Canadian CANNAINVESTOR Magazine April / May 2018 | Page 62

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Cannabis will be commoditized – just look at Oregon!

A convenient position to pick and choose which jurisdiction to use to make one’s point. This has also been the experience in Washington and Colorado yet there are successful producers in these states with growing revenues. States such as Nevada and California do not appear to be sharing that experience at this time.

What we do know about Canada is that recent information shows an approved legal supply of 300,000kg and the estimated Canadian demand for 2018 that includes recreational legalization is over 1,000,000 kg. This is a 700,000 kg shortfall.

In April 2017, there were 41 Licensed Producers and on April 20, 2018 there were 102. Of those 41 LPs as at April 2017, only a few were not granted licenses. Of the 60 Licenses awarded since April 2017, only eight have been awarded sales and of those the majority have been recently. The supply shortage in the short run is real.

Part of this argument is that the commoditization will financially harm LPs and not the Black Market. Those making this argument are the same ones who also state that the legal industry cannot compete on price with the Black Market. Therefore, if commoditization occurs then it necessary does affect the Black Market. There are punitive measures under consideration at the Federal and Provincial levels include prison time and fines potentially in the tens and hundreds of thousand of dollars. The cost of black market participation combined with lower revenues (according to the supposition that the price will fall dramatically) could be a incentive for many to exit the black market supply and distribution.