Canada’s leading cannabis producers are adapting to industry challenges by diversifying their cultivation to include vegetables, fruits and flowers. This transition, as reported by MJBizDaily, is prompted by an oversupply of cannabis and falling prices.
Tilray Brands Inc TLRY, following in the footsteps of Aurora Cannabis Inc. ACB ACB and Village Farms Intl Stock VFF, has designated a section of its Gatineau facility for food cultivation to mitigate the impact of market saturation.
Aurora expanded into the vegetable and flower sector with a $35 million purchase of Bevo Agtech. “Everybody’s trying to figure out what to do with (the greenhouses), and you’re never going to get all your money back,” said Aurora’s CEO Miguel Martin, stressing the importance of adaptability.
Canada’s Weed Glut
Canada’s cannabis market faces an oversupply, with a record 1.47 billion grams of dried cannabis inventory, intensifying economic challenges. Prices have plummeted approximately 50%, from CA$13 per gram in 2019 to CA$6 in 2023, as noted by Aaron Grey of Alliance Global Partners.
Aurora’s diversification involved acquiring Bevo and transforming the Sky greenhouse complex for tropical plant cultivation like orchids, a move Martin called “wildly successful.” He credits the precise engineering of cannabis greenhouses, with consistent temperature and humidity, as a factor behind this success.
Tilray, after diversifying into the beverage sector, is now stepping into vegetable cultivation. CEO Irwin Simon announced the conversion of their Masson facility in Quebec for growing cannabis and vegetables, responding to a reported local shortage.
However, Michael Lavery of Piper Sandler raised concerns about cannabis companies directly entering produce cultivation, suggesting that selling facilities to established produce growers might be a more viable strategy.
Village Farms International distinguished itself with an existing foothold in agriculture before venturing into cannabis. Executive VP Ann Lefever Gillin credits their consistent EBITDA-positive performance to their strategy of tailoring operations and costs for a lower-price market, drawing from their vast agricultural expertise.
Canada’s Five Years Of Legal Weed
After five years of legalization, these developments signal a pragmatic shift within Canada’s cannabis sector, where adaptability and diversification are emerging as priorities for big players in the face of market saturation. These companies are exploring new avenues to leverage their sophisticated greenhouse technologies and operational expertise, marking a cautious step toward expanding their agricultural horizons to overcome current market challenges.
Photo courtesy of Erwan Hesry on Unsplash