The Canadian cannabis market is at the moment more stable and safer to bet on, but how long will Canada be able to keep up its supremacy in the long run?
Canada is well on its way to legalizing recreational cannabis in just a few months, and sales are due to start a few weeks after that.
With a projected market size between 5 and 9 billion USD and federal legislation in place, Canada will be a safe bet for quite a while, which isn’t something that can be said for the US.
The United States still has a very on-and-off relationship with cannabis, which mostly depends on how the federal government is feeling at the moment and which party is in office.
With the rise of Republicans in the US House and Senate we’ve also seen progressively more anti-marijuana stances, especially from the US Attorney General Jeff Sessions.
Many of the Canadian licensed producers have been in the game for quite a while now, and multiple companies have been there for more than 10 or 15 years.
With that amount of time, just about any company would be able to perfect their process of production, and that’s just what the LP’s in Canada have been doing.
Not only that, but several producers that have already made significant progress in that field have also started opening new facilities and increasing their production numbers.
By doing so, Canada and its cannabis producers have ensured a place at the top of world’s cannabis market.
According to one study, the average price of an eighth of an ounce of weed is around $27 in Canada, whereas in the US it goes up to $40.
Low prices of cannabis in Canada ensured that the black market takes a heavy loss, but they also made it very affordable to those that always needed it.
According to a cannabis publication, Wikileaf, “part of the reason cannabis is so much cheaper in Canada than the United States is there is a much longer history of legalization in Canada, and thus a larger supply of legal marijuana growers and sellers”.
Having low prices and a good product also allowed Canadian companies to create good connections and relationships with foreign investors, and not only that but partnerships with European, Australian and Asian producers as well.
So far, some of the biggest producers in Canada already started making plays and acquiring foreign companies.
This made it so that companies such as Aurora, Canopy Growth, and several others now also have a footprint in foreign countries, boosting their portfolio but also expanding their offer to the customers.
Another thing that Canadian cannabis producers will have going for them is exporting cannabis to other countries with legal programs.
Several companies have already established supply agreements with programs in Germany, Italy, Denmark, Malta and a few other countries around Europe.
How long will this last?
Well, several things have to happen in order for the US to be completely ready to overtake the market and dominate the world of cannabis, which it certainly is able to do.
Firstly, the United States federal government will have to introduce laws that will federally legalize all interactions with both medical and recreational cannabis.
By doing so, companies within the US will finally be able to start working with the companies outside of it and significantly increase their influence abroad.
Secondly, the “smart money” will have to get into cannabis stocks and be ready for the explosion when it comes.
Thirdly, and lastly, the US has enormous potential to expand its cannabis industry to unbelievable lengths.
By increasing production similarly to how Canada has done over the last 15 years the United States could control the market with good, cheap weed.
However, there are still ways to go for the United States to even become as juicy of a prospect for investors. Until that happens, which is at least another 5 to 10 years, Canada will keep up its reign and sit firmly on the weed throne.