Talking Tough Love to the Cannabis Industry

Financial analysts, by nature, aren’t all about unicorns and rainbows. Hard data is to be dutifully crunched, reviewed, and disseminated. It’s clearly not everyone’s idea of the ultimate glamour gig. But without it, businesses and consumers would be lost in a sea of misinformation and corruption.

In the cannabis space, the consensus ‘go-to guys’ for this kind of vital information are The Cannalysts. Don’t let the cute and bouncy play-on-words fool you – these are the kind of tough love, no-nonsense professionals that would probably make your high school vice-principal look like Jim Carrey.

And the message the three company principals brought to the Lift & Co. (TSX-V:LIFT) Cannabis Business Conference (LCBC) and Expo Vancouver 2020 was mistakes made, lessons learned.

Speaking to a standing room only crowd to kick off Friday morning's Industry Day, the ‘Three Horseman of the Apocalypse’ gave a 30-minute breakdown of where the nascent industry went wrong and how to steer the ship back on course. But first, attendees were given a strong dose of reality right off the top – expect more rough & tumble times in 2020.

The Cannalysts cautioned that despite the optimism of Cannabis 2.0, months of layoffs, facility shutdowns and plunging stocks, the new products won’t be enough to save the industry.

Company Co-Founder and Managing Director Craig Wiggins was first on stage and brought ample doom and gloom during his presentation. And he says it’s primarily about inventory.

He explained that by the end of October 2019, licensed cannabis producers (LPs) were storing 721 days of inventory. That could hit 816 days a year from now, according to his optimistic forecasting.

“This will be catastrophic unless certain things happen,” Wiggins said. “More retails stores and ‘2.0’ does not fix this. Something has to give. We need companies to go out of business. It sucks to say it, but we need a rightsizing of the harvests. We need people to write off inventory.”

Meanwhile, licensed producers continue to harvest at a rate that exceeds legal sales, about 4.42 kilograms for every kilogram sold, Wiggins bemoaned.

