With excise taxes, margins shrinking, and competition increasing both domestically and abroad, Canadian craft and micro cannabis producers are being forced to rethink what it means to survive and thrive. For many, staying profitable in today’s turbulent cannabis market isn’t about reinventing the wheel—it’s about adapting quickly and getting strategic.

“When you’re talking about what’s getting the members of our industry on the production side through to whatever these greener pastures are, it’s not so much innovation in a traditional sense. It’s more switching markets,” said Walker Patton, Chief Commercial Officer at Woody Nelson.

Patton explained that the export market has become a primary focus for many in the craft and micro category, with nearly all the companies he knows trying to get the majority of their product outside the domestic landscape. This is due to the higher prices they can get abroad as well as lower taxes.

Toby Shilito, a Medical cannabis industry Consultant in England, concurred in a recent StratCann article on the subject. Over the last year, Shilito has seen an uptick in high-quality products, especially from craft and micro growers in BC. This indicates a shift in market focus from high THC to a greater emphasis on terpenes.

There can still be profit in domestic sales 

Interestingly, Woody Nelson has taken a slightly different route. “We’ve had a lot of commercial success in the Canadian market,” Patton said. “If you go based on Headset, Woody Nelson sells more premium flower in BC and Ontario than any other premium brand in Canada.” Because of this strong domestic presence, they haven’t felt the same urgency to export, though that’s changing with their first export of 100 kg to Australia next month.

Woody Nelson also found a creative solution to its supply challenges. “Around this time last year, we didn’t have enough flower,” said Patton. “We had orders that we couldn’t fill from wholesalers like the OCS.” To bridge the gap, they began working with other premium cultivators in the Kootenays and selling that flower under the Woody Nelson label. “We’ve been doing that for the last year, and it’s going well. In Ontario, the number-one selling premium SKU right now is our 14g rotating Country Club.”

Patton emphasized the importance of staying agile in product offerings. “We’ve seen great products fall out of favour and effectively be delisted. We realize that the new product halo moves a lot of sales, and we have launched probably about 50 products in the last twelve months.”

Dylan King, Founder and CEO of Pistol & Paris, echoed the need for bold thinking, especially when it comes to high-end SKUs. “Our Hash Holes are the most premium product in Canada, in my opinion,” King said, referring to their infused pre-rolls made with full-melt live rosin and premium flower. The product’s premium feel doesn’t end with the flower—it includes a reusable 12mm glass tip and a custom cigar band.

Pistol & Paris also took a proactive approach to packaging innovation. “We were the first to come out with a black glass jar, with a see-through bottom, with a magnifying glass in it,” King said. “My supplier and I were working on the [see-through bottom] a year ago. Health Canada just changed the way we could package about three months ago, but we were dropping this regardless. We knew changes were coming to the way we could package, but I took a chance and invested.”

That approach has sometimes meant pushing boundaries. “[Health Canada] has seen some stuff on my social media and even on my website and they have warned me three or four times now,” King noted.

Beyond packaging and product innovation, many micro and craft producers are carving out new channels for growth. One notable example is the sale of clones through farmgate retail in Ontario. 

Producers like TorrCann, in partnership with Kingston Cannabis and Level Up Infusions, have started offering live cannabis clones directly to consumers. As Daniel Torres of TorrCann explained to StratCann, the project’s launch involved a careful selection of genetics, such as the Tire Fire cultivar, which was rigorously tested for pests and pathogens to ensure a viable experience for home growers. This kind of direct-to-consumer genetics play opens up new revenue and brand engagement opportunities for small-scale cultivators.

Environmental innovation is another area where craft operators are taking the lead. The Purple Bin recycling initiative, developed by Purple Hills, collects used cannabis packaging from over 1,000 retail locations across Ontario. With more than 20,000 pounds of waste diverted from landfills and repurposed, the program highlights how even resource-limited producers can drive meaningful change. 

Other brands, such as Coterie, are experimenting with biodegradable materials, opting for backyard-compostable PHA biopolymers to reduce packaging waste. These sustainability efforts may not be required by regulation, but they are building loyalty among increasingly eco-conscious consumers.

As the Canadian cannabis landscape continues to shift, micro and craft producers are showing that while scale and capital may be limited, creativity, collaboration, and courage are proving to be powerful tools for staying competitive. By adapting to market pressures through thoughtful partnerships, product reinvention, and forward-thinking environmental and retail strategies, many are not just surviving, they’re setting a new standard for resilience in the cannabis industry.

Featured image via woodnynelson.com

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