of serpentine dirt roads through northern California’s towering redwoods. The isolation that so intrigued “back to the land” hippies like the Hesslers also turned Humboldt County into the cannabis capital of California—and, therefore, America.
Humboldt, Mendocino and Trinity counties make up the “Emerald Triangle”, an area roughly the size of Massachusetts famous for growing weed. Locals say the dense forests act as a “redwood curtain”, affording farmers seclusion when cannabis was still illegal. For decades cannabis farmers were seeing green. Johnny Casali, a small farmer in Humboldt County, says he remembers selling some of his crop for $5,800 a pound ($12,760 a kg) in 1990.
California legalised medical marijuana in 1996 and recreational cannabis in 2016. The state is now the largest legal weed market in the world, raking in $5.2bn in sales in 2021. Proposition 64, the ballot measure that allowed recreational weed, was heralded as a way to shrink the illicit market, and give those harmed by the war on drugs a chance to join the legal economy. Some of that has happened. Mr Casali was released in 2004 after serving eight years in prison. He now runs a legal cannabis farm.
However, many cannabis businesses in California are floundering. Supply surged as more growers entered the legal market. In 2017 era Economics, a consultancy, estimated that California consumes 2.5m pounds of the 13.5m-15.6m pounds of weed produced there each year. Farmers and shop owners complain that onerous taxes and rules make running a profitable legal weed business nearly impossible. Last autumn was “a perfect storm of everything that could have gone wrong”, says Nicole Elliott, California’s top pot regulator. Prices fell to $400 a pound; the cultivation tax, of $161 a pound for buds, was raised because of inflation; and labour was scarce.
The price has recovered somewhat; in April it was about $800 a pound. But the legal framework set up by Proposition 64 spells long-term trouble. It gave local municipalities the power to decide whether they would allow cannabis to be grown and sold. In their forthcoming book “Can Legal Weed Win?” two economists, Robin Goldstein and Daniel Sumner, argue that local control ensured that the illegal market would continue to flourish in places where legal weed was banned. Local control also helps explain why California lags behind nine states in weed shops per person. By comparing sales figures with drug-use surveys, Messrs Goldstein and Sumner estimate that only about 25% of the weed sold and consumed within California is legal. Many pot farmers in Humboldt say that some of their fellow growers have gone back underground to make a profit.
One way to try to stamp out the illegal market, including the organised-crime groups which have set up shop in the Emerald Triangle, is to ramp up enforcement. But that is not popular among officials who want to make up for the trauma inflicted during the war on drugs. In the 1980s, “it was like the military coming in,” says William Honsal, Humboldt County’s sheriff. “A lot of the old farmers still have ptsd based upon the helicopters flying low.” He says his department doesn’t have the resources anymore to go after illegal farmers even if it wanted to. Of the 120 deputies that roam Humboldt, only four are devoted to smoking out illegal cannabis.
Programmes to help former offenders have fallen short. An investigation by the Los Angeles Times, published in January, found that at least 34,000 old drug charges for marijuana had yet to be cleared.
Wake up and smell the weed
Chipping away at local control by incentivising—or compelling—cities to join the legal market might help the industry. But the change farmers want most is tax reform. Some cities and counties have suspended local taxes on cannabis. Gavin Newsom, California’s Democratic governor, has promised to “look at tax policy to stabilise the market”. Meanwhile, Humboldt farmers are getting crafty to keep their businesses afloat. Some take part in cannabis tours, where Bay Area potheads are whisked to different farms to see what happens behind the redwood curtain.
Humboldt farmers hope federal legalisation will save them by creating a national market. “When California cannabis becomes legal”, says Mr Casali, “the Emerald Triangle will be the Napa Valley of weed.” They might be disappointed. Because interstate commerce is banned, states that might have bought California pot have instead built their own industries. If and when weed is legalised, these states may strive to prop up their local businesses.
California may also have trouble competing with lower-cost states. Industrial, indoor farms have proliferated as the cannabis industry has begun to resemble Big Ag. But the state’s high energy costs make growing pot indoors expensive. In future farmers may choose to grow in somewhere like Oklahoma—a medical-only state that licenses new businesses quickly—rather than California, where they must also contend with high taxes and burdensome regulations. “People gotta wake up in California, man,” warns Mr Hessler, “before it’s way too late.” ¦
Read my first post circa 2014. Newbie here?
I have,nt changed my mind. So keep arresting colored and dirt poor folks.
LPs are corrupted and doomed.
Linton,s Ponzi sell shares to suckers.
Knowledge is power, but one has to work hard for the world to change.
Australians Can Get a Medicinal Cannabis Prescription for Pretty Much Anything
Doctors are turning to the drug as a catch-all treatment for any number of medical conditions.
By Bonno
15.5.22
In 2016, Australia introduced a first-of-its-kind medicinal cannabis program through which doctors would be able to write prescriptions to treat any number of different conditions.
Now, doctors are reaching for it as a catch-all tincture used to treat conditions for which there isn’t much evidence it’ll resolve, all at a “steeply” increasing rate.
The broad-based prescription increase emerges as one of the core findings of a new study undertaken by researchers at the University of Sydney, who found that medicinal cannabis is being prescribed for more than 140 different conditions in Australia.
ADVERTISEMENT
Among the most common is anxiety, even though there are only a smattering of studies to support the drug’s efficacy in treating the condition.
One of the report’s senior authors, Dr Elizabeth Cairns, said most of the research that supports the use of medicinal cannabis in treating conditions like anxiety is based on “CBD-dominant” cannabis products, rather than those with a dominant THC component. THC is what commonly induces anxiety for users of the drug, and is more common among cannabis products in general.
But anxiety isn’t the only condition with rising prescription rates for which medicinal cannabis has questionable efficacy. Using data from the Therapeutic Goods Administration (TGA), researchers found that doctors are increasingly turning to medicinal cannabis prescriptions to treat general “pain” and “sleep disorders”, too.
World News
Cops Told the ‘Smell of Cannabis’ Doesn’t Justify Stop and Search
RUBY LOTT-LAVIGNA
20.4.22
As it stands, the evidence for using medicinal cannabis as a treatment of pain in Australia is limited at best, and in most cases even controversial. The Australian Faculty of Pain Medicine suggests not prescribing medicinal cannabis for chronic pain, for instance, while some medical practitioners have taken even stronger positions against it.
When it comes to using medicinal cannabis as a treatment for sleeping disorders, most researchers have come to sing a familiar refrain: there isn’t enough evidence to support the drug’s efficacy in treating the condition.
ADVERTISEMENT
That hasn’t stopped its proliferation as a catch-all treatment, as well as the rate at which it is being prescribed.
Rhys Cohen, a spokesperson for CannGroup and a co-author of the study, told VICE that most of that uptick has taken place over the last year or so, and most of the people seeking the drug as treatment are, unsurprisingly, young men.
“All of the people getting access to medicinal cannabis that we looked at in our paper are accessing products that have not been proven to be effective for treating anything in particular,” Cohen said.
“These are unregistered medicines that haven't gone through normal drug approval processes.”
Their reasons for doing so are likely vast, he said, but could broadly be put down to the legions of clinical psychiatric needs being left unmet in Australia.
“We know that people who use cannabis for medicinal purposes already, be it on a prescription or not, are much more likely than the general public to be living with high levels of psychological distress; to come from poor areas, or have less access to the kinds of quality health care that they should be able to,” he said.
