Numerous hot-button issues emerged in the Canadian cannabis industry in 2023. Among the many topics we covered, we’ve compiled this summary to put these issues at your fingertips.
THC Inflation
The accuracy of THC amounts advertised on cannabis products has long been in question. The issue only grew more controversial in the past year, with Health Canada launching a new data-gathering program on cannabis markets in Canada that will include sampling and testing of both legal and illegal products, the OCS announcing a THC testing pilot project in January 2024, and industry continuing to provide their own results showing which products have the most significant variance from label claims.
Here’s some more of StratCann’s coverage of the issue in 2023:
- How the THC obsession is killing classic cultivars
- More changes needed to address inflated THC levels
- Health Canada has conducted more than two dozen inspections of cannabis producers this year for the purpose of verifying the THC level of cannabis products
- Can regulators reign in THC inflation without driving consumers to the illicit market?
- THC Testing—What it says vs What it is
- Inflated THC levels undermine cannabis industry
- Four ways to solve the potency inflation problem
- Industry mixed on new OCS THC testing program
- Lab owner calls for more oversight of cannabis testing standards
Bankruptcies, lay-offs, and closures
Bankruptcies, closures, and licence revocations have also been a common theme in 2023 as the cannabis industry experiences serious economic challenges along with broader economic challenges not only in Canada but around the globe. Here are a few of those stories as captured by StratCann.
- High taxes, regulatory fees, low margins meant the end of the road for OGEN
- BC’s Tantalus Labs lays off majority of workforce as it files for restructuring
- Dynaleo Group Services Inc. filed a Notice of Intention to Make a Proposal, as well
- New cannabis licence applications continue to come in, even as revocations increase
- Canopy Growth closing Tweed’s Smiths Falls facility, laying off 800 workers
- Sundial Cannabis announces layoffs as part of “rightsizing” efforts
- BZAM cuts more than 90 personnel as company refocusses to two production sites
- Pineapple Express ends deliveries following Fire & Flower filing for creditors’ protection
- Cronos closing cannabis fermentation facility in Winnipeg, Manitoba
Edible Extracts
Edible or ingestible extracts was also a hugely popular topic in 2023, with Health Canada beginning a long process of pushing back on an array of products in the market that they say are not compliant with federal regulations. We wrote about this so much we had to create it’s own article. You can read all about it here:
Flower still dominates
The cannabis market in Canada continued to evolve as it entered its fourth year in 2023, with new products emerging and consumer trends continuing to shift away from cannabis flower. National and provincial reports consistently show dried flower SKUs beginning to lose some market share to extracts, especially vape pens and infused pre-rolls.
In Ontario, while dried flower continues to represent the most prominent sales category, accounting for 42.7% of revenues in 2022–23 (compared to 53.9% in 2021–22), the OCS saw growth in other product categories, notably vapes and concentrates, and pre-rolls.
In BC, a similar theme plays out, with dried flower and pre-rolls combined still dominating sales, but inhalable extracts—especially infused pre-rolls (classified as an extract) and vape carts—continue to eat into their market share. Consumers are also continuing the shift to larger volume dried flower offerings, while 3.5 and 7-gram SKUs remain the most popular overall.
Nationally, we see similar figures. Headset’s data also shows the trend of flower’s dominant market share taking a hit with the growth in pre-rolls and cannabis extracts, especially vape pens and infused pre-rolls. Cannabis flower sales decreased by just under 16% in the last year (ending May 2023), while pre-roll sales increased by more than 23% in the same period.
Taxes!
- Cannabis industry disappointed by lack of tax reform in Budget 2023
- BC has brought in more than $157 million in cannabis excise tax since legalization
- Cannabis taxation’s multiplier effect
- BC cannabis company asking the provincial government for tax money back
- Cannabis Council of Canada calls for regulatory changes on fifth anniversary of legalization
- Cities in BC still asking for their share of cannabis tax
Cannabis Exports
- Data presented by Health Canada indicate cannabis exports may continue growing
- Canadian cannabis companies increasingly exploring export market
- Canadian exports—Global medical cannabis markets
- Canadian cannabis finds its way to foreign shores in more ways than one
- BC company ships 20 kg of cannabis to Jamaica
Cannabis surplus
Too much weed! While the surplus of cannabis in the market appears to finally (potenitally) have peaked, it’s still an industry wide challenge, driving prices downward.
- Canadian producers still sitting on more than 1 million kg of dried cannabis
- Wholesale cannabis prices appear to be rebounding
- Total unpackaged cannabis inventory, production space continue to decline
- The downside of too much weed
