37% of cannabis producers are upping capacity for post-legalisation demand

According to a new report from Ernst & Young, 37% of Canadian cannabis producers are focusing on increasing their production capacity in anticipation of a higher post-legalisation demand, based on statistics taken from a study of licensed producers.

“Limited access to capital and an uncertain regulatory environment is impeding Canadian cannabis companies' ability to make long-term strategic investments,” says Monica Chadha, Ernst & Young Canada's National Cannabis Leader.

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In line with this, the report named, “How do you define your future in an undefined market?”, suggests that established names within the tobacco, pharmaceuticals and alcohol industries are well-positioned to enter into the legal cannabis market.

This is due to a multitude of factors including brand recognition, strong capital, established infrastructure and knowledge and expertise of working within a regulated environment.

With this in mind, industry players will have to invest heavily into innovation, new technologies and talent in order to differentiate and stay ahead of the market.

“Many companies are currently allocating available capital towards increasing scale of production, but recognize that there's an opportunity to shift some of that investment towards technology and innovation in order to build a competitive advantage,” Chadha continued.

“As the industry matures and regulatory frameworks become clearer, investments in human capital and innovative technologies need to occur, in conjunction with production. A focus on innovation will ultimately lead to lower costs, heightened product quality and/or productivity enhancements. Cannabis companies who fail do to so, risk losing market share to bigger players.”