Canada’s cannabis industry, once hailed as a budding success, has faced persistent challenges due to oversupply and competitive pressures. As a result, some of the country’s largest cannabis cultivators are exploring alternative avenues to maintain profitability. These companies are now venturing into the realm of fruits, vegetables, and ornamental flowers as a strategy to diversify their core businesses.
One of the most recent entrants into this unconventional field is Tilray Brands, headquartered in Leamington, Ontario. The company has announced plans to convert part of its sprawling facility in Gatineau, Quebec, to cultivate fruits and vegetables. Tilray joins the ranks of Alberta-based Aurora Cannabis and British Columbia-based Village Farms International in pursuing such diversification to adapt to a challenging market.
Aurora Cannabis, for instance, delved into vegetable propagation and ornamental flowers by acquiring Bevo Agtech for $35 million. The move allowed the company to repurpose its underutilized greenhouses and explore the potential of cultivating plants other than cannabis.This shift reflects the industry’s struggle to address oversupply and falling prices, which dropped by about 50% from 2019 to 2023, according to Aaron Grey, an analyst at Alliance Global Partners.
Health Canada, the federal agency overseeing the cannabis sector, requires that licensed producers venturing into fruits, vegetables, or flowers maintain the same organization or individual holding the cultivation license. This requirement underscores the regulatory aspects of diversification.
Village Farms International, a specialized agricultural company, adopted a different approach by focusing on produce before cannabis. The company’s strategy involved being mindful of capital investments in cannabis cultivation, leading to 19 consecutive quarters of positive earnings before interest, taxes, and amortization (EBITDA).
Village Farms’ Executive Vice President of Corporate Affairs, Ann Lefever Gillin, highlighted the company’s reverence for plants and its agriculture-focused foundation as a key advantage. They leveraged years of growing and climate data to create optimal environments for cultivating high-quality cannabis consistently.
These developments in Canada’s cannabis industry demonstrate the adaptability and resourcefulness of producers, striving to navigate a challenging market. With oversupply and fierce competition impacting the industry’s profitability, these diversification efforts into vegetables, fruits, and ornamental flowers aim to bolster the bottom line and offer a lifeline to struggling businesses. As the industry continues to evolve, these innovative approaches could hold the key to sustained success in the ever-changing cannabis landscape.
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