The Financial Post reports in its Friday, May 10, edition that many Canadian licensed producers may never achieve profitability and eventually lose ground to their American peers because of oversupply and onerous marketing restrictions.
The Post's Vanmala Subramaniam writes that Medreleaf (now owned by Aurora Cannabis) former chief financial officer Igo Gimelshtein says: "There are 150 companies, millions of square feet of greenhouse space presumably coming online in the next three to five years, and just 35 million people. This is going to turn into the microbrewery business where no one makes any money." Mr.
Gimelshtein says he was eager to sell Medreleaf last year because he believes an oversupply situation will be forthcoming in the next few years.
He says: "We thought the situation in Canada was getting ridiculous, the valuations were crazy. If you could brand your products the way you can in the U.S. it could create strong pricing and differentiated margins, but you can't do that here." The Post says it is a grim view of an industry that has achieved stratospheric valuations over the past two years due largely to the belief that Canadian cannabis companies would carve out a first-mover advantage globally.
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