In 2019, it was estimated by the Australian Institute of Health and Welfare that there were around 600,000 Australians already using cannabis illegally to treat medical conditions, at least part of the time.
ADVERTISEMENT
And since the inception of the national cannabis scheme in 2016, just under 250,000 Australians have joined them legally, with prescriptions for the drug doubling from 2020 to 2021, and more than 122,000 prescriptions written last year alone. It’s a marked jump on the 2,500 prescriptions written in 2018, just four years ago.
Mat Henderson, a drug lawyer and academic, told VICE that he sees the uptick in medicinal cannabis prescriptions running parallel to the mounting evidence for the dwindling safety and efficacy of dominant selective serotonin reuptake inhibitors (SSRIs) available on the market.
At least in an anecdotal sense, Henderson suggested, “lots of people are making the switch” to medicinal cannabis because psychiatric pharmaceuticals either “didn’t work, did more harm than good, had unbearable side-effects, or a shithouse combo of all of the above.”
“Are cannabinoids a long-term solution to the tidal wave of anxiety and depression in Western society? For many, maybe. It’s gotta be better than the current status quo,” he said.
World News
We Found the World's Worst Weed: ‘Paraguayo’
NATHANIEL JANOWITZ
20.4.22
“There’s a lot of patient numbers here and we ought to pause and recognise the crummy situation that cannabinoid medicines are in. Held back by lack of pharma-level research but the same standard of research is coming apart at the seams when it comes to all the products that MC is naturally replacing.”
ADVERTISEMENT
In contrast, Cohen accepted the idea in part, but pointed to the fact that there isn’t really any evidence to support the suggestion that rising rates of medicinal cannabis prescriptions have emerged as the direct result of broadly reported negative experiences with SSRIs.
“We don't have great drugs for these conditions. Non-drug treatments can be really time- and cost-intensive as well,” Cohen said.
“But I think the fact that so many Australians already use SSRIs, and the fact that so many Australians, unfortunately, remain with untreated or unmanaged anxiety and depression, is a sign that, yeah, this is a cohort of people who have a huge unmet need, who are looking for some kind of help.”
Et j,en parle 5.
Only a matter of time before all LPs pop.
Here,s the data...
Some Aurora data for all bag holders
AURORA CANNABIS $1 BILLION NET LOSS
CALEB MCMILLANMAY 15, 2022
To Bonno
Aurora Cannabis has announced net losses of $1 billion in the third quarter. They will be closing their Aurora Sky facility in Edmonton and two others in British Columbia.
Aurora says the move is an effort to make the LP “a leaner, more agile organization.”
The Aurora Sky facility is where Aurora employs 13 percent of its workforce. Aurora spokesperson Kate Hillyar declined to share how many people that included. Expect the facility to close by the third quarter of 2023.
The two BC facilities are Aurora Anandia and Whistler Alpha Lakes. Expect both to close by the end of the year.
How Did This Happen?
Aurora Cannabis is one of Canada’s largest LPs, so how exactly do they post a net loss of $1 billion?
Miguel Martin, Aurora’s chief executive, told analysts that the company suffered from excess inventory and fierce competition.
"Excess inventory". Read : bunk stays on shelves.
"Fierce competition". Read : Legacy kicks ass.
He called the market “irrational” but said, “We expect the recreational market in Canada to correct. When that process is complete, we will have added opportunities for market share and pricing.”
Correct for what? Read: Police will try to arrest their way through legacy.
In other words: we created this speculative market, we’re successfully weathering the storm, and once the market correction comes, we’ll be one of the few LPs left supplying Canadians with cannabis.
Aurora Cannabis Pulls a Hammer Time
Aurora Cannabis $1 billion
Aurora Cannabis losing $1 billion comes as no surprise. The company was never selling cannabis, according to one anonymous insider. “They were always just selling equity to bag holders.”
And nowhere is this more evident than Aurora Sky, their Edmonton grow facility that costs the company $7 million per quarter.
What ever happenned to scale?
The facility, designed to be a sea of green, was where computers and machines would automate everything. Giant cranes would handle the plants. No human hands needed to touch the cannabis.
But then consumers started buying the products. And they wanted premium brands and were willing to pay for them. Few wanted the mass-produced generic flower Aurora designed Aurora Sky for.
Aurora Sky is the equivalent of MC Hammer’s house. For those too young to remember, MC Hammer was a hip-hop artist in the 1980s. Successful beyond his wildest dreams, he bought a mansion to go with his fame. The house created headlines because, in the 1980s, spending $20 million on a home was unheard of.
But as MC Hammer’s hip-hop style dived in popularity, so did his album sales. And within a few years, he was declaring bankruptcy. Unable to afford the 40,000 sq ft house with Italian marble floors, a bowling alley, recording studio, two swimming pools, a movie theatre, tennis courts, a baseball diamond, and a 17 car garage.
Sound like a few cannabis company we know? One that hyped up its Aurora Sky facility. Even when the building was merely a concrete foundation on the eve of legalization?
Booth Makes Out Like A Bandit
Aurora Cannabis $1 billion
Terry Booth is an Edmonton electrician turned pot investor. Booth co-founded Aurora with $2.5 million of his own cash. Needing that kind of start-up capital shows what kind of legalization scheme the Trudeau government had created.
Booth never wore a suit to meetings. He was a workingman’s CEO, or at least that’s the image ascribed to him. A former employee says, “[A]s far as him being the CEO of a multi-billion-dollar company, you really got the feeling that was thrust upon him.”
Terry Booth resigned from Aurora in early 2020. The year prior hadn’t been good for the company. Aurora laid off a significant chunk of its employees, closed several facilities and saw its valuation drop by $1 billion.
Booth is now CEO of Australis, a Massachusetts-based cannabis investment firm. Like many other LP executives who inspired the Canadian market with false (some would even say fraudulent) confidence, he’s cut and run to the US.
Meanwhile, Aurora continues to lose money. “Aurora Cannabis posts a net loss of $1 billion” is becoming a typical headline.
The idea is that Aurora can afford to sell at a loss while the craft producers can’t. Over time, this leaves only the top LPs. This is the legacy of Terry Booth’s Aurora Cannabis and Justin Trudeau’s legalization scam.
Poor quality at a premium price nobody wants.
Pour Todd.
Some Aurora data for all bag holders
AURORA CANNABIS $1 BILLION NET LOSS
CALEB MCMILLANMAY 15, 2022
To Bonno
Aurora Cannabis has announced net losses of $1 billion in the third quarter. They will be closing their Aurora Sky facility in Edmonton and two others in British Columbia.
Aurora says the move is an effort to make the LP “a leaner, more agile organization.”
The Aurora Sky facility is where Aurora employs 13 percent of its workforce. Aurora spokesperson Kate Hillyar declined to share how many people that included. Expect the facility to close by the third quarter of 2023.
The two BC facilities are Aurora Anandia and Whistler Alpha Lakes. Expect both to close by the end of the year.
How Did This Happen?
Aurora Cannabis is one of Canada’s largest LPs, so how exactly do they post a net loss of $1 billion?
Miguel Martin, Aurora’s chief executive, told analysts that the company suffered from excess inventory and fierce competition.
"Excess inventory". Read : bunk stays on shelves.
"Fierce competition". Read : Legacy kicks ass.
He called the market “irrational” but said, “We expect the recreational market in Canada to correct. When that process is complete, we will have added opportunities for market share and pricing.”
Correct for what? Read: Police will try to arrest their way through legacy.
