Why are some Canadian cannabis companies struggling?

when pot became legal in Canada

investors couldn't sign checks any

faster to make sure they had a foot in

the door stores and producers popped up

and people right across the country

we're excited about this industry and

what it might mean for new jobs the

truth is some of the Canadian cannabis

companies have been struggling so we're

here at weed me a cannabis cultivators

just 30 minutes outside of Toronto to

find out why the difficulty is that it's

hard for people to get the product at

the moment

that's Terry Kellogg ah he's the founder

of weed me a company that grows cannabis

and makes its products available to

legal companies across Canada and one of

the markets he's moving into is Ontario

the access to the to the consumer is

really limited in Ontario there needs to

be more brick-and-mortar stores so

people can go in see the product touch

and feel the product smell it and then

buy it in Ontario

there are 24 legal cannabis stores this

is nothing compared to how many liquor

stores the provincial government runs

here more than 600 stores the reason why

there's such a big difference here is

the only way you can sell marijuana in

Ontario is by winning a licence through

a lottery fewer stores and a huge market

like Ontario mean many people are

getting their weed elsewhere the black

market when people have been interacting

with a seller in the black market for

many years they will have confidence

that that seller is going to give them

the sort of product they want about

three Canadians bought cannabis from the

illegal market earlier in 2019 for every

two who bought only from the legal

market not surprising when you see how

much people pay for it legal cannabis is

about $10 per gram but in the black

market pot is half that price at about

$5 per gram the real issues for people

especially people that have been using

pot for a while is what's the motivation

for them to switch first of all they

can't find it and second of all they

have to pay a lot more for it but why

the price hike there's many levels of

government that are involved in in every

step of the way so we're quite

significantly taxed if if we were

selling direct to the consumer without

so many hands in our pocket so to speak

that we would be extreme

we competitive with the black market

well recreational marijuana was a huge

hit with investors in 2018 shares are

now down by 25% to big producers hexo

Corp and can trust recently cut hundreds

of jobs those layoffs represent about 4%

of the cannabis producer workforce in

Canada but it's not just companies that

are suffering the New Brunswick

government decided to get out of the

cannabis game saying it's time for the

private sector to handle it isn't that

indicative of some of our the initial

hurdles of the industry starting super

big is difficult to do and there's no

real previous model to follow in this

industry except for the black market

which in some ways the legal market is

trying to emulate we're not reinventing

the wheel here we're trying to legalize

the wheel the black market produces some

great products but what they don't have

is the confirmation that what the

consumers consuming is safe for

consumption in the black market there

are no regulations as to how these

plants are treated prior to consumption

and finishing for us we provide a safe

product for the consumer it's time to

show show the public that as a producer

you're able to actually produce product

and you're able to do so in a way that

makes business sense but the cannabis

industry in Canada is still very much in

its early days so maybe what's happening

right now are just a few growing pains