It’s time for Cannabis 2.0 in Canada.
Canada’s foray into legal cannabis last year was intentionally slow, methodical and tempered. The forms of recreational cannabis were limited to dry flower (or bud), tinctures and capsules.
Canada is marking its one-year anniversary of legal weed by way of a product upgrade.
Health Canada, the governing body overseeing and regulating cannabis sales, on Thursday will start accepting applications from companies seeking to produce cannabis-derived goods such as edibles, beverages and vaping products.
The planned enhancement is projected to be a billion-dollar boon for Canada’s burgeoning cannabis businesses. But, staying true to methodical form, it’s going to take some time before cannabis-infused beverages and gummies appear on store shelves.
The products are not permitted for sale until at least 60 days after the application is submitted so the necessary inspections and approvals can be conducted.
“It’s important to ensure that expectations are in line,” said Bethany Gomez, managing director of the Brightfield Group, a market research firm specializing in the cannabis industry. “The rollout is always a lot slower than people are expecting it to be …we’re not going to see the market change overnight – even 60 days from [today].”
Canada’s launch of legal cannabis last year came with plenty of fanfare and bullish expectations for operators in the space.
Instead, it was a sobering experience for many companies – especially the highly valued publicly traded operators – whose financial statements and stocks took hits as markets were slow to develop and the limited product offerings weren’t attractive enough to pull consumers away from the illicit market.
With more products in the regulated market, the Brightfield Group now projects Canada’s cannabis industry to total $3.7 billion by the end of 2020, more than double the $1.6 billion in 2019. Sales of “derivatives” – including edibles, vapes and topicals – are expected to account for $900 million of sales next year, Gomez said.
The biggest question mark will be consumer demand for vaping products amid the concerns surrounding the recent lung illnesses in the US, where suspicion has fallen on black market THC vaping products.
A Health Canada spokesperson told CNN Business that the new products regulations include regulatory controls for production practices, product formulation restrictions, quality standards for ingredients and testing requirements. The amended regulations also restrict ingredients in vaping products and will not allow sugars, sweeteners or sweetening agents.
“It will be prohibited for cannabis extracts, including cannabis vaping products, to contain anything that may cause injury to the health of the user when the cannabis product is used as intended or in a reasonably foreseeable way,” said Tammy Jarbeau, a Health Canada spokesperson.
Said Brightfield Group’s Gomez, “many of these Canadian [licensed producers] were focusing on vapes to start out with. That may severely dampen the potential of the Canadian market once again.”