In other words: we created this speculative market, we’re successfully weathering the storm, and once the market correction comes, we’ll be one of the few LPs left supplying Canadians with cannabis.
Aurora Cannabis Pulls a Hammer Time
Aurora Cannabis $1 billion
Aurora Cannabis losing $1 billion comes as no surprise. The company was never selling cannabis, according to one anonymous insider. “They were always just selling equity to bag holders.”
And nowhere is this more evident than Aurora Sky, their Edmonton grow facility that costs the company $7 million per quarter.
What ever happenned to scale?
The facility, designed to be a sea of green, was where computers and machines would automate everything. Giant cranes would handle the plants. No human hands needed to touch the cannabis.
But then consumers started buying the products. And they wanted premium brands and were willing to pay for them. Few wanted the mass-produced generic flower Aurora designed Aurora Sky for.
Aurora Sky is the equivalent of MC Hammer’s house. For those too young to remember, MC Hammer was a hip-hop artist in the 1980s. Successful beyond his wildest dreams, he bought a mansion to go with his fame. The house created headlines because, in the 1980s, spending $20 million on a home was unheard of.
But as MC Hammer’s hip-hop style dived in popularity, so did his album sales. And within a few years, he was declaring bankruptcy. Unable to afford the 40,000 sq ft house with Italian marble floors, a bowling alley, recording studio, two swimming pools, a movie theatre, tennis courts, a baseball diamond, and a 17 car garage.
Sound like a few cannabis company we know? One that hyped up its Aurora Sky facility. Even when the building was merely a concrete foundation on the eve of legalization?
Booth Makes Out Like A Bandit
Aurora Cannabis $1 billion
Terry Booth is an Edmonton electrician turned pot investor. Booth co-founded Aurora with $2.5 million of his own cash. Needing that kind of start-up capital shows what kind of legalization scheme the Trudeau government had created.
Booth never wore a suit to meetings. He was a workingman’s CEO, or at least that’s the image ascribed to him. A former employee says, “[A]s far as him being the CEO of a multi-billion-dollar company, you really got the feeling that was thrust upon him.”
Terry Booth resigned from Aurora in early 2020. The year prior hadn’t been good for the company. Aurora laid off a significant chunk of its employees, closed several facilities and saw its valuation drop by $1 billion.
Booth is now CEO of Australis, a Massachusetts-based cannabis investment firm. Like many other LP executives who inspired the Canadian market with false (some would even say fraudulent) confidence, he’s cut and run to the US.
Meanwhile, Aurora continues to lose money. “Aurora Cannabis posts a net loss of $1 billion” is becoming a typical headline.
The idea is that Aurora can afford to sell at a loss while the craft producers can’t. Over time, this leaves only the top LPs. This is the legacy of Terry Booth’s Aurora Cannabis and Justin Trudeau’s legalization scam.
Poor quality at a premium price nobody wants.
Some Aurora data for all bag holders
AURORA CANNABIS $1 BILLION NET LOSS
CALEB MCMILLANMAY 15, 2022
To Bonno
Aurora Cannabis has announced net losses of $1 billion in the third quarter. They will be closing their Aurora Sky facility in Edmonton and two others in British Columbia.
Aurora says the move is an effort to make the LP “a leaner, more agile organization.”
The Aurora Sky facility is where Aurora employs 13 percent of its workforce. Aurora spokesperson Kate Hillyar declined to share how many people that included. Expect the facility to close by the third quarter of 2023.
The two BC facilities are Aurora Anandia and Whistler Alpha Lakes. Expect both to close by the end of the year.
How Did This Happen?
Aurora Cannabis is one of Canada’s largest LPs, so how exactly do they post a net loss of $1 billion?
Miguel Martin, Aurora’s chief executive, told analysts that the company suffered from excess inventory and fierce competition.
"Excess inventory". Read : bunk stays on shelves.
"Fierce competition". Read : Legacy kicks ass.
He called the market “irrational” but said, “We expect the recreational market in Canada to correct. When that process is complete, we will have added opportunities for market share and pricing.”
Correct for what? Read: Police will try to arrest their way through legacy.
In other words: we created this speculative market, we’re successfully weathering the storm, and once the market correction comes, we’ll be one of the few LPs left supplying Canadians with cannabis.
Aurora Cannabis Pulls a Hammer Time
Aurora Cannabis $1 billion
Aurora Cannabis losing $1 billion comes as no surprise. The company was never selling cannabis, according to one anonymous insider. “They were always just selling equity to bag holders.”
And nowhere is this more evident than Aurora Sky, their Edmonton grow facility that costs the company $7 million per quarter.
What ever happenned to scale?
The facility, designed to be a sea of green, was where computers and machines would automate everything. Giant cranes would handle the plants. No human hands needed to touch the cannabis.
But then consumers started buying the products. And they wanted premium brands and were willing to pay for them. Few wanted the mass-produced generic flower Aurora designed Aurora Sky for.
Aurora Sky is the equivalent of MC Hammer’s house. For those too young to remember, MC Hammer was a hip-hop artist in the 1980s. Successful beyond his wildest dreams, he bought a mansion to go with his fame. The house created headlines because, in the 1980s, spending $20 million on a home was unheard of.
But as MC Hammer’s hip-hop style dived in popularity, so did his album sales. And within a few years, he was declaring bankruptcy. Unable to afford the 40,000 sq ft house with Italian marble floors, a bowling alley, recording studio, two swimming pools, a movie theatre, tennis courts, a baseball diamond, and a 17 car garage.
Sound like a few cannabis company we know? One that hyped up its Aurora Sky facility. Even when the building was merely a concrete foundation on the eve of legalization?
Booth Makes Out Like A Bandit
Aurora Cannabis $1 billion
Terry Booth is an Edmonton electrician turned pot investor. Booth co-founded Aurora with $2.5 million of his own cash. Needing that kind of start-up capital shows what kind of legalization scheme the Trudeau government had created.
Booth never wore a suit to meetings. He was a workingman’s CEO, or at least that’s the image ascribed to him. A former employee says, “[A]s far as him being the CEO of a multi-billion-dollar company, you really got the feeling that was thrust upon him.”
Terry Booth resigned from Aurora in early 2020. The year prior hadn’t been good for the company. Aurora laid off a significant chunk of its employees, closed several facilities and saw its valuation drop by $1 billion.
Booth is now CEO of Australis, a Massachusetts-based cannabis investment firm. Like many other LP executives who inspired the Canadian market with false (some would even say fraudulent) confidence, he’s cut and run to the US.
Meanwhile, Aurora continues to lose money. “Aurora Cannabis posts a net loss of $1 billion” is becoming a typical headline.
The idea is that Aurora can afford to sell at a loss while the craft producers can’t. Over time, this leaves only the top LPs. This is the legacy of Terry Booth’s Aurora Cannabis and Justin Trudeau’s legalization scam.
Poor quality at a premium price nobody wants.
Je parle 5 langues. Et toit?
Connais tu Todd?
L,ignorance n,est pas une excuse...
