I’d be remiss if I didn’t start off by saying, it’s been too long since the last Lift & Co. Expo took place in Toronto.
So much has changed within the industry since we last got together.
Since 2019, we’ve gone from an industry of juggernauts – based solely on their output capacity – to an industry of bleeding balance sheets. Gone are the days of frothy stock valuations and easy access to capital. Now, it’s about correction and mass job-loss.
3 years after legalization (2 years in regards to 2.0 products), we’ve seen drastic swings in industry behaviour and soberer approaches to expectation.
Mass production of flower with disregard for market-desire is no longer the norm. Stalwarts of the industry (Canopy Growth Corp, Aurora, Tilray, Hexo) have seen their share prices remain socially distant from historic highs while they try to address their negative balance sheets. On the other hand, smaller players (Pure Sunfarms, Auxly) – again, only according to market capitalization – continue to capture more and more market share by focusing on specific products.
The financial backdrop to this year’s expo arrived with a definitive tone by all players at the table:
“Where do we go from here to make the industry better?”
Day 1 – Thursday November 18: Lift Cannabis ($600!) Business Conference (worth it?)
The South Rises
A lot of the focus was on the brewing progress on cannabis legalization in the United States, and what it means for Canadian corporations.
The day began with an introduction on where the Canadian cannabis industry stands today, and the international opportunities that lay ahead. While Europe remains a medical focus for many Canadian licensed producers, the market doesn’t appear ready to deliver positive returns on investment in the near future. This avenue remains a path most sought by the larger players (according to market capitalization numbers) with an eye still on investment rather than profits.
While Europe remains a future prospect, the United States has become a market to be aware of in the present.
Since Canada became the first G7 country to legalize recreational cannabis use, a slew of individual States have passed bills to legalize recreational use. While still Federally a Schedule 1 drug, many States have begun to ignore federal laws without consequence. This has spurred the growth of many American corporations that now compete on par with Canadian entities in the cannabis sector.
To highlight this point:
In 2019, Bruce Linton was at the helm of Canopy Growth – the largest cannabis corporation in the world – at the time – headquartered right here in Canada. In 2021, he is now chairman of the board for Gage Cannabis Co. – in Michigan.
A lot has changed in 2 years.
2 years ago, occasionally, raising capital only required proof of planned profits.
Now, raising capital requires blood from your first-born.
With years of red on the books for most licensed producers, investors have become less jaded by the green rush. Future investment in cannabis-focused corporations will be vetted by a higher standard.
The initial play of being fully integrated, seed to sale producers has created very few winners 3 years into legalization. If this business model is still to be pursued and funded through investment, only one licensed producer north of the border is worth modelling – Pure Sunfarms. In a sea of red, few licensed producers shine through as positive examples of responsible financial stewardship and profitability.
However, this further underscores where profitability in cannabis is heading – brands.
More on brands later.
(So far, so good on the value for the $600 investment)
Day 2 – Friday November 19: Lift Industry Day
More looking ahead
The day focused on the future and how to win it. A lot was discussed on the international market and projections of its growth. Will we reach USD $ 90.4 billion by 2026? That sounds lofty.
In a best-case world, those numbers are attainable.
Further deregulation in the United States, expansion of medical use in Europe, and growing production in other countries make it plausible.
But, bill progression in the US is something not akin to linear and the EU moves cautiously on sweeping legislation due to its composition.
The next few years will require nimble and agile strategies.
This reality lends well to the entrepreneurs that will notice the gaps in demand and service them quickly.
While the large scale LP’s remain vital to the functionality of the Canadian cannabis marketplace, it is the secondary players that will create the necessary innovations to bring about profitability. Companies such as Protonify and Adastra Labs who are focused on Cannabis 3.0, demonstrate where the future of cannabis infusion is heading.
Having the right skill-set and people will be key to success.
Scholarly institutions, like Centennial College, have begun to pick up on this need.
Centennial College’s Cannabis Cultivation and Processing Program is a successful seeder program into licensed production work.
(The $600 investment is starting to look good)
Day 3 – Saturday November 20: Lift Consumer
Brands, brands, brands
The story of the day was brands, brand differentiation, and the value of a good branding.
Day 3 was spent with the intent of taking in the booths and their content.
There were noticeable changes this year though. The seed-to-sale LP’s did not dominate in presence. Rather, it was the secondary and tertiary companies that set-up shop with the hopes of B2B sales versus LPs looking for B2C brand awareness.
The change in companies setting up booths shows the underlying growth prospects of the industry are strong, as new companies join the cannabis eco space.
Back on the stages, great information was still being disseminated.
Next up, an in-depth discussion on edibles and beverages took to the floor. The discussion was fruitful, insightful, informative, and brought up key roadblocks that need to be addressed before cannabis 2.0 products can truly take off.
Following the talk on edibles, the subsequent sessions focused on the need to reform the retail experience: how can we have more fun with cannabis and what are the therapeutic benefits to athletes?
(By day 3, I have to say, the $600 investment is looking like a steal)
Day 4 – Sunday November 21: Lift Consumer Day
On the last day, we feasted.
The mood at the convention was one of quiet jubilation for an event well-executed and a time well-spent. New connections were made and old connections rekindled. We remained masked and socially distant, but regained the warmth of a shared environment with shared appreciation for a plant and its many derivatives that brought us all together for 4 days in Toronto.
We listened to more in-depth discussions about treatments and therapeutics. And got a rising end to the day from Pleasure Peaks – and that sounds just about right to me.
The 4-day conference went off without a hitch
The Lift & Co. Expo was a sorely needed return to normalcy for most of us in the cannabis sector.
We learned, we (re)connected, and we had fun.
Isn’t that what cannabis is all about anyway?
The 2021 Toronto Lift & Co. Expo was worth every penny.
And I’m already looking forward to next year’s to catch up with all my fellow progress-makers on this green-brick road.
Founder & CEO