After a year-long wait, cannabis edibles officially became legal in Canada just two weeks ago. Legalization 2.0 has led several cannabis companies to seek Health Canada approval so that they can get their products to market by mid-December.
However, there’s been some criticism about the regulations on how much of the psychoactive compound tetrahydrocannabinol (THC) is allowed in each cannabis product.
Health Canada finalized its cannabis edibles regulations in June of this year and will only allow 10 milligrams of THC in each cannabis product, whether it be an edible, beverage, or ingestible extract. The problem is, for medical cannabis patients, this dosage simply won’t do.
The Two Markets for Cannabis Edibles
Cannabis products straddle two connected, but very different markets.
The first is the health and wellness market. The medicinal benefits of cannabis consumption are varied but not fully understood. As Deloitte reports, many pharmaceutical companies are making their own cannabis edibles “as consumers turn to CBD and other cannabis products to manage various health and wellness issues.”
The second market is for cannabis’s recreational purposes. This is where THC, as a psychoactive component, becomes important. THC gives cannabis users the “high” that led to cannabis’s prohibition through most of the 20th century.
Cannabis is essentially the only substance available for both medical and recreational use. Unfortunately, the two applications are coming into conflict with each other.
Health Canada Regulations Contribute to Lost Market Value
Now that cannabis edibles with up to 10 milligrams of THC are legal, analysts are predicting that Canada’s medical cannabis market will decline from $457 million USD in 2018 to $381 million USD in 2024.
This is because more patients will obtain their cannabis from the legal recreational market instead of from a medical supplier. As they do this, they will be limited by the government’s cap on THC. This limit was put in place to prevent over-consumption but may lead to under-dosing.
Buying enough cannabis edibles to get high and to provide the necessary medical applications will be a financial struggle for some consumers. According to the Globe and Mail, Health Canada “has shown little interest in listening to industry, which could have been a helpful partner in educating Canadians about a product that still lacks reliable science.”
The regulatory body’s “strict” guidelines have contributed to estimates on the national cannabis market value being cut from $5.9 billion USD by 2022 to $5.2 billion USD by 2024.
Companies Still Hoping to Play Both Sides of the Cannabis Edibles Market
Many companies are still working to capitalize on the full spectrum of cannabis products and their various applications.
BevCanna Enterprises (CSE:BEV) (OTCPK:BVNNF) will be launching both THC-based and CBD-based beverage lines beginning early next year. Its THC line, Anarchist Mountain, will feature sparkling spring water beverages to help consumers have fun and relax after a long day.
Meanwhile, its forthcoming CBD line, Lev, will feature crave-worthy fruit flavors in sparkling alkaline spring water to elevate consumers’ quality of life.
BevCanna has recently received an aggregate “Buy” rating from TradingView’s technical analysis. Despite being publicly listed for only a few months, this early recommendation shows how bullish Wall Street is on BevCanna’s prospects.
Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB) has also been gearing up for the legalization of cannabis edibles. Most notably, its 20,000 square foot manufacturing facility, Aurora Air, will be responsible for edible products like cookies, gummies, chocolates, and mints. All of these products will include a certified, lab-tested concentration of THC and CBD.
The company is also responsible for a national safety campaign called Ready for Edibles. The campaign will educate new and experienced cannabis consumers on responsible consumption and safe storage of edibles products.
As Canadians await a new era in cannabis legalization, investors can look into these two companies, amidst others, to try and play the new green rush for what it’s worth.
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