From legacy to legal, who owns the cannabis market?

Canada legalized cannabis three years ago, but the market didn’t come out with products that most Canadian customers were familiar with. Beloved small growers and their brands failed to achieve Health Canada’s first cut, including a shortlist of former licensed producers. There has been a shift from the legacy to the legal industry, but licensees do not own the industry as the cannabis market belongs to the consumers.

Legacy cannabis – the black market – slowly closed after legalization. After regulations were in place, the shift restricted most product and brand advertising, and limited consumer connection and knowledge. Manufacturers also struggled to maintain quality at a reasonable price.

And so it became more difficult to satisfy customers, partly due to regulations. Quality aside, however, industry experts believe that the legal market is completely lacking in brands and high quality products to attract customers.

A lighter is believed to have endless marketing potential when compared to Canadian cannabis.

A brand house rolls up a piece of Big Cannabis

Old school home growers spent years looking for quality. While Canada’s legal cannabis industry has been struggling to overcome an evil bud plague for the past three years. After irradiation, the product is placed dead on the shelves and usually left to dry in monotonous, clunky cardboard cocoon containers. During a phone call, Trang Trinh, the founder of TREC Brands, agreed that the legacy market is a win while also demanding that customers matter.

I noticed that everyone was focused on funding capacity and pumping money into infrastructure, and no one was focused on selling to the end user. And what I’ve learned from working with really big customers and companies at Deloitte and from all of these transactions is that people always come first.

Book page

Raid after raid, brands fell from the free market

However, many Canadians were abandoned after decades of traditional brands were wiped out in the market three years ago, raid after raid. Industry experts agree that companies have spent millions of dollars on infrastructure that only served as a sponge for investors. Hence it is evident that the role of the legacy market continues to be suppressed rather than being adequately replaced by big cannabis.

The labels in the Canadian market are still lacking in color and information, instead they are sprinkled with exaggerated warnings. These deficiencies decouple consumers from the legal market and encourage them to fall back on the legacy, tradition, and brands and small businesses that consumers once loved.

TREC takes over Agripharm with the hope of growing in the Canadian market. In the past three months, they captured 1 percent of the dried flower market in BC, Alberta, and Ontario, which has doubled from six months earlier. They plan to integrate vertically and backwards into the Canadian market to more than double sales from current $ 10.5 million in 2021. But does their success depend on the cannabis market that really belongs to the consumers?

Keep in mind that legacy market manufacturers are known to build and immerse themselves in an independent network. In addition, this Agripharm is one-third owned by Canopy Growth. And small growers have started on and off Canopy in the past.

Is the Legacy Market a Foundation for Big Cannabis?

El Hasho, officially known as Mike Imposimato, is a well-known hash (Hashishin) producer in the market. El Hasho is a well-known figure in the hash and solvent-free cannabis extract industry. BIG (Blaise Independent Growers) was founded by El Hasho along with John Fowler and Scott Walters and processes cannabis under an agreement with Agripharm, a licensed cannabis producer. This is an example where legacy growers and processors act as keys in a market that is lacking in experience. As such, Trang agreed that Imposimato – along with other extract artists – was part of their decision.

That’s a component that inspired the transaction [with Agripharm]but the deal checks many other boxes for us as well.

Book page

The licensed manufacturer that your company plans to acquire in the coming months consists of three current owners. And yet, management and ownership details remain to be fully clarified in the transaction. Independently of this, Canopy Growth Corporation, Organa Brands and Green House Genetics jointly own Agripharm and are 35 percent owners of TREC (Trust, Respect, Ethics, and Compassion). But will vertical integrations fuel the strength of the partnership or will acquisitions encourage legacy market experts to step into their own business?

TREC will actually commercialize the products, ie we will facilitate the listing with the boards and sell them to retail partners and also get consumers to follow suit from a marketing point of view.

Book page

In order to keep customers happy, they hope to be able to rely on brand development and their new partners to produce quality products. A new report from Deloitte, HiFyre and BDSA suggests that 86% of consumers are willing to pay the premium for better products and that craft cannabis has increased 158% since 2020. However, due to regulations, making high quality cannabis requires significant effort. In addition, according to the Deloitte report, brands do not yet play a role in the market.

Another recent study has shown that consumers unknowingly make decisions based on terpene profiles. So quality is the quintessential, and the secret behind repeat customers is to find the perfect balance between THC ratio, aromatics and effects. However, terpenes are subject to many unfortunate limitations before they can reach a consumer’s taste buds. Improved product management and distribution can solve the problem of annual oxidized cannabis, except in provinces that host their spirits authority as a centralized middleman.

In early October, a cannabis retailer in Pemberton, BC, discovered that extracts made under Agripharm’s brands were – among several other products – sold out on the BC Cannabis Stores Wholesale website, the only access point for BC Stores. However, to be fair, Agripharm is located in Creemore, Ontario.

Canopy Growth Corporation (CGC, WEED). 11/17/2021.

Purchasing power, a large or small cannabis market belongs to the consumers

In any case, consumers could see more old market producers at least entering the legal market if access were more convenient for consumers. If so, a brand house might stand a chance of success compared to Canopy’s independent track record of dumping dollars. But will customers make the same transition, or will their traditions and sales be dedicated to the legacy of the free market?

Another legacy market network is currently working on the Canadian legal industry, which has overshadowed several unlicensed trademarks throughout legalization. Those familiar with El Hasho may recognize the brand house Ghost Drops.

Ultimately, stock options, while offering great opportunity, are neither traditional nor profitable in a cannabis market owned by consumers and patients. The success of any branded house depends on the craftsmanship of farmers, hashinines and extract artists. So is any brand house or distributor on the right track to preserve and express these terpenes despite a multitude of regulations and laws, or does a farm-based cannabis model fit the market better?

Let us know in the comments if you think legacy producers should be conducting legal operations or continuing to play off in the open market. And stay tuned to hear how the changes in the cannabis industry during the pandemic pale in comparison to the old market shutdown.