Canadian Cannabis Companies Focused on Scaling Up to Meet Anticipated Post-legalization Demand

By:
EY: Scaling Up in Canada

Producers recognize the need to invest in innovation and talent to be competitive

TORONTO, Ont., Nov. 20, 2017 /Weed Wire/ — Thirty-seven percent of Canadian licensed cannabis producers are focusing on scaling up capacity and production to meet anticipated post-legalization demand, according to a new Canadian EY cannabis study of licensed producers.

“Limited access to capital and an uncertain regulatory environment is impeding Canadian cannabis companies’ ability to make long-term strategic investments,” says Monica Chadha, EY Canada’s National Cannabis Leader. “Many companies are currently allocating available capital towards increasing scale of production, but recognize that there’s an opportunity to shift some of that investment towards technology and innovation in order to build a competitive advantage.”

The report, How do you define your future in an undefined market?, outlines how survey respondents see established industries – such as tobacco, pharmaceuticals and alcohol – as well-positioned to enter the cannabis market due to their strong ties to capital, mature infrastructure, brand recognition and knowledge of operating in a regulated environment.

Survey respondents recognize further investment in human capital, and technology and innovation will be crucial moving forward. In fact, 37% say they will be investing in technology to drive a competitive advantage and allow for differentiation in the market.

For 85% of licensed producers, technology or innovation means creating new products or derivatives. This is complementary to the 75% who believe the demand for varied derivative products will increase in the coming years.

Survey results show investment in talent is lacking the most. Only one-quarter realize that the composition of talent in areas of the recreational business – including retail, corporate compliance, governance and branding – will need to improve in order to operate effectively.

“As the industry matures and regulatory frameworks become clearer, investments in human capital and innovative technologies need to occur, in conjunction with production,” says Chadha. “A focus on innovation will ultimately lead to lower costs, heightened product quality and/or productivity enhancements. Cannabis companies who fail do to so, risk losing market share to bigger players.”

Read the EY How do you define your future in an undefined market? study for key insights on Canada’s cannabis industry.

About EY

EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY is proudly celebrating 150 years in Canada. For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.

EY refers to the global organization and may refer to one or more of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

For further information:

Victoria McQueen
victoria.mcqueen@ca.ey.com
416 943 3141

Matt O’Connor
matthew.oconnor@ca.ey.com
403 206 5675

Camille Lariviere
camille.lariviere@ca.ey.com
514 879 8021

Weed Wire disseminates press releases from companies and organizations in the legal marijuana industry. Email weedwire@mjic.com to have your press release added.

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