According to a report by EY consulting released on Monday, 87 percent of Canada’s licensed cannabis producers believe the industry will consolidate over the next three years; yet 75 percent see “craft or niche players” gaining a foothold in the market. Another 75 percent anticipate the entrance of “big players from established industries” such as tobacco, pharmaceuticals, and alcohol; while another 75 percent say a legal industry will not completely wipe out the illicit cannabis market.
The survey found that 50 percent of Canada’s cannabis producers plan to invest “most heavily” in medical cannabis clinical trials. Another 37 percent indicated most of their investments would be aimed at increasing grow capacity or yield, and the same percentage said their investments would be in information technology, including automation and e-commerce. Just 25 percent said most of their investment would be in processing or extracting technology, or human capital.
Among the respondents, 75 percent indicated vertical integration was the focus of their growth strategy, while 37 percent said their focus was on large-scale production. Twenty-five percent each said their growth strategy focuses on customer service, patents, or quality.
Seventy-five percent of respondents said that customers would demand varied derivative products as legalization takes hold, while 62 percent believe customers would be more concerned about increasing accessibility, while half said customers would demand medical and safety education. Another 37 percent each said customers would demand organic or non-pesticide products, while the same number anticipated customers will become attached to brands in the coming years.
Canada’s legalized regime is expected to roll out in July.
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