Mélange De Cannabis Médicinal Segments Clés Pour Une Forte Croissance À L’avenir 2022-2030 [Aphria Inc., Aurora Cannabis, Cannabis Science Inc., Canopy Growth Corporation]
Posted on 15 mai 2022 AuthorBonno Comment(1006)
Le rapport d’étude de marché mondial Mélange de cannabis médicinal propose une estimation de la taille du marché de 2022 à 2033 en termes de valeur et de volume. Il présente une évaluation complète des segments clés de l’industrie Mélange de cannabis médicinal, des parts d’activité avec les dernières tendances et des technologies utilisées dans l’industrie post_category. Représente également un aperçu instructif du paysage des fournisseurs et de l’augmentation géographique du secteur Mélange de cannabis médicinal. L’étude de recherche examine le Mélange de cannabis médicinal à l’aide d’un certain nombre de critères, tels que le type de produit, l’application et l’expansion géographique. Les parts de marché apportées par ces segments sont formulées pour donner une feuille de route opportuniste aux lecteurs du marché Mélange de cannabis médicinal.
Présentation de base du rapport
1. Le rapport est un document de recherche crucial pour ses publics cibles tels que les fabricants de Mélange de cannabis médicinal, les fournisseurs et acheteurs de matières premières, les experts de l’industrie et d’autres autorités commerciales.
2. Le rapport parle d’un aperçu du marché qui aide à la définition, à la classification et aux détails statistiques des distributions Mélange de cannabis médicinal qui révèlent l’état actuel et futur de l’industrie ainsi que les valeurs prévisionnelles.
3. Le rapport décrit les principaux moteurs et contraintes affectant le marché ainsi que diverses tendances de l’industrie Mélange de cannabis médicinal qui façonnent les chaînes d’approvisionnement et de distribution du marché.
4. Le rapport Mélange de cannabis médicinal se penche également sur la dynamique du marché qui couvre les pays émergents et les marchés en croissance, bien que de nouvelles opportunités commerciales et de nouveaux défis pour les acteurs des marchés émergents, ainsi que les principales nouvelles de l’industrie et les directives commerciales par région géographique mondiale.
Mélange de cannabis médicinal marchés
Aperçu de la concurrence sur le marché mondial Mélange de cannabis médicinal
L’analyse concurrentielle sert de pont entre les fabricants et les autres acteurs du marché disponibles dans le secteur Mélange de cannabis médicinal. Le rapport comprenait une étude comparative sur les meilleurs Mélange de cannabis médicinal acteurs avec le profil de l’entreprise, les entreprises compétitives, les innovations de produits, la structure des coûts, les usines et les processus de fabrication, les détails des revenus des années précédentes et les technologies utilisées par eux. De plus, le rapport élabore les stratégies clés des concurrents de Mélange de cannabis médicinal, avec leurs changements à venir dans les techniques de marketing et d’expansion commerciale. Ce rapport a utilisé les meilleures techniques d’étude de marché pour fournir les connaissances les plus récentes sur les concurrents du marché Mélange de cannabis médicinal.
Les acteurs de l’industrie répertoriés dans le rapport sont :
Aphria Inc.
Aurora Cannabis
Cannabis Science Inc.
Canopy Growth Corporation
Medical Marijuana Inc.
VIVO Cannabis Inc.
TikunOlam Ltd
Terra Tech Corp.
Tilray and Cronos Group
Harvest Health & Recreation
Green Thumb Industries
Maricann Group Inc.
TerrAscend
Aperçu de la segmentation du marché mondial Mélange de cannabis médicinal
Le rapport offre des informations clés sur les différents segments de marché présentés pour simplifier l’estimation du marché mondial Mélange de cannabis médicinal. Ces segments de marché sont basés sur plusieurs facteurs pertinents, y compris le type de produit ou les services Mélange de cannabis médicinal, les utilisateurs finaux ou les applications et les régions. Le rapport fournit également une analyse détaillée du potentiel régional détenu par le marché Mélange de cannabis médicinal, qui comprend la différence des valeurs de production et des volumes de demande, la présence d’acteurs du marché, la croissance de chaque région au cours de la période de prévision donnée.
Types de produits :
Cannabidiol (CBD)
Tétrahydrocannabinol (THC)
Applications utilisateur final :
Hôpitaux
Cliniques
Instituts de recherche
Régions géographiques :
Amérique du Nord
L’Europe
Asie-Pacifique
Amérique latine
Le Moyen-Orient et l’Afrique
Right here son...
Cannabis should of been the same as coffee and tea.
They are taxed, have quality control and sold everywhere.
Local farmers market would be ideal.
Let the bio farmer work his field and make a living.
Cannabis Act was implemented by Chief of Police Bill Blair.
It does,nt work and never will.
There will be no incentive to bust legacy when canna ounces go for 10$.
On line stores are allready selling ounces for 49$.
But it is still too pricey.
Are you aware that LP,s have been lubbying Gov. to bust legacy growers?
Putting folks in jail for a plant is not helping your share prices any...
There is some progress. Thailand lets any individual grow any amount.
LPs stock market Ponzi will eventually pop-O-la
Cannabis is not the problem here. Arresting canna growers is...
No prison for pot.
Free the weed!
MAY 13, 2022 12:00PM ET
CULTURE COUNCIL
Bonno
Content created by members is an invitation-only network of industry professionals who share their insights with our audience. What's This?
How Aligning Business Incentives With Social Impact Could Change Legal Cannabis
Cannabis businesses and their leaders can take concrete actions to align incentives with social change.
In business, incentives are often misaligned with social good. This is true in the prison and pharmaceutical industries and, now, much of the legal cannabis industry.
I’ve spent the last seven years researching terpenes. During that time, I also worked on drug policy and criminal justice reform and serve on the board of the Marijuana Policy Project. I’ve met some incredible changemakers over these years. Recently, I’ve been interviewing social entrepreneurs and advocates for my podcast. Based on this experience, I’ve outlined some common themes here.
Let’s examine what happens when injustice is incentivized and how “cannabusinesses” can align with social change.
When Injustice Is Incentivized
The $182-billion-dollar prison industry locks up 629 people per 100,000 people in the United States, according to numbers from 2017. American people are imprisoned at the highest per capita rate of 223 tracked countries.
Beginning in the 1980s, the War on Drugs and harsher sentencing laws led to the rapid expansion of the prison population. According to the ACLU, local, state and federal governments could spend anywhere between $20,000 to $50,000 per year to keep one person behind bars.
The public sector did not keep pace with prison demand. Correspondingly, this opened the door to a for-profit prison industry that makes a business of incarcerating people in privately owned state and federal prisons.
According to the Sentencing Project, between 2000 to 2016, the number of people “housed in private prisons increased five times faster than the total prison population.” Of the 1.5 million people in state and federal prisons in 2016, it found that 8.5 percent were incarcerated in private prisons.
Having interviewed a number of formerly incarcerated individuals on my podcast and researched the topic, it’s clear to me that U.S. prisons should be more closely aligned with rehabilitation and learning centers. If prisons’ incentives could be aligned with things like successful reintegration into society, lower recidivism rates and other positive prisoner outcomes, our system would be much better positioned to match the needs of our country.
Big Pharma
The U.S. is a global leader in per capita prescription drug spending. U.S. sales of the 20 top-selling drugs on the market were more than double that of the rest of the world combined. Because the development of new medicines is funded through markups protected by patents, innovation and affordability are usually not the focus of solving the biggest health problems. The pharmaceutical industry is incentivized for people to continue consuming products on an ongoing basis, rather than to cure people of illnesses.
The global cannabis market was valued at U.S. $25 billion in 2021 and is projected to reach $178.7 billion by 2030. In contrast, the global pharmaceutical market was worth an estimated $1.2 trillion in 2020. States are beginning to allow doctors to recommend cannabis to patients “for any condition they would prescribe an opioid,” according to NBC News. Despite its comparatively small size, the cannabis industry has the potential to disrupt mainstream pharma by offering alternatives to pharmaceuticals.
