Pot may deserve your political support, but not your financial investment. (iStock)
When the federal government privatized medical marijuana production on April 1, it unleashed a groundswell of entrepreneurial energy. There are now dozens of pot-producing startups in various stages of fundraising and operational readiness, though the number of growers licensed by Health Canada stands at just 21. Several of those are listed on the TSX Venture Exchange, including a clutch of former mining shells now dedicated to producing cannabis, and Tweed Inc., which staged a high-profile initial public offering in the spring. (There’s even a Marijuana Stocks Report website on which to follow the stocks.) Meanwhile, dispensaries have bloomed in cities, suburbs and small towns across Canada, far out of proportion to the estimated $120- to $220-million market serving 37,000 prescribed users.
Clearly this “dot-bong” mania stems from anticipation that recreational users will soon be permitted to buy cannabis and derivative products in Canada even if the federal Tories have urged everyone to banish the thought. Left to enforce this conflicted policy is Health Canada, which in November issued warning letters to almost all its licensees for advertising violations—ranging from featuring promotional photos of buds to the inclusion of catchy slogans, like “the smoke is strong with an unmistakably flowery taste.”
All this is happening around a product that already has entrenched suppliers and distribution channels, and little to no sign of growing demand. In other words, the experience for most of these upstarts will end in tears. This, of course, is not much different from any other industry that suddenly comes into being. Except pot has been an industry all along; it’s just now seeing a burst of capital and competition from would-be legitimate participants, who sense a potential advantage over black-market players. They might deserve your moral and political support, but probably not your financial investment.
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