Green Rush 2.0: Canadian Marijuana Is A Growth Industry

Posted: 07/11/2016 5:48 pm EDT Updated: 07/11/2016 5:59 pm EDT



Marijuana is a growth industry, yes, I said it. Back in 2014, a "green rush" began as mainstream investors started realizing the huge profits that could be made in the cannabis business when just two states had legal sales of recreational cannabis.

Since then, many more states and districts in the U.S. have either decriminalized, legalized or made medicinal cannabis use legal. Around the world, a number of countries now have legal cannabis for medicinal purposes and/or recreational adult use. In Canada, cannabis for medicinal purposes has been legal since 2001 and we expect a recreational adult use model to be in place before the end of 2017.

With legal recreational use likely less than a year away, why haven't we yet seen a spike in share prices for Canadian cannabis stocks? A number of companies are publicly traded including Tweed and Supreme Pharmaceuticals. After opening at 20 cents in early 2015, Supreme has drifted between eight and 45 cents. Similarly, Tweed opened at $2.50 in 2014 and has been between $1.50 and $3.70 for the past year.

It could be that the market is waiting to see the outcome of the federal task force led by Anne McLellan to determine what opportunities exist for the future of cannabis in Canada. The task force is expected to present a report in November 2016 outlining the future of recreational adult use cannabis. Whether a clear picture of potential winners and losers will come from that report is uncertain, but it may give the markets some direction.

In the meantime, in the medicinal market, we are getting a clearer picture of what to expect later this year when amendments to MMPR are expected. The lead attorney in the Allard court case has stated on a number of occassions that we can likely expect a pharmacy model. This could prompt the start of "green rush 2.0" as the growing medicinal cannabis market goes mainstream in to pharmacy chains across the country. What is now a $90 million dollar a year market is expected to grow to $750 million per year by 2024

Shoppers Drug Mart was bought by Loblaws in 2014 and as the largest chain of Pharmacies will likely benefit from this new model. Rexall was bought by McKesson Corp earlier this year. Jean Coutu remains a stand alone company, publicly traded while most of the remaining Canadian Pharmacy chains are privately held.

If there is a "green rush 2.0," I would expect to see the pharmacy chains lead the way.

Well we're getting closer to the August deadline for the modifications, all speculation until they release the communications on the new program. Just hope they don't try to screw medical growers so it goes back to court again. Everything else other than home grow allowances is just noise to me. Can't see them distributing through drug stores but anything's possible.

Oh ...dont worry there...
It's already DONE!!!

But I aint sayin who's who!!!!!!...
I would not invest even with the knowledge .....inside BS crap....
No one deserves a head start in this Shit Shwag industry. No one should help these wanna be fools grow shwag pot for the Rec masses.

They started the industry for MEDICAL NEED...and now the sick can go die in the corner while we TRY and get rich quick.This aint no get rich quick deal...
The ones who have dealt with it over the last 50 years KNOW this too.

Oh and...this Moron Miss McLellan? will see it right back into the court system for a good while ...and they will continue with this REC crap while they push the sick into limbo...

watch it now!!

GroErr said:

Can't see them distributing through drug stores but anything's possible.

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I think it's very possible. If they are forced to allow home grows, those who can't or don't want to grow will need to buy and the government may give the LP's a retail outlet to sell their schwagg to prop up sales. I can see dispensaries being part of the plan...so long as they are supplied by the LP's. If dispensaries are only allowed to sell weed supplied by a government approve source, the same way booze is sold, it gives the LP's a huge instant market and a starting point for rec sales and theoretically puts a dent into the 'black market'. Pure speculation, but it certainly sounds plausible. Personally, as long as I can grow, I don't care, but I'm sure it'll piss a lot of people off. C'mon August 24!

VIANARCHRIS said:

I think it's very possible. If they are forced to allow home grows, those who can't or don't want to grow will need to buy and the government may give the LP's a retail outlet to sell their schwagg to prop up sales. I can see dispensaries being part of the plan...so long as they are supplied by the LP's. If dispensaries are only allowed to sell weed supplied by a government approve source, the same way booze is sold, it gives the LP's a huge instant market and a starting point for rec sales and theoretically puts a dent into the 'black market'. Pure speculation, but it certainly sounds plausible. Personally, as long as I can grow, I don't care, but I'm sure it'll piss a lot of people off. C'mon August 24!

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That depends on wholesale price. I can't see LP's selling at $1 per gram, they could to move all the old stock but that shit has been sitting for months. Dispensary clients would lough at that, going from fresh weed to buying weed that could be months and months old. The quality would have to be way better than current products and way cheaper for them to be ok. Also I can't see the gov allowing the price to be too low as then what happens if legalization forces the price to go 2-4X what it is after Aug 24th?

I can see them allowing store fronts and pharmacies. Now they have full control, this kills the dispensaries as the LP's have tons of stock, can keep the price down and have docs on site. Still product selection could be a factor.

Lots of guys panicking now too and weed is drooping in price pretty fast, you can get descent stuff now for $1200-1300/lb There's still a higher market driven by a dispensaries and boutique sellers. (I know people who still sell OZ's for $240+)

One thing I should mention IF the gov was to get the price of weed down to $4-5 per gram or less through dispensaries or LP store fronts and say they took down the Blackmarket we'd see some serious reproductions in small towns and over all in the retail/services market. Places like Nelson would be dead fast like interior BC towns after forestry collapsed. There would be some serious foreclosure on homes too. I'm pretty sure it would drive the housing market down a bit in the GVRD and especially in the Valley and Interior. One thing also imagine seeing an influx of unemployed people looking for work all of a sudden.

