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Economy

10 Oct 2021

Canada’s Cannabis Farms Struggle as Market Mellows

The Index Today

Marijuana companies in Canada had a head start over American firms after the government announced full legalization. However, after the U.S began legalizing marijuana, competition grew fierce and created more risk for Cannabis businesses.

Cannabis stocks have been on a decline since the democratic proposals to legalize the sale and use of marijuana throughout the nation. The ongoing lockdowns and closed borders also hit marijuana sales in Canada as businesses were not able to meet the booming demands.

After the Democrats took control earlier this year, Canopy Growth, one of Canada’s most valuable firm in the industry fell by two-thirds whereas Cronos Group declined by more than half. The booming cannabis industry is looking to expand its operations and sales across borders as research has shown the untapped market is five times larger than Canada’s.

Canadians are legally not allowed to buy American cannabis firms but can seek other options such as bonds. For example, Canopy has acquired placeholder agreements with American growers. On the other hand, the cannabis industry in Canada is getting more competitive and is pushing to overproduction. Reports reveal indoor cultivation covers around 18.7 million square feet which can supply 200% of the demand in the nation. Companies are now struggling to keep their market share and remain profitable.

©Photo: Chris Wattie/Reuters

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