By Adrien Ghobrial
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Toronto (CTV Network) – Canadians who have invested in cannabis companies have lost more than $131 billion, according to data collected by law firm Miller Thomson, which calculated the total losses of 183 listed cannabis producers. listed and licensed.
This is a staggering figure which, if broken down on a per capita basis, would equate to a loss of approximately $43,000 per Canadian citizen.
Larry Ellis, a lawyer for the firm, told CTV National News that he “doesn’t know many Canadian investors who can afford to lose $40,000 individually.”
From highlights to large swaths of an industry that is now going up in smoke, the money lost is just one example of the current state of the Canadian cannabis industry. Many now point to the federal government‘s rollout of legalization, while noting that the black market is booming.
Levon Kostanyan thought he had found the perfect spot for his cannabis retail store on a busy pedestrian street in downtown Toronto. It opened in September 2021. Twelve months later it was forced to close.
Kostanyan says he still has three years left on his lease. With rent at $6,000 a month, he admits “bankruptcy may be the only way out of here.” He spent nearly $300,000 on his retail store, with his family lending him most of the money.
“The license cost me $10,000 for this location. Then I got all my renovations, it was about $150,000. Then I got the rent and running costs, it’s $60,000. Then I had an inventory of $50,000. So we’re already at $280,000, and that’s not including employee payroll and overhead like that,” Kostanyan told CTV National News.
When he chose his location, there was a black market cannabis store two doors down from his, but he figured it would be shut down soon or the government would change its laws to allow him to compete with a store. unregulated which continues to offer much more potent edibles.
But that never happened.
“From my point of view, I did everything. I applied for all licenses; I did everything. Why should I go bankrupt? Kostanian asked.
The store next door sees a steady stream of customers and is able to sell cannabis products without government regulations or taxes.
“They did nothing to shut them down. For now, there is no point in opening a store. I mean, there’s too much competition. The margins are very low,” Kostanyan added.
Currently in Toronto, there are more cannabis stores than Tim Hortons.
Ellis’ company has helped dozens of cannabis companies revamp their businesses as they struggle to stay afloat.
“This is an industry that was created by the Canadian government and frankly doomed. said Ellis.
CTV National News has been granted access to an unregulated 10,000 square foot cultivation facility in southern Ontario. We were taken for a walk 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 calls the space a cooperative medical marijuana facility and claims that “the flower that comes out of this medical environment is no different than that that comes out of a licensed facility. The only governance needed to access any consumer shelf in the retail market is a certificate of analysis. »
Maris says thousands of plants are allowed to be grown at the sprawling operation using medical marijuana licenses issued to just four people by the federal government. He says the cannabis at the facility is shared with medicinal users who only pay a quarter of the price to grow their plants here instead of buying the product from a licensed grower or retailer.
However, concerns are shared that the telltale amount of cannabis grown using medical licenses in some facilities is ending up on the unregulated market.
“When we see the volumes that these different [medical] producers are producing, it’s a decent instinct to think it’s going somewhere else,” Ellis said.
“I don’t know about this black market you’re talking about. I know medical patients who are supported by cooperatives like this,” he said.
Maris admits that he has been growing marijuana for more than two decades, long before legalization, and therefore has a criminal record.
“I had to leave and serve time for conspiracy to traffic cannabis, and that kept me from owning more than 10% of a cannabis business,” he said.
Maris believes it’s individuals like him who have the knowledge to help make the Canadian marijuana market viable for the future, and he’s calling on the federal and provincial governments to relax their restrictions on who can participate in the “self- so-called legal system” of the country. ”
Currently, a long overdue review of Canada’s Cannabis Act is underway. The federal government says part of its goal is to cultivate a “diverse and competitive legal industry comprised of small and large players to move the illicit market.”
Although for Kostanyan and so many other small retail business owners, any legislative changes to the Cannabis Act are simply too late. Hundreds of independent retail stores are expected to close across the country this year.
As he packs his last boxes and locks his doors for good, Kostanyan doesn’t mince words.
“I got screwed over by the government 100%. The number of illegal stores keeps increasing, the number of legal stores keeps decreasing. So what’s the point of all this if it doesn’t work? »
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