As the cannabis market evolves and long-term planning becomes top-of-mind for investors, multiple companies are abandoning vertical integration and refocusing on their core competencies. Several players in the cannabis industry have tried to do too many things at once, spreading finite resources thinly and creating market inefficiencies. The current oversupplied, low-priced environment has led some vertically integrated companies to scale back operations and liquidate assets. Meanwhile, many new micro market licensees have emerged, with about half of all licenses issued by Health Canada in the past two months being for micro-cultivation or micro-processing purposes, compared to a historical one-third ratio.
When recreational cannabis became legalized, the dominant players in the Canadian cannabis industry focused heavily on vertical integration, controlling the cannabis value chain from cultivation to retail. Four years later, several companies have begun to specialize, playing to their respective organizational strengths, and focusing on what they do best.
For cultivators, their cannabis products must get into consumers’ hands quickly, so it remains fresh. They must cultivate sufficient volumes of quality dried flower to deliver on commitments to processors and distributors, ensuring downstream retail operations have enough cannabis products to sell. For processors, they must have access to appropriate automation equipment for their business operations and adequate quantities of readily accessible and affordable packaging options that are also Health Canada compliant.
Supply chain disruptions throughout the COVID-19 pandemic have highlighted the importance of cannabis packaging and processing equipment arriving on time. By sourcing domestically, cannabis companies can ensure their products make it onto retail shelves in a timely and cost-effectively without compromising quality or compliance.
The Canadian Cannabis Exchange (CCX) live trading platform connects licensed producers with other domestic service providers, including those offering harvesting, storage, toll processing, packaging, and equipment sales. As the cannabis industry continues to develop and an increasing number of companies turn to specialization over vertical integration, CCX strives to support our client’s continued success, enabling new B2B sales and procurement marketing options.
For more information on how CCX can help your company diversify its domestic supply chain options or improve operational efficiencies, contact info@canadiancannabisx.com.
