When Abi Roach thinks about the 20 years she spent fighting for Canada to legalize cannabis, she says pot legislation is like a clenched fist.
The analogy, which Roach first heard from a former Toronto councillor, represents the tight grip on the cannabis market that legislators held for centuries.
It meant Roach had to exploit a grey area of the law to run her popular cannabis consumption space HotBox, which opened in 2000, and its customers were accustomed to looking over their shoulders for cops before walking through the door.
Roach has been a stalwart in Canada’s cannabis industry as a longtime advocate for legalization and queen of an empire that eventually spanned 15 different businesses, including a magazine, a tour company and lines of pot accessories and apparel.
While regulations and attitudes have loosened since Canada legalized recreational cannabis five years ago, Roach said policy constraints and industry response mean there is still “a ton of room to go” before the industry reaches general acceptance.
“It’s the closed fist that slowly opens as we prove ourselves to society as being just a normal part of everyday life,” she said, as the fifth anniversary of cannabis legalization approaches on Oct. 17.
“The world isn’t exploding, the chickens aren’t going to fall from the sky, if people are consuming cannabis.
“Five years into it, you’re really seeing that cannabis is an industry that is viable.”
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The signs of that viability are everywhere. Cannabis shops dot some of the most coveted strips in Canadian real estate. Alberta- and Ontario-based giants have expanded their medical pot businesses into Europe. The domestic recreational market is valued in the billions.
Cannabis legalization has had wide-reaching effects and made its use more accessible and acceptable.
Yet the razzle-dazzle days where money was no object and sky-high demand was expected are gone, replaced by a sobering reality: legalization has fallen well short of expectations.
The biggest companies — Canopy Growth Corp., Aurora Cannabis Inc. and Tilray Brands Inc. — have shrunk their footprints, laid off thousands and grappled with balance sheets that reflect a turbulent market and a longer march to profitability than many once imagined.
Others weren’t so lucky. They sold their business at bargain prices to a bigger rival, folded or declared bankruptcy.
And Roach worries the carnage isn’t over.
“Until there’s a real regulatory reform in all of the main pain points of the industry, we’re going to continue to see companies go bankrupt … and a lot of consolidation in the market,” Roach predicted.
“It’s becoming much harder and harder, not only to raise capital to get out of trouble, but also to sell your company. I know people that were trying to sell their cannabis stores. Nobody wanted it.”
Many cannabis businesses were doomed from the start. They spent fast and furiously in anticipation of legalization, scrambled to produce the right amount of pot — first there was not enough, then too much — and discovered catering to consumers wasn’t easy.
Canadians wanted more potent products in packaging that wasn’t dull. Others couldn’t shake relationships with longtime dispensaries and dealers who could supply pot at a fraction of the price of the legal market.
Cannabis companies wanted governments and police to go after illicit sellers more aggressively, but felt authorities never put their full might behind the cause, so pot producers took an “If you can’t beat them, join them” approach.
“The only way to convince an illicit market consumer to migrate into the regulated market is to have a comparably priced product,” said Vivien Azer, a managing director and senior research analyst at TD Cowen who specializes in the cannabis sector.