{"id":3505,"date":"2023-02-15T15:46:46","date_gmt":"2023-02-15T04:46:46","guid":{"rendered":"https:\/\/www.dalgarnoinstitute.org.au\/wp_site\/cannabis-industry-cant-complete-with-continuing-illegal-markets\/"},"modified":"2025-11-10T12:45:33","modified_gmt":"2025-11-10T01:45:33","slug":"cannabis-industry-cant-complete-with-continuing-illegal-markets","status":"publish","type":"post","link":"https:\/\/www.dalgarnoinstitute.org.au\/wp_site\/cannabis-industry-cant-complete-with-continuing-illegal-markets\/","title":{"rendered":"Cannabis Industry Can’t Compete with Continuing Illegal Markets"},"content":{"rendered":"

 <\/strong>Cannabis giant to slash its workforce by 60% as the legal pot industry\u2019s recent boom goes bust amid a haze of finger-pointing<\/strong><\/span><\/p>\n

February 10, 2023<\/p>\n

Canopy Growth, backed by Corona beermaker Constellation Brands<\/a> Inc., will close major operations and cut 60% of its jobs as it says Canada\u2019s marijuana industry has failed to meet expectations due to competition from a thriving black market.<\/strong><\/p>\n

The scaling back of Canada\u2019s second-largest pot producer is the second restructuring in less than 12 months. Together with job cuts announced in April, Canopy estimates it can save as much as C$310 million ($230 million) and be profitable, helping it become the right size for Canada, and enter the US<\/a> through Canopy USA. On a conference call, Chief Executive Officer David Klein cited Canada\u2019s thriving illicit market for revenue declines. <\/p>\n

\u201cToday, there are two very different cannabis markets in Canada. One that\u2019s legal, highly taxed and regulated, and one that\u2019s thriving and illicit,\u201d<\/em><\/strong> he said, estimating that the black market represents about 40% of Canada\u2019s overall cannabis sales. That has meant that the $7 billion marijuana market that was supposed to materialize in Canada hasn\u2019t come to fruition, Klein said, and forces companies like his to try to compete on price with illegal operators who don\u2019t have to pay taxes.<\/p>\n

\"CannabisInsdustryFlames\"<\/p>\n

Canopy Growth, backed by Corona beermaker Constellation Brands<\/a> Inc., will close major operations and cut 60% of its jobs as it says Canada\u2019s marijuana industry has failed to meet expectations due to competition from a thriving black market.<\/strong><\/p>\n

The scaling back of Canada\u2019s second-largest pot producer is the second restructuring in less than 12 months. Together with job cuts announced in April, Canopy estimates it can save as much as C$310 million ($230 million) and be profitable, helping it become the right size for Canada, and enter the US<\/a> through Canopy USA. On a conference call, Chief Executive Officer David Klein cited Canada\u2019s thriving illicit market for revenue declines. <\/p>\n

\u201cToday, there are two very different cannabis markets in Canada. One that\u2019s legal, highly taxed and regulated, and one that\u2019s thriving and illicit,\u201d<\/em><\/strong> he said, estimating that the black market represents about 40% of Canada\u2019s overall cannabis sales.<\/strong> That has meant that the $7 billion marijuana market that was supposed to materialize in Canada hasn\u2019t come to fruition, Klein said, and forces companies like his to try to compete on price with illegal operators who don\u2019t have to pay taxes.<\/p>\n

Shares fell as much as 18% in Thursday trading.  <\/p>\n

It\u2019s a massive shakeup for a business that was once the standard-bearer for Canada\u2019s pot sector after Prime Minister Justin Trudeau\u2019s government legalized the use of recreational marijuana in 2018. That same year, Constellation, the marketer of Corona beer and Robert Mondavi wines, struck a multibillion-dollar deal<\/a> that gave it a 38% stake in the cannabis firm.<\/p>\n

Canopy\u2019s complaints about competition from the black market echo those made in California <\/a>and other US states, as the marijuana industry lobbies for tax cuts, the ability to open more locations<\/a> and other regulations that could favor it<\/a>.<\/p>\n

Canopy was Canada\u2019s most valuable marijuana company \u2014 now it\u2019s second to Tilray Inc. \u2014 and at one point its stock-market value rose to nearly $20 billion. But business results have fallen far short of expectations and it has never been able to fully realize Constellation\u2019s high hopes for pot-infused beverages. <\/p>\n

For complete story  The legal pot industry’s recent boom goes bust | Fortune<\/a><\/p>\n

(So, now what will the Government do? Cut taxes to give the industry a boost? If so, then the already scarce revenues being consumed by compliance, bureaucracy, enforcement of regulations, the continuing policing of the on going illicit market, and the growing health and mental health costs \u2013 are going to be reduced even more. Hmmm? So much for the cornucopia of cannabis!<\/em> \u2013 Dalgarno Institute)<\/p>\n

Also See<\/p>\n