Since the announcement of the future entrance of cannabis, to the Canadian market, there are a lot of companies interested in it. But, only a well-grounded, effective company such as FSD Pharma (OTCPK:FSDDF) (C.HUGE)(HUGE:CNX) will have an advantage in the market, the day recreational pot becomes legal. Rather than a medical use, that would eventually end. Let’s take a look at the greatest pot company in Canada.
Back in 2014, the now Canopy Growth Corporation, that used to be known as Tweed Marijuana Inc was, established. The company acquired a Health Canada license to be able to grow marijuana for medical purposes. They used the Hershey´s chocolate Factory amenities, in Smiths Falls, Ontario, to grow their product. Weed, which is TSX stock symbol, currently delights in a market cap close to 8 billion Canadian dollars.
Health Canada licensees, which also appears on the TSX, joined Tweed in the marijuana market. Most of these companies are under the old Health Canada rules for their marijuana production. It is the only market that allows the sale of the product.
Even in tough conditions the medical marijuana licensee business, like one gram per day, would get around 12,000,000 dollars a month. The consumer common orders are expected to be around 1,200, grams per day. If this sounds a lot, it does not compare with the amount of money recreational marijuana use can obtain. Business plan writers estimate that the recreational pot would be around 300 million grams, talking about a low stage scenario.
Because Canopy and its competitors land on the market early they have a little more experience and have quite established an identity. But, because of the restrictions in the market, it doesn’t represent a great threat.
Some of the early participants operated over assumptions, causing companies to pay huge amount of money in secured facilities. How will this affect the future market, the real market? And who will end with a successful business?
Recreational marijuana was first legalized in Colorado (May of 2013) followed by Oregon and Washington. Because of the rage of the demand was high a lot of shops and dispensaries couldn’t supply the product. That stage only lasted a few months. When the fever ended, the prices stabilized. In Oregon was around $6.50 (per gram) and $6.50 in Colorado. But in the last one, the average price for the bestselling strains was around 4.27 dollars.
Statistics collected by Colorado’s government showed that approximately 80 percent of the recreational marijuana was bought by lower income quintile, while the other 20% were sold to the user population. We don’t know for sure how reliable these statics are, but they show that the recreational market is well segmented across people who like to smoke. Both, medical and recreational pot in American are rising in sales. In 2013 1.6 billion were estimated and 8 billion are estimated for 2019. This brings a very promising outlook for companies in Canada interested in investing on cannabis.
There´ve been some declines in the “flower” product (which is dried cannabis) sales. This has been attributed to the market of edibles, concentrates, and pre-rolled joints. In Colorado de sales went from 69% in Q1, 2014 to 45 in Q1 in 2018. And in Oregon went from 80% in Q4 2015 to 46 % Q1 2018.
The legalization in California would be a good example for Canada, because the market in both places are very similar and has had the medical use for the same amount of time. Sales of an estimated $339 million dollars were seen in the first two months. Because of a confusion on how does, the dispensary would sell the weed the products were notably taxed. And in Canada were a vigorous grey market for marijuana and the least enforcement of new laws.
A considered number of licenses have been issued and thousands of applications are in progress, since the verification that recreational marijuana will be legal.
A lot of small growers are looking forward to the artisanal pot market. The new craft licenses are built to welcome these types of growers into the legal system. This companies unlike FSD Pharma, which runs million plus square foot and it is the leader of the industry, are not looking forward to producing massive quantities. The production can be placed in the most solvent as well as emergent markets. And of a company invests in a certain biological segment can fit its growing operations in those segments.
Until October eighteen the legal recreational market in Canada will continue unknown. The only thing that is certain is that the medical marijuana market will be notably different.
Each province counts with a set of regulations sales and distribution. This won’t be the only matter to take into consideration. They’ll have to think as well about where to grow the stains and how to best land the product.
Companies who are able to raise the cash as FSD Pharma will start as an equal for the old cannabis companies. Huge has an advantage over the older companies because they would not be stuck at the investment process.
An enormous market share is ready to be taken. And FSD Pharma, a solid company with a lot of cash is in a great place to take over the market share.