Canadians have lost more than $131 billion investing in cannabis companies: assertive

Canadians investing in cannabis companies have lost more than $131 billion, according to data compiled by the law firm Miller Thomson, which tallied the total losses of 183 publicly traded and licensed cannabis producers.

It is a staggering number that broken down per capita would equate to every Canadian citizen losing about $43,000.

Larry Ellis, an attorney at the firm, told CTV National News that he "doesn't know many Canadian investors who can afford to lose $40,000 individually."

From the rocky times to large swaths of an industry now on fire, the lost money is just one example of the state of the Canadian cannabis industry today. Many now point the finger at the federal government's launch of legalization, while noting that the black market is thriving.

Levon Kostanyan thought he had found the perfect location for his retail cannabis shop on a busy pedestrian street in downtown Toronto. He opened his doors in September 2021. Twelve months later he was forced to close them.

Kostanyan said he had three more years on his lease. With $6,000 a month in rent, he admits that "bankruptcy may be the only way out of here." He spent nearly $300,000 on his retail stores, with his family lending him most of the money.

“License cost me $10,000 for this location. Then I did all the renovations, about $150,000. Then I have the rent and operating costs, which are $60,000. Then I have $50,000 in inventory. So, we've reached $280,000, and that's not including wages for employees and extras like that," Kostanyan told CTV National News.

When he chose his location, there was a black market marijuana store two doors down from his own, but he figured it would close quickly or the government would adjust their laws to allow him to compete with the unregulated shops that continued to offer a great deal. edible product stronger.

But that never happened.

“From my point of view, I did everything. I apply for all licenses; I do everything. Why should I go bankrupt?” Kostanyan asked.

The shop next door sees a steady stream of customers and is able to sell cannabis products free from government regulations and taxes.

“They did nothing to shut it down. At this time, there was no point in opening a shop. I mean, there's too much competition. The margins are very low,” added Kostanyan.

Today in Toronto, there are more cannabis shops than Tim Hortons.

Ellis' company has helped dozens of cannabis companies reorganize their businesses as they struggle to stay afloat.

"This is an industry created by the Canadian government and frankly set up to fail." said Ellis.

CTV National News gains access to an unregulated 10,000 square foot estate in southern Ontario. We were taken on a tour inside where around 1,600 plants are in various stages of growth. Every few months a crop is harvested and a new one is planted.

Paul Maris refers to the space as a cooperative medical marijuana facility and claims that, “the interest that comes out of this medical environment is no different than what comes out of a licensed facility. The only governance required to reach any consumer shelf in the retail market is a certificate of analysis.”

Maris said thousands of plants were allowed to be grown in the sprawling operation using a medical marijuana license issued to just four people by the federal government. He said cannabis at the facility is shared with drug users who pay only a quarter of the price to grow their plants here instead of buying the product from a licensed manufacturer or retailer.

However, there is a shared concern that the quantity of cannabis grown under medical licenses in some facilities is paving its way to an unregulated market.

“When you look at the volumes these various [medical] growers are producing, it's a good instinct to think it's going to happen elsewhere,” says Ellis.

Maris disagreed.

“I don't know about this black market you are talking about. I know there are medical patients who are supported by a cooperative like this,” he said.

Maris admitted that he had been growing cannabis for more than two decades, well before legalization, and had a criminal record as a result.

“I had to go and serve time conspiring to trade cannabis, and that has prevented me from owning more than 10 percent of the cannabis business,” he said.

Maris believes it is individuals like herself who have the knowledge to help make Canada's cannabis market viable for the future, and she is calling on the federal and provincial governments to relax their restrictions on who can participate in "the country's so-called legal system." ”

Currently, a long overdue review of the Canadian Marijuana Act is underway. The federal government claims part of their focus is to grow a "diverse and competitive legal industry made up of both small and large players to replace the black market."

Though for Kostanyan and so many other small retail business owners, any legislative change to the Marijuana Act is too late. Hundreds of independent retail stores are expected to close across the country this year.

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