CannaReview said:

One thing also imagine seeing an influx of unemployed people looking for work all of a sudden.

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imo this factor is going to be bigger than most people imagined. Regardless of what happens anyone who's relying on selling into the BM and hasn't started planning for alternative work is going to get a rude awakening. It doesn't matter what happens further down the road as the market matures, tweaks to policies are made etc. However, at first the introduction of legalization is going to disrupt the BM at minimum and prices will take a dive to the point where anyone depending on it to pay the bills better be ready for it.

GroErr said:

imo this factor is going to be bigger than most people imagined. Regardless of what happens anyone who's relying on selling into the BM and hasn't started planning for alternative work is going to get a rude awakening. It doesn't matter what happens further down the road as the market matures, tweaks to policies are made etc. However, at first the introduction of legalization is going to disrupt the BM at minimum and prices will take a dive to the point where anyone depending on it to pay the bills better be ready for it.

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I know people that have NEVER done anything else...they're fucked! It would be nice if there was a way to go legit and continue on, but I don't see that option being available to anyone except the big players for now. Wonder what Revenue Canada is going to say if they suddenly get tax returns from 50 year olds who have never had an income before!

GroErr said:

imo this factor is going to be bigger than most people imagined. Regardless of what happens anyone who's relying on selling into the BM and hasn't started planning for alternative work is going to get a rude awakening. It doesn't matter what happens further down the road as the market matures, tweaks to policies are made etc. However, at first the introduction of legalization is going to disrupt the BM at minimum and prices will take a dive to the point where anyone depending on it to pay the bills better be ready for it.

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You will for sure see lots of foreclosures. It already happened once when prices tanked to $900 per lb. Guys who invested in several houses a year earlier and were making $1900 per LB but with several high mortgages all of a sudden had to let the homes go. Now those guys set them selves up for that and so does everyone whose income was all from growing BUT not either way even if they didn't pay income tax that money was spent on housing. food, cars entertainment and private doctors. It powers every city/town in BC and Canada.

CannaReview said:

That depends on wholesale price. I can't see LP's selling at $1 per gram, they could to move all the old stock but that shit has been sitting for months. Dispensary clients would lough at that, going from fresh weed to buying weed that could be months and months old. The quality would have to be way better than current products and way cheaper for them to be ok. Also I can't see the gov allowing the price to be too low as then what happens if legalization forces the price to go 2-4X what it is after Aug 24th?

I can see them allowing store fronts and pharmacies. Now they have full control, this kills the dispensaries as the LP's have tons of stock, can keep the price down and have docs on site. Still product selection could be a factor.

Lots of guys panicking now too and weed is drooping in price pretty fast, you can get descent stuff now for $1200-1300/lb There's still a higher market driven by a dispensaries and boutique sellers. (I know people who still sell OZ's for $240+)

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no one wants to be stuck holding a bag...
Only LP's do idiotic things like that...and they did it all to themselves to

CannaReview said:

You will for sure see lots of foreclosures. It already happened once when prices tanked to $900 per lb. Guys who invested in several houses a year earlier and were making $1900 per LB but with several high mortgages all of a sudden had to let the homes go. Now those guys set them selves up for that and so does everyone whose income was all from growing BUT not either way even if they didn't pay income tax that money was spent on housing. food, cars entertainment and private doctors. It powers every city/town in BC and Canada.

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I don't think anyone can estimate the BM economy accurately but I can tell you from personal experience in my past that it's huge. Like you mentioned too, it's part of the legit economy. Many legit businesses including my own benefited from the BM money, shit it's how I got started and floated my first business. The legit economy will take a hit but they'll reap the rewards from taxing MJ on the government end. The growers will be the one's left out in the cold per say.

The government is going to regulate this to death...the BM is going to be just fine...I like going into the dispensaries, I like hearing that what I'm looking at is locally grown...And that was in Nelson...I will not buy from a LP...ever.

WHATFG said:

the BM is going to be just fine.

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yep. adapt & thrive. theres nothing legal about the legalization Im hearing tell of.

just sounds like a future with more cops and raids. this industry is BM beginning to end. unless the gov fully relinquish all criminality, the MJ community will never settle.

The BM started to THRIVE the day our Government started collecting tax from illegally exported Hash!!!
Price more quadrupled!! ....... exports sell for 3 to 4/gree

Old times gone to be no more !

Field grows S America, island off coast of Australia, etc. Armed guards cheaper than fence, CCTV etc.
Machine harvest, process, make extracts. And, cheap labour to harvest for buds. Could make cheaper products???
I don't think LP's have the skills to produce bud for less than $10/g retail in Canada, and make a profit. IMO And it's garbage bud anyways. Bedrocan "5/g because we can" because no one wants their bunk.
Trimmers get $13/hr ??? because they can?

paying minimum wage means minimum effort.
when you go to the places that pay minimum, you can tell. they don't care. sure thee are a few go-getters but no many. if you pay better than average then you'll get better than average