Inequity in Cannabis
The ACLU report, Tale of Two Countries, paints a devastating portrait of the current inequity in cannabis. The report finds that of all cannabis arrests, 89.6 percent are for possession only. In every state, Black people were significantly more likely to be arrested for cannabis possession. In some states, Black people were up to six, eight or nearly 10 times more likely to be arrested for cannabis. Legalization has not changed the trend: The report found in 31 states racial disparities in cannabis arrests were actually larger in 2018 than in 2010 despite legalization at the state level.
The U.S. cannabis industry is projected to reach $30 billion annually by 2025, yet those most hurt by the War on Drugs are still most likely to lack access to opportunities in the space. According to a 2019 report, only one in five cannabis businesses is owned by a racial minority. In most states, cannabis licenses are expensive and difficult to get. Because cannabis is still federally illegal, banking and business loans are burdensome to obtain, which disadvantages those without access to investors and capital.
Many in the cannabis space attempt to make the industry a leader in aligning business incentives with social justice, but as bigger money continues to get more and more involved, old-school incentive models are unfortunately rising to the top.
How Can Incentives Align With Social Change in Cannabis?
When looking at the prison, pharma or cannabis industries from a perspective of incentivizing social good, the statistics can seem overwhelming. While it is tempting to lose faith in the systemic enormity of the problems, there are some ways that cannabis businesses and their leaders can take concrete actions to align incentives with social change.
Tips for Entrepreneurs to Align Cannabusinesses With Social Justice
• Eliminate criminal conviction disclosure questions on employment applications.
• Practice non-discrimination in hiring practices for racial inclusion and hiring those impacted by the criminal justice system.
• Create workforce development and education for those who have been involved in the criminal justice system.
• Provide startup grants, interest-free loans and business support for cannabis entrepreneurs who have been most impacted by injustice.
• Connect beyond your business by creating strategic partnerships, sharing knowledge and skills, and participating in legislative advocacy.
Final Takeaways
Macroscopic change is needed at the policy level to address systemic causes of injustice. In the meantime, cannabis entrepreneurs can make impactful changes by aligning incentives with social justice and positive impact.
Good luck arresting your way ...
Locking up folks growing cannabis will get you nowhere fast.
90 years of persecution has proved it over and over again.
It,s simple when it comes with cannabis...
Grow fire at low cost and you are golden.
PS... want to rid of legacy & grey market?
Include them!
Check that out Todd...
Some cheap shares for you...
Matt Lamers ????
@matt_lamers
To Bonno
Aurora Cannabis has now lost $5.3 BILLION since 2015.
·
10h
Replying to
@matt_lamers
Executives and investors will use this as an example of Canada's burdensome regulatory system, but this has nothing to do with that.
This is what happens when you build a business on fantasy and hype.
Matt Lamers ????
@matt_lamers
·
10h
Aurora only sold 9,722 kgs of cannabis in Q3 2022.
To put that into perspective, in 2020 Aurora boasted a production capacity of 150,000 kgs
So they were off by a little bit.
While Aurora was losing billions of dollars and firing workers en masse, Canada's federal government was showering it with cash
Aurora received $43.1 million in taxpayer money from the CEWS boondoggle, per
@Porters6thForce
research
The $100 billion CEWS boondoggle needs a national inquiry, and as much of that money should be recouped as possible.
Reminder: The biggest cannabis LPs reached into taxpayers' pockets for hundreds of millions during pandemic while firing workers en masse
My research found 6,000 people lost jobs—roughly 1/3 of the whole industry
In the days before the quarter's financial disclosure, stock analysts were furiously slashing their expectations for Aurora's sales.
Aurora still missed.
ATB for example cut its target from $53.1 million to $51.7 million.
Aurora reported net sales of $50 million.
Aurora's Q3 net sales for the past 4 years
2018: Canada legalized cannabis
2019: $65.1 million
2020: $75.5 million
2021: $55.1 million
2022: $50.4 million
Average selling price per gram: $5.31
So much for premiumization.
During the nine months ended March 31, 2022, Aurora:
- sold its recreational production facility in Uruguay
- sold production facility in Denmark
- sold a production facility in Cremona, Alberta
- sold a production facility in Saskatchewan
- sold Aurora Sun in Alberta
During the nine months ended March 31, 2022, Aurora also sold equipment worth $200k.
Maybe the question is what's not for sale?
Aurora's recreational cannabis sales are a stunning 73% off their 2020 high.
Recreational cannabis sales in canada in Q3 for the following years:
2019: $29.5 million
2020: $38.5 million
2021: $18 million
2022: $10.3 million
On the bright side, aurora sales are falling so fast they're Excise tax payables in the quarter were only $870k, down from $4.7 million 1 year ago.
Somehow Payroll liabilities rose to $15.5 million, from $9.2 million 1 year ago.
Norton Singhavon (Nort) ????????
@nort604
·10h
Replying to
@matt_lamers
It’s crazy how hard it is for Canopy and Aurora to unwind the catastrophe that Linton and Booth had created.
How low can Bozo go Joe?
FLOWER IS KING: SALES BREAKDOWN
CALEB MCMILLANMAY 13, 2022, 13h
To bonno, please share
Flower is king in the cannabis world. It is the dominant category in every market, requiring little-to-no processing; it is often the cheapest category of cannabis. And flower is versatile. It can be smoked, vaped or used to make edibles or oil. From a business standpoint, flower is also susceptible to price fluctuations. The price of flower has been decreasing over time.
From January 2021 to March 2022, the price of flower dropped by 22% in the US and 17% in Canada. And from March 2019 to April 2022, flower market share dropped from 78.8% to 42.5% in Canada and 41% to 40.4% in the US. However, that is part of an industry-wide downward trend. Flower is king compared to the sales of pre-rolls and vape pens.
Flower is King Compared to Edibles & Vapes
Flower is king in terms of sales and market share. By total sales volume in all cannabis markets, flower comes out on top. Flower captures nearly twice as many sales as the next category.
The market share of flower has been declining since 2019. In Canada, this began in the early months of legal sales. The flower marker surged briefly during the COVID pandemic in the US but has been decreasing since early 2021. Market share in the US is now lower than pre-pandemic levels.
Per States and Provinces
flower is king
Is flower king in the legal states and provinces?
Ontario has a higher proportion of total sales in the flower category than other Canadian provinces. There is a wide distribution in the US, with Maryland and Michigan taking the top spots. Ironically, Colorado and California have the lowest proportion of total sales to the flower category.
A lot has changed in a year. Last year, Nevada held the top spot for the largest flower market share. Their share was at 56.3%; this year, it’s down to 46%. And this isn’t unique. Every flower market has seen a decline in market share since last year.
What Kind of Flower is King? Canada vs. the USA
flower is king
What kind of flower is king? Looking at Canada and the US, we see some similarities and differences. For similarities, hybrid flower is the most popular in both countries. Indica is more prevalent in Canada than sativa strains. At the same time, both indica and sativa flowers reach the same sales volume in the US.
A significant portion of sales in the US are from “popcorn” flower. A trend that has not yet caught on in Canada. Ground flower is popular in Canada but doesn’t yield a lot of sales in the US.
Pricing Flower: Canada vs. the USA
type of buyer
If flower is king, it’s because of its price. The average price per gram of flower has dropped in both the US and Canada. In Canada, the price decreased steadily throughout 2021, whereas the US saw a slight increase in prices in September.
