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7 Things To Expect in 2019 in the Canadian Cannabis Industry

2018 was one for the history books no doubt. However, the industry is still young and developing and there is going to be a lot happening both domestically and internationally in 2019 and beyond. Here are 7 things I am expecting to see in 2019.

1.    More Consolidation Among LPs

Days before Christmas, Aleafia Health Inc.and Emblem Corp. announced that Aleafia would be acquiring Emblem in an allstock deal worth $173 million.  As theindustry continues to mature, expect more consolidation amongst LPs, for avariety of reasons, in 2019.

2.    Supply and Demand to Balance

Despite Health Canada’s efforts to ramp up licensing of cultivators prior to legalization, supply vastly outstripped demand once the clock struck midnight on October 17, 2018.  In response, Alberta announced a freeze on the granting of retail sales licenses and Ontario went from permitting unlimited licenses come Spring of 2019 to handing out only 25 province-wide to start.  Expect supply to catch up in 2019 as even more cultivators come online, along with the addition of micro-cultivators and a supply boost from existing cultivators who either bring additional square footage online, or simply become more efficient and experienced at growing.

3.    Ontario Retail to be Booming

In December the provincial government announced that only 25 licenses would initially be made available and that they would be awarded via a lottery system.  When Saskatchewan, a province with a population of 1.2 million people, conducted its retail lottery, it received approximately 1,350 submissions for 51 permits.  Expect the numbers from Ontario, with a population of 14.2 million, to be mind boggling.  As supply concerns ease as the year moves on, expect more licenses to be granted and the start of a thriving retail industry to be well underway by the end of the year.

4.    Race for New Products

Edibles, topical and concentrates; the Government of Canada dropped the draft regulations for these products just before Christmas.  All of them will be legal by the middle of October, 2019, at the latest.  Experience in other jurisdictions tell us that these products will be exceptionally popular, and profitable.  Expect to see licensed processors jockeying for position in this lucrative market segment.

5.    International Expansion

Legalization of cannabis for medical purposeshas been a phenomenon that started sweeping across the entire globe in2018.  At a Federal level, cannabisremains illegal in the United States, prohibiting American companies fromexpanding internationally.  Canadiancompanies have been taking advantage, spreading their reach into multiplecontinents.  The legalization of hemp inthe United States at the end of 2018 feels like a harbinger of things to comefor cannabis.  Expect Canadian companiesto continue to push to take advantage of their head start before the Americansare able to jump into the race.

6.    Brands Emerge More Prominently

Deciding what cannabis to purchasepost-legalization has been a difficult decision for many sincelegalization.  Heavy restrictions onpromotion as well as the imposition of plain packaging can leave consumersscratching their heads.  However, in 2019expect certain brands to emerge more prominently over others, whether thatoccurs through creative promotion, word of mouth, or otherwise.

7.    Bill Blair to Put His Stamp on His Role

Bill Blair, the former Chief of the Toronto Police Service and aprominent figure in the Liberal Party behind the legalization process, was appointedas the Minster responsible for administering the Cannabis Act in late November, 2018.  The CannabisAct and its regulations provide room for interpretation in many instancesand there is also a level of built-in discretion in how the law can be administered.  Expect Bill Blair to show Canadians how thegovernment intends to administer the CannabisAct as the dust on legalization settles in 2019.

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