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Louis. Kyron, CPA, CGA
@Louis. Kyron
Louis. Kyron, CPA, CGA
@LouisKyron
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Bill C-45 will likely become law on or before June 7, 2018. Depending on what changes are made to it (capping THC for example), prohibition could end as early as September. Some others expect it to be early 2019 to best prepare all stakeholders to be as ready as possible. Do you remember what others said back in 2016 about when prohibition in Canada would end? Most said April 20, 2017 and that edibles would be included but if not April 20th then the summer of 2017. I was less than popular I admit when I wrote in our USA edition back in 2016 that an adult legal recreational market in some form will be much later than early 2017 with late 2018 to mid-2019 being probable. Fast forward and here we are looking at the last few months of 2018 or early 2019 and mid-2019 for edibles and beverages. That is the ecosystem view because it would take years (not months) to effectively transform the landscape. Now think of ecosystems and foreshocks and look at the pattern of the graph above depicting the last few months. My imagination has me seeing the ocean tide … and with each “foreshock” the tide retreats further… it returns (the increases) but then retreats and does so further out. That is the overall downward trend that you see broken up by periodic upward ticks. When legalization comes … it could be the index (ROI) equivalency to a Tsunami and that may be a major Ecoforming event or perhaps a long slow rise.
Only time will tell if this bearish sentiment persists OR if there will be a slow and steady prolonged period of growth (the tide slowly returning and rising) or the “Tsunami”. But keep in mind always what we alerted you to in a recent article and that is ‘supply and demand’. There are no issues of over supply forecasted for the first couple of years but eventually supply is projected to surpass domestic demand. A lot can happen to reduce the impact of any oversupply situation – international markets supplied from domestic production; increased domestic demand by tourism; a customer growth rate above projections and this could happen when edibles and beverages are allowed; conversion of alcohol consumption to cannabis; etc. We have discussed these previously and you likely have seen others subsequently discussing these same demand forces. Please see our case studies this month as we repeat some of these concepts.