2018 was one for the history books no doubt. However, the industry is still young and developing and there is going to be a lot happening both domestically and internationally in 2019 and beyond. Here are 7 things I am expecting to see in 2019.
1. More Consolidation Among LPs
Days before Christmas, Aleafia Health Inc. and Emblem Corp. announced that Aleafia would be acquiring Emblem in an all stock deal worth $173 million. As the industry continues to mature, expect more consolidation amongst LPs, for a variety of reasons, in 2019.
2. Supply and Demand to Balance
Despite Health Canada’s efforts to ramp up licensing of cultivators prior to legalization, supply vastly outstripped demand once the clock struck midnight on October 17, 2018. In response, Alberta announced a freeze on the granting of retail sales licenses and Ontario went from permitting unlimited licenses come Spring of 2019 to handing out only 25 province-wide to start. Expect supply to catch up in 2019 as even more cultivators come online, along with the addition of micro-cultivators and a supply boost from existing cultivators who either bring additional square footage online, or simply become more efficient and experienced at growing.
3. Ontario Retail to be Booming
In December the provincial government announced that only 25 licenses would initially be made available and that they would be awarded via a lottery system. When Saskatchewan, a province with a population of 1.2 million people, conducted its retail lottery, it received approximately 1,350 submissions for 51 permits. Expect the numbers from Ontario, with a population of 14.2 million, to be mind boggling. As supply concerns ease as the year moves on, expect more licenses to be granted and the start of a thriving retail industry to be well underway by the end of the year.
4. Race for New Products
Edibles, topical and concentrates; the Government of Canada dropped the draft regulations for these products just before Christmas. All of them will be legal by the middle of October, 2019, at the latest. Experience in other jurisdictions tell us that these products will be exceptionally popular, and profitable. Expect to see licensed processors jockeying for position in this lucrative market segment.
5. International Expansion
Legalization of cannabis for medical purposes has been a phenomenon that started sweeping across the entire globe in 2018. At a Federal level, cannabis remains illegal in the United States, prohibiting American companies from expanding internationally. Canadian companies have been taking advantage, spreading their reach into multiple continents. The legalization of hemp in the United States at the end of 2018 feels like a harbinger of things to come for cannabis. Expect Canadian companies to continue to push to take advantage of their head start before the Americans are able to jump into the race.
6. Brands Emerge More Prominently
Deciding what cannabis to purchase post-legalization has been a difficult decision for many since legalization. Heavy restrictions on promotion as well as the imposition of plain packaging can leave consumers scratching their heads. However, in 2019 expect certain brands to emerge more prominently over others, whether that occurs through creative promotion, word of mouth, or otherwise.
7. Bill Blair to Put His Stamp on His Role
Bill Blair, the former Chief of the Toronto Police Service and a prominent figure in the Liberal Party behind the legalization process, was appointed as the Minster responsible for administering the Cannabis Act in late November, 2018. The Cannabis Act and its regulations provide room for interpretation in many instances and there is also a level of built-in discretion in how the law can be administered. Expect Bill Blair to show Canadians how the government intends to administer the Cannabis Act as the dust on legalization settles in 2019.