Planning For Cannabis 2.0: How LPs Are Adapting To The Quickly Changing Canadian Market

With total legalization in effect for only six months, the Canadian cannabis industry remains a tempest in a teapot. 

Speaking Wednesday to the Benzinga Cannabis Capital Conference in Toronto, 420 Investor author Alan Brochstein moderated a panel of representatives from some of the leading cannabis suppliers serving the Canadian market discussing how their companies have so far approached finding a share of the still-nascent industry.

"You’re about to meet four of the OGs," Brochstein said. "All of these companies have been around since 2013 or earlier."

Scaling Supply To Demand

One of the major choke points affecting the Canadian market is meeting demand. The consensus among the panel is that the supply issue is at least partly a matter of scaling production to what is now a fully legal industry in a country of more than 37 million people.

Scott Walters, VP of corporate development with The Supreme Cannabis Co. Inc. SPRWF, characterized the shift after the Oct. 17 legalization.

"After celebrating Oct. 17, not 5 minutes later, the entire executive team was planning for cannabis 2.0."

Ray Gracewood, chief commercial officer for OrganiGram Holdings Inc OGRMF, outlined his company's concerted efforts to ramp up production.

"We are in the middle of working on expanding 36,000 kilograms of product to 100,000 kilograms, tripling our production."

Allan Rewak, vice president of communication at Emerald Health Therapeutics Inc. EMHTF, said getting product to stores is a critical component of the newly legal industry.

"We’ve seen in the markets that, with a decent retail supply, more than 80 percent [of sales] are done in brick-and-mortar," said Rewak.

Marc Lakmaaker, vice president of investor relations at Aurora Cannabis Inc. ACB, had a similar appraisal, touting Aurora's own rapidly expanding production. He emphasized the critical role logistics will play in getting product to consumers.

"Getting from harvest to shelf, it's a matter of getting logistics in order, working through an entire supply chain. We're doing well in that."

The Importance Of Customer Experience 

Beyond bringing product to consumers, Canadian cannabis companies are establishing their brands and market presence. Building brand awareness ensures that consumers will buy again, but it also means brands have the opportunity to become synonymous with the overall cannabis market.

Supreme Cannabis' Walters said that's why he is firm on communicating and maintaining the company's high standard of quality, particularly at the point of sale.

"We do a lot in our provincial stores with educating the budtender in communicating to the client what the product will do for them and making sure we are very clear about the products we are selling."

The panel was in accord on how critical these consumer experiences are. Those, more than advertising, will determine a brand's success.

"Consumers are still learning about brands, whether through online or in a brick-and-mortar store," Emerald Health's Rewak said. "We need to focus on providing a good, high-quality supply and let that discovery happen."

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Emerald Health's Allan Rewak, left, The Supreme Cannabis Co.'s Scott Walters and OrganiGram's Ray Gracewood discuss the Canadian cannabis market Wednesday during the Benzinga Cannabis Capital Conference in Toronto. Photo by Juil Yoon.