The average price of flower in the US dropped by 22% from January 2021 to March 2022. In Canada, the flower price dropped by 17% over the same period.
Type of Buyer
customer demographics
The demographic data tells us about different consumer groups that shop for cannabis flower. Males spend proportionally more on flower than female customers. At the same time, baby boomers tend to spend the most on flower, followed by Millennials.
Generation Z customers only spent 1/3 of their potential cannabis income on flower in Canada.
Conclusion
Flower is king despite its decreasing sales. Its versatile nature will likely mean it remains the dominant category. Cannabis flower can be quickly grown and requires little to no processing. However, as customers branch out and try new products, the market share for cannabis flower may decrease even further.
California cannabis companies sell assets, narrow focus to save money
By Bonno
May 12, 2022
SHARE
California cannabis, California cannabis companies sell assets, narrow focus to save money
Vertical integration was the name of the game when California launched its recreational marijuana market in 2018, as companies handled everything from cultivation to retail sales and home delivery.
Four years later, small and large operators across the state are unloading assets, shuttering business lines and letting coveted licenses expire in order to cut costs and narrow their focus in the world’s largest marijuana market.
NorCal Cannabis Co., which is focused on building its flower brand, is among those weighing another divestiture – in its retail operations.
The company operates a retail location in Long Beach and Santa Ana, and is building stores in Santa Rosa and downtown San Francisco, near its headquarters.
“Ideally we may keep two of those,” said co-founder and CEO Jigar Patel. “We don’t look at retail as much as an outlet for us.”
NorCal Cannabis, like other big players in the market, cast a wide net after its inception in 2015, implementing a multichannel approach in an effort to capture business and scale operations across segments.
It became one of the largest delivery providers in the state, handling some 3,000 daily orders in a coverage area totaling 18 million residents.
It was also losing dollars on every delivery.
In the first quarter of 2020 when other competitors doubled down efforts amid growing consumer demand at the onset of the pandemic, NorCal Cannabis exited the delivery segment altogether, cutting partnerships and selling off assets.
The company, which has raised $60 million in funding, saw growth capital dry up, according to Patel, spurring NorCal Cannabis to focus on cultivation and brand development.
“We had to make hard decisions,” he said, but the divestitures helped management improve operations and expand the brand, which is now carried in 400 dispensaries.
“For the first time in many years, it’s given us the opportunity to focus strictly on our core business and really strategize on how to build brand in California,” Patel said. “It’s such a competitive market.”
More supply chain constraints
In 2017, Eric Sklar set out to partner with the industry’s top growers, packers, distributors and retailers.
It was a similar recipe he followed at his successful Napa Valley winery, which bought 95% of its grapes from other growers.
Reality quickly set in.
“It was impossible to go into business without being more vertical because the supply chain wasn’t mature,” said the founder of the cannabis business Napa Valley Fumé.
So the company acquired delivery, manufacturing and distribution licenses, and struck a retail partnership with San Francisco-based delivery leader Eaze to complement its outdoor cultivation operation in Lake County.
“We started five businesses at the same time,” Sklar said. “We knew that wouldn’t be forever. It just wasn’t feasible. But we had to do it or we weren’t going to be in business.”
About two years ago, Eaze acquired its retail business. Fumé now outsources all manufacturing, focusing strictly on its grow operation and brand development, much like NorCal Cannabis.
Top line revenue and margins are improving, according to Sklar. The company’s two brands are carried in about 25 California dispensaries, with plans to hit 100 by year’s end.
The strategy is focused, Sklar said.
“We have two brands, we don’t have 20 brands that we don’t own,” he added. “We’re not doing retail or manufacturing. And it’s working out really well.”
The essential resource for cannabis business leaders across all sectors provides the latest data and in-depth analysis you need to develop informed business strategies and avoid costly missteps.
Last year’s collapse of California’s wholesale cannabis market pushed Eco Farm Holdings/Thrive Society to zero in on distribution, its digital marketplace and technology development.
The Santa Rosa-based company, which also has three farms, a nursery and manufacturing licenses, won’t plant crops this year or possibly next year, if market conditions don’t improve.
It’s leased two farms and is searching for another partner on the third.
“Whenever the market kind of rolled out, the name of the game was being vertically integrated,” said co-founder Danielle Dao.
“But, you know, being as fragmented as the supply chain is, people need to very much focus on their core competency. What I call pick the lane.”
Sustained unfavorable market conditions made the decision easier for Dao, a farmer by trade.
“If the market hadn’t created such a big dive from oversupply last year, we would have kept our farms,” she said. “I was a farmer for 20 years, and I miss it very much. But the competition out there is really, really high.”
Path to profitability
It took Euphoric Life Inc. four years to get its manufacturing and distribution business operational, finally opening its doors in 2020 in Hollister, near Monterey Bay on the Central Coast.
Like others, it started developing a litany of products and launched its own brand.
Within a few months, sales eclipsed a total of $25,000.
The good run lasted four to six months before the market was flooded with competition, according to Chief Operating Officer Aiden Rafii.
“All of a sudden people started making similar products to us and just cutting the prices,” he said.
As overhead grew, so did losses, reflecting high capital startup costs, local and state taxes, and other regulatory-related expenses.
In one recent example, the fire department asked the company to remove a waste storage cage after the department requested its installation, an unplanned removal cost of about $20,000.
“It’s just nearly impossible to break into the green,” Rafii said.
Last November, when the wholesale market hit rocket bottom, Euphoric Life stopped selling its Exir brand of pre-rolls and infused pre-rolls.
Now it’s concentrating on contract packaging, white label manufacturing and contract extraction.
The company has largely exited distribution as well, outsourcing that to another service provider, saving upwards of $800 per delivery trip to Los Angeles, roughly 300 miles to the south.
Upfront costs have been lowered significantly, as the company no longer needs to purchase packages every month or commission expensive lab tests.
Euphoric Life won’t likely renew its distribution license in June, saving nearly $15,000 in annual licensing fees.
The company still faces major challenges tied to the stagnant wholesale market – it’s currently sitting on 17 kilograms (37 pounds) of extract – but senses a financial turnaround in the works.
“I think there is a path to profitability,” Rafii said. “The co-packing move has been a saving grace for us.”
CANADA’S CANNABIS CARTEL
CALEB MCMILLANMAY 12, 2022
Cannabis Life Network
To Bonno
Canada’s cannabis cartel is here. And they’ve always been here – big LPs like Tilray, Canopy and Aurora. They’re just being patient, playing the waiting game.
It may appear as if Canada has a robust craft cannabis sector. After all, there are over 800 licensed producers in this large but thinly populated country. And consumers prefer top-quality buds to subpar discounted brands.
But like with money and banks, telecommunications, oil, uranium, or even maple syrup – there is no free market. Canada is cartel country.
Legalization Hype
To understand Canada’s cannabis cartel, we have to return to 2018. To the eve of legalization. Bill C-45, the Cannabis Act, was more hype than substance.
Legalization was a public health initiative taken to keep kids safe and profits out of the hands of organized crime. No word on liberty or ownership of your body.
Nothing about the immoral and disastrous failings of the drug war. The same people who opposed cannabis all these years were now in a position to regulate its legality.
On the heels of C-45, investors rushed into the cannabis space. Some companies received billion-dollar valuations. Before cannabis was even legal, these companies were hiring thousands of employees.
