An expert in the cannabis trade industry says the closure of five Canopy Growth facilities in Canada, including in St. John’s, is the latest step in the evolution of the legal cannabis industry.
Brad Poulos, an instructor at Ryerson University’s School of Business Management, told the St. John’s Morning Show on Thursday that often when industries are created more suppliers than necessary enter the market.“It’s kind of what happened with the cannabis industry, so now what we’re seeing is the natural upheaval that comes after that,” he said.
Canopy said on Wednesday it would be shutting down operations in several provinces, including its facility in St. John’s, which had yet to open. The company also closed operations in Edmonton, Fredericton and Bowmanville, Ontario.
The company said the closure of the facilities was part of efforts to improve its margins and accelerate its “path to profitability.”
As a result, 220 people across Canada are unemployed.
Poulos said he was not surprised by the announcement. It can be difficult to make a profit on legal cannabis in Canada, he said.
“The problem is, there’s so much overcapacity, and that’s what Canopy is facing here,” he said. “They themselves, as well as the industry as a whole, just have an overcapacity problem. So big players like Canopy and Aurora are streamlining their operations.
“At the time of legalization in 2018, the sector was already overloaded.
Poulos said the COVID-19 pandemic created a boom in cannabis sales and was not a factor in the closings.
“We can speculate on the reasons, but it is not because of COVID that Canopy is closing these facilities,” he said. “Although they are a big player and have a reasonable market share in this industry, they don’t need these facilities to meet what they think is their own internal demand. ”
Province “stacked the game” on local producers, entrepreneur says
Bond Rideout, a cannabis businessman hoping to grow produce in Fair Haven on the south coast of Newfoundland, said he was opposed to the idea of Canopy coming straight out.
“I have to say I saw it coming three years ago.… The writing was on the wall,” Rideout said. CBC Newfoundland Morning.
“When you look at a business like Canopy Growth, their primary focus is recreational marijuana. It is present in larger markets such as Toronto, Montreal, Vancouver. These are the main distribution centers. There was no need for them to come here in the first, when they could have had an outlet built here and just shipped. ”
Rideout said the province’s deal with Canopy is affecting the ability of growers in Newfoundland and Labrador to grow cannabis, which he hopes he can resume soon.
“He was stacking the game against local producers,” he said. “It took away the legitimacy of these local producers, in my opinion.… When they give that support and that legitimacy to someone from afar to come in, it says a lot about how they feel about their own people. ”
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