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According to a recent Lift News article entitled ‘Cannabis may be the next trend for a desperate food industry’, Sylvain Charlebois, Professor of Agri-Food Distribution at Dalhousie University, there is a “possibility that between five and seven percent of food sold within Canada in the next 10 years will contain cannabis, including ready-to-eat, biscuits, desserts, and so on”, arguing that margins are already thin in the agri-food industry and these companies may be driven by the need to increase profits. Loblaws, for example, with its Shoppers Drug Mart chain, seems to be a logical fit, with the potential to distribute cannabis at its pharmacies if this path is taken in the not so distant future, and also infuse some of its private brands like Life, Quo and Sanis, with cannabis.
Matt Shahloub, Managing Director of Green Acre Capital, who is launching the Green Acre Capital Fund exclusively dedicated to making investments in the legal cannabis industry in Canada, the U.S. and internationally, recently reiterated Jeff Maser’s sentiments in that:
“It's not a question of if dried cannabis will become commoditized in a Canadian recreational market, but when? It's because of this, that we feel the better investment opportunities are and will continue to be in other parts of the value chain. Many people in the industry consider these to be investments in the ‘picks and shovels,’ in reference to the constant comparisons to this as the ‘green gold rush’”
It is important to note that in Canada, based upon a report released in December 2016 by task force chair and former Liberal cabinet minister Anne McLellan, it was advised that the government control market size in an effort to prevent oversupply. The report suggests limiting the number of licenses issued or limiting production by approved suppliers, which in effect, is good news for those already licensed under the medical system. Although it seems uncertain as to whether Canadian LP’s will follow the same fate as our U.S. counterparts based on the recommendation made in the report, it is an interesting trend to follow nonetheless from an investment perspective for Canadian companies with an edible product line that are doing business in the US.