Take Aurora, for example. On the eve of legalization, they had a $2-billion market cap. Aurora Cannabis began as a licensed producer under Stephen Harper’s now unconstitutional medical cannabis regulations. With recreational legalization, they were in the right place at the right time.
They sold investors with a vision of a 75,000-square-metre greenhouse called Aurora Sky. If completed, it would be the world’s largest indoor cannabis facility.
And they weren’t the only ones. Cannabis in Canada became more about investing in pipe dreams rather than the reality of Canadian cannabis. And that was precisely the point. Inflate the potential for a later payoff.
How Health Canada Regulations Created Canada’s Cannabis Cartel
Canada's Cannabis Cartel
Health Canada regulations helped create Canada’s cannabis cartel. Despite moving from medical to recreational, Canada’s cannabis regulations still demand LPs produce pharmaceutical cannabis. That is, irradiated cannabis deprived of moisture and flavour.
Then, throw in the cost of wasteful plastics and government taxes, and Health Canada’s strict zero-tolerance on marketing. And what you’ve got is a Soviet-style cannabis industry in Canada.
LPs have had to rely on THC percentages to distinguish themselves from the competition with no legal advertising. Aurora did this initially, but as other LPs and craft producers have improved their yields, Aurora’s share of the market (at the beginning of 2022) has dropped to 3 percent.
And that gets the crux of what’s happening in Canada, why Canada’s cannabis cartel is already here and just biding its time.
How It Happened
LPs began by inflating the potential of the cannabis market. Before legalization, it was apparent there wasn’t enough demand in the Canadian market alone.
That’s why exports of BC Bud to the US were routine. There was a supply gut in the underground market.
But that didn’t stop LPs from forecasting record numbers. Canada’s top LPs, like Canopy, Tilray and Aurora, indicated sales more than triple what the government was predicting. Aurora claimed it would grow a third of Canada’s cannabis. And despite the supply gut in the legacy market, Aurora kept building greenhouses.
But was it simply a mistake to overestimate the cannabis market? Was this a case of LPs getting high off their own supply?
When the first post-legalization sales earnings were made public, investors pulled out. Canadian pot stocks dropped in the spring of 2019, and Aurora reported losses of $26.6 million.
The pandemic may have led to a spike in sales, but overall the effect has been negligible. Given the industry’s original estimation of how much cannabis they expected Canadians to buy and consume.
How Canada’s Cannabis Cartel is Inevitable
You can blame the excise tax if you want to know how Canada’s cannabis cartel is forming.
The government claims its moral authority over free people and deems specific actions immoral, thus subject to taxation. If this sounds like something a secular liberal democracy shouldn’t be doing, join the club.
Nevertheless, Canada’s cannabis excise taxes take $1 per gram off wholesale flower. And that’s regardless of the production costs or the retail price. So if your wholesale price is $8 per gram, and your competitor is producing cannabis at $4 per gram, he’s essentially paying a higher tax for being more productive.
Large companies like Aurora can absorb excise taxes more than smaller craft companies. And that is how the cannabis cartel is forming. They know all they have to do is sell cannabis at a gross margin loss and wait for the craft competitors to starve. That is what is happening right now.
It may appear as if small craft growers are increasing their market share. They are, but they don’t have the volume to increase their margins. The group Stand for Craft says the only thing keeping the craft industry alive are the tax breaks and “flexibility” offered by Canada Revenue Agency.
The Canadian Cannabis LP Index has lost 88 percent of its value since legalization in 2018. Very few companies are profitable, and all the large ones are cash-flow negative.
The legacy market still accounts for 75 percent of cannabis consumed in Canada.
Canada’s Cannabis Cartel: An Inevitability?
Canada's Cannabis Cartel
Was this all on purpose? Harper’s medical LPs were in the right place at the right time. They over predicated the market size, aggressively bought competitors, and gobbled up greenhouse companies and manufacturers.
The LPs had too much capital and applied it as quickly as possible in as many sectors as possible. They came in fast, made their money, then made out like bandits.
And the result? A struggling craft industry unlikely to survive beyond this decade. Especially if the US legalizes and cross-border trade becomes a thing.
The result will be a cannabis cartel in Canada consisting of the large LPs who were able to sell at a loss while waiting out the smaller guys.
Was this the plan from the beginning? Or just an inevitable result of too much government interference in the marketplace? Another example of government regulators causing what they claim to protect consumers from?
Cannabis in Canada: A Lost Opportunity
All the government had to do was remove cannabis from the criminal code. That’s it. Canada was already the world’s top cannabis producer. All the infrastructure and knowledge existed, especially in British Columbia, where their “BC Bud” cannabis was world-renowned for its quality and potency.
All the government needed to do was legalize this $5-billion underground market.
But Health Canada’s regulations created the conditions for a cannabis cartel. Far from “protecting” consumers, all Health Canada’s rules did was increase the costs of doing business.
To become a licensed producer, individuals had to form a company. And then, this company had to build a grow facility and wait for approval before it could begin growing. Many waited over a year.
No underground BC farmer would forgo a year of production and take on unnecessary costs, including tax forms and government applications running over 1,000 pages.
Canada’s cannabis cartel was inevitable. Even if that wasn’t the regulations’ intention, that was the consequence. Legal cannabis was accessible to only those with deep pockets.
Or, as one former senior Tilray employee put it, on conditions of anonymity, “They [Tilray] weren’t selling cannabis – they were always just selling equity
Thanks for the tip happy, i was unaware that one can vote in Canada...
CANADA’S CANNABIS CARTEL
CALEB MCMILLANMAY 12, 2022
To Bonno
Canada’s cannabis cartel is here. And they’ve always been here – big LPs like Tilray, Canopy and Aurora. They’re just being patient, playing the waiting game. It may appear as if Canada has a robust craft cannabis sector. After all, there are over 800 licensed producers in this large but thinly populated country. And consumers prefer top-quality buds to subpar discounted brands.
But like with money and banks, telecommunications, oil, uranium, or even maple syrup – there is no free market. Canada is cartel country.
Legalization Hype
To understand Canada’s cannabis cartel, we have to return to 2018. To the eve of legalization. Bill C-45, the Cannabis Act, was more hype than substance.
Legalization was a public health initiative taken to keep kids safe and profits out of the hands of organized crime. No word on liberty or ownership of your body. Nothing about the immoral and disastrous failings of the drug war. The same people who opposed cannabis all these years were now in a position to regulate its legality.
On the heels of C-45, investors rushed into the cannabis space. Some companies received billion-dollar valuations. Before cannabis was even legal, these companies were hiring thousands of employees.
Take Aurora, for example. On the eve of legalization, they had a $2-billion market cap. Aurora Cannabis began as a licensed producer under Stephen Harper’s now unconstitutional medical cannabis regulations. With recreational legalization, they were in the right place at the right time.
They sold investors with a vision of a 75,000-square-metre greenhouse called Aurora Sky. If completed, it would be the world’s largest indoor cannabis facility.
And they weren’t the only ones. Cannabis in Canada became more about investing in pipe dreams rather than the reality of Canadian cannabis. And that was precisely the point. Inflate the potential for a later payoff.
How Health Canada Regulations Created Canada’s Cannabis Cartel
Canada's Cannabis Cartel
Health Canada regulations helped create Canada’s cannabis cartel. Despite moving from medical to recreational, Canada’s cannabis regulations still demand LPs produce pharmaceutical cannabis. That is, irradiated cannabis deprived of moisture and flavour. Then, throw in the cost of wasteful plastics and government taxes, and Health Canada’s strict zero-tolerance on marketing. And what you’ve got is a Soviet-style cannabis industry in Canada.
LPs have had to rely on THC percentages to distinguish themselves from the competition with no legal advertising. Aurora did this initially, but as other LPs and craft producers have improved their yields, Aurora’s share of the market (at the beginning of 2022) has dropped to 3 percent.
And that gets the crux of what’s happening in Canada, why Canada’s cannabis cartel is already here and just biding its time.
How It Happened
LPs began by inflating the potential of the cannabis market. Before legalization, it was apparent there wasn’t enough demand in the Canadian market alone. That’s why exports of BC Bud to the US were routine. There was a supply gut in the underground market.
But that didn’t stop LPs from forecasting record numbers. Canada’s top LPs, like Canopy, Tilray and Aurora, indicated sales more than triple what the government was predicting. Aurora claimed it would grow a third of Canada’s cannabis. And despite the supply gut in the legacy market, Aurora kept building greenhouses.
But was it simply a mistake to overestimate the cannabis market? Was this a case of LPs getting high off their own supply?
When the first post-legalization sales earnings were made public, investors pulled out. Canadian pot stocks dropped in the spring of 2019, and Aurora reported losses of $26.6 million.
The pandemic may have led to a spike in sales, but overall the effect has been negligible. Given the industry’s original estimation of how much cannabis they expected Canadians to buy and consume.
How Canada’s Cannabis Cartel is Inevitable
You can blame the excise tax if you want to know how Canada’s cannabis cartel is forming.
The government claims its moral authority over free people and deems specific actions immoral, thus subject to taxation. If this sounds like something a secular liberal democracy shouldn’t be doing, join the club.
Nevertheless, Canada’s cannabis excise taxes take $1 per gram off wholesale flower. And that’s regardless of the production costs or the retail price. So if your wholesale price is $8 per gram, and your competitor is producing cannabis at $4 per gram, he’s essentially paying a higher tax for being more productive.
Large companies like Aurora can absorb excise taxes more than smaller craft companies. And that is how the cannabis cartel is forming. They know all they have to do is sell cannabis at a gross margin loss and wait for the craft competitors to starve. That is what is happening right now.
It may appear as if small craft growers are increasing their market share. They are, but they don’t have the volume to increase their margins. The group Stand for Craft says the only thing keeping the craft industry alive are the tax breaks and “flexibility” offered by Canada Revenue Agency.
The Canadian Cannabis LP Index has lost 88 percent of its value since legalization in 2018. Very few companies are profitable, and all the large ones are cash-flow negative.
The legacy market still accounts for 75 percent of cannabis consumed in Canada.
Canada’s Cannabis Cartel: An Inevitability?
Canada's Cannabis Cartel
Was this all on purpose? Harper’s medical LPs were in the right place at the right time. They over predicated the market size, aggressively bought competitors, and gobbled up greenhouse companies and manufacturers.
The LPs had too much capital and applied it as quickly as possible in as many sectors as possible. They came in fast, made their money, then made out like bandits.
And the result? A struggling craft industry unlikely to survive beyond this decade. Especially if the US legalizes and cross-border trade becomes a thing.
The result will be a cannabis cartel in Canada consisting of the large LPs who were able to sell at a loss while waiting out the smaller guys.
Was this the plan from the beginning? Or just an inevitable result of too much government interference in the marketplace? Another example of government regulators causing what they claim to protect consumers from?
Cannabis in Canada: A Lost Opportunity
All the government had to do was remove cannabis from the criminal code. That’s it. Canada was already the world’s top cannabis producer. All the infrastructure and knowledge existed, especially in British Columbia, where their “BC Bud” cannabis was world-renowned for its quality and potency.
All the government needed to do was legalize this $5-billion underground market.
But Health Canada’s regulations created the conditions for a cannabis cartel. Far from “protecting” consumers, all Health Canada’s rules did was increase the costs of doing business.
To become a licensed producer, individuals had to form a company. And then, this company had to build a grow facility and wait for approval before it could begin growing. Many waited over a year.
No underground BC farmer would forgo a year of production and take on unnecessary costs, including tax forms and government applications running over 1,000 pages.
Canada’s cannabis cartel was inevitable. Even if that wasn’t the regulations’ intention, that was the consequence. Legal cannabis was accessible to only those with deep pockets.
Or, as one former senior Aurora employee put it, on conditions of anonymity, “They [Aurora] weren’t selling cannabis – they were always just selling equity
OK, now we are talking...
Thailand to give away one million free cannabis plants to households, minister says
By Bonno
Updated 4:24 AM EDT, Wed May 11, 2022
Thailand's Public Health Minister Anutin Charnvirakul.
Sakchai Lalit/AP
—
The Thai government will distribute one million free cannabis plants to households across the nation in June to mark a new rule allowing people to grow cannabis at home, its health minister has said.
Health Minister Anutin Charnvirakul announced the move in a Facebook post on May 11 in which he expressed his intention for cannabis plants to be grown like “household crops.”
The new rule, which comes into force on June 9, will allow people to grow cannabis plants at home after notifying their local government, but the plants will have to be of medical grade and used exclusively for medicinal purposes. Additionally, the cannabis cannot be used for commercial purposes without further licenses.
The move is the latest step in Thailand’s plan to promote cannabis as a cash crop. About a third of its labor force works in agriculture, according to the World Bank.
In a region notorious for harsh penalties towards illegal drugs, Thailand became the first country in Southeast Asia in 2018 to legalize cannabis for medical research and use.
NAKHON RATCHASIMA, THAILAND - MARCH 25: Thai greenhouse workers trim damaged marijuana leaves and care for plants at the greenhouse facilities at the Rak Jang farm on March 25, 2021 in Nakhon Ratchasima, Thailand. The Rak Jang farm, in Nakhon Ratchasima, Thailand, is one of the first farms that has been given permission by the Thai government to grow cannabis and sell their products to medical facilities since medical marijuana was legalized in 2019. The cannabis grown by the farm is high in CBD and sold to local hospitals for therapeutic treatments for patients with prescriptions. Thailand plans to continue to develop more cannabis products in an effort to boost the local economy and draw more customers to Thailand for medical tourism. (Photo by Lauren DeCicca/Getty Images)
Thailand gives green light to growing cannabis at home
The kingdom has also loosened local laws around cannabis. Thai drinks and cosmetics companies last year rushed to launch products with hemp and CBD, a compound that does not give users a high, after their use was approved for consumer goods.
In a further Facebook post on May 10, Anutin noted that Thai companies registered to do so could sell cannabis products that contained less than 0.2 tetrahydrocannabinol, or THC, the part of the plant responsible for getting people high.
“This will enable people and the government to generate more than 10 billion baht per year in revenue from marijuana and hemp,” Anutin wrote.
A worker inspects flowering cannabis plants at a legal marijuana facility in Thailand.
A worker inspects flowering cannabis plants at a legal marijuana facility in Thailand.
Matt Hunt/SOPA /Sipa/AP
Kitty Chopaka, a Bangkok-based cannabis entrepreneur, told CNN the law was meant to pave the way for people to use the plant in medicinal teas or soups.
“It will still be considered criminal if you don’t have a legal prescription and you have to be a patient of some form of ailment for this to work. Only then will you be able to grow cannabis at home and use it however you like.”
She added that, even though recreational use of the drug remained illegal, “smoking weed will happen, and there’s no way the [government] can stop that.”
Smart.