BREAKING NEWS: Canada’s Cannabis Industry Is Facing Major Headwinds

After two of Canada’s biggest government-run cannabis wholesalers faced major service disruptions, we started to research the situation to asses the potential ripple effects on companies across the country.

According to data from analytics firm Hifyre, Canadian cannabis sales increased 16% in August (on a year-over-year basis). Although the growth indicates that the sector was not impacted by the service disruptions, we believe the percentage growth statistic does not tell the full picture.

BMO Capital Markets analyst Tamy Chen published a research note which said, “It does not appear that industry sales in August were meaningfully impacted by the cyberattack on Ontario’s cannabis distributor or the labor strike at B.C.’s liquor board distribution center.”

Over the next few months, we expect to learn more about the impact the service disruptions had on the Canadian cannabis industry and want our readers to be aware of two key developments.

1. British Columbia faced inventory issues after dozens of regulated cannabis stores were forced to close their doors in mid-August after workers at the province’s monopoly distributor went on strike. The strike ended on August 31^st and we believe it will adversely impact sales numbers in the province
2. Ontario’s provincial monopoly wholesaler suspended all deliveries to retailers after a cyberattack struck the parent company that operates its distribution center. It took a few weeks for deliveries to resume and we expect this to have a transitory impact on the province

Based on available data, Ontario and British Columbia account for more than half the legal cannabis sales in Canada. We believe the impact will be highlighted in future earnings reports from Canadian cannabis operators and want our readers to be aware of this potential headwind.

If you are interested in learning about the companies that may be negatively impacted by the service disruptions, please send an email to support@technical420.com with the subject “Canadian Cannabis Companies At Risk” to be added to our distribution list.

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Michael Berger is Managing Partner of StoneBridge Partners, LLC and Founder of Technical420.com. Prior to entering the cannabis industry, Michael was an Equity Research Analyst at Raymond James Financial covering the Energy Sector. Michael has been featured in publications such as The Street, Bloomberg, US Money News, and hosts various cannabis events across North America.

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