A group that was supposed to have been created by the Canadian government almost two years ago to shine a light on major issues confronting the nation’s struggling cannabis industry is, for the first time, showing signs of life.
A long-awaited cannabis “strategy table” designed to bridge communication between Canada’s federal government and the flailing industry quietly had its preliminary meeting over the summer and selected a chair, industry sources say.
George Smitherman, CEO of the Cannabis Council of Canada, said the strategy-table group – which brings together government and industry officials – represents a critical opportunity for the marijuana sector to have an aligned government champion.
And he’s upbeat after the initial meeting over the summer.
“I think that’s noteworthy, because we’re five years into (legalization), and a lot of people come away feeling like the very government that made (the industry) hasn’t been that interested in whether we actually make it,” Smitherman said.
“This hopefully is turning the corner on that.”
A plan to launch the strategy table was unveiled in the country’s federal budget in April 2022, or about 18 months ago.
Since then, however, the federal body tasked with organizing it – Innovation, Science and Economic Development Canada (ISED) – has said little publicly and the initiative has until now been seemingly stuck in Canada’s bureaucratic and political gridlock.
That has triggered alarm bells within the cannabis industry, which has racked up losses exceeding 20 billion Canadian dollars ($14.6 billion) while government-owned enterprises collect most of the profit.
Business failures have been snowballing while solvent companies struggle to keep up with debts owed to the federal government.
A review of insolvency filings by MJBizDaily found that the Canadian government is commonly among the biggest unpaid creditors of insolvent producers – a situation that is almost unheard of in other industries.
The strategy table is meant to be a venue for industry and government to communicate about some of the issues facing businesses.
‘Energized to support forum’
Smitherman told MJBizDaily there has been significant progress in advancing the ISED strategy table behind the scenes.
“Over the summer, the staff team at ISED transitioned, and me and my team had a chance to meet with them … and they’re really unified, motivated and energized to support the forum,” he said in a phone interview.
“In August, there was an initial meeting of the forum,” Smitherman said. “That’s another positive development.”
He said several cannabis industry CEOs were in Ottawa that month for two days of meetings with government officials.
It appears that government-level staff turnover at ISED contributed to slowing the forum’s official launch.
Another factor is executive turnover at cannabis companies.
Ironically, the industry is hoping the strategy table will help address issues such as snowballing bankruptcies, but those insolvencies might be making it harder to launch the initiative.
“Because of the high turnover rate in (the cannabis) industry related to things like CCAA filings, there’s been a lot of attrition,” Smitherman said, referring to Canada’s corporate insolvency law, the Companies’ Creditors Arrangement Act.
For instance, Fire & Flower Holdings, one of the largest cannabis retailers in Canada, entered creditor protection earlier this year.
Roughly 40% of companies that used the CCAA in 2022 were cannabis businesses.
Cannabis Act review
In those August meetings, the strategy-table group is said to have met with the chair of Canada’s Cannabis Act review, Morris Rosenberg, and the deputy minister of ISED, Simon Kennedy, among others.
Critically, the secretariat of Rosenberg’s legislative review was supposed to keep his panel informed of cannabis strategy table outcomes.
But it’s unclear if there is enough time for that to happen, with the strategy table not yet officially launched and Rosenberg’s review wrapping up in the coming months.
Smitherman said Auxly Cannabis Group CEO Hugo Alves was selected as chair of strategy table, adding that they might be trying to firm up two fall meetings.
Alves declined to confirm the appointment when reached by MJBizDaily.
A spokesperson for ISED declined via email to confirm whether the preliminary meeting took place.
The spokesperson also declined to answer MJBizDaily questions about how the members of the forum are being selected or what ISED is doing to ensure the group is not dominated by the interests of large cannabis producers at the expense of small and medium-sized enterprises.
ISED also wouldn’t say how it’s ensuring the cannabis strategy table is representative of entrepreneurs who are Black, Indigenous or other people of color.
“Development and finalization of the table, including its membership, remains underway and announcements pertaining to the status of the initiative are expected soon,” the ISED spokesperson said via email.
The spokesperson said ISED is actively engaging with industry stakeholders and associations, gathering intelligence about the sector and completing analysis.
“This analysis and understanding of the cannabis value-chain, including its diverse businesses and operators, will inform the make-up of the Cannabis Strategy Table to ensure its members can speak to the breadth of challenges and opportunities in the industry,” the ISED spokesperson wrote.
“This work is also in support of the Budget 2023 acknowledgement of the financial difficulties facing the cannabis industry and the Government of Canada commitment to continue monitoring the sector.”
The spokesperson said one of ISED’s objectives will be to provide a venue for dialogue on “challenges and opportunities” facing Canada’s legal cannabis value chain and to enhance government understanding and awareness of the sector’s economic situation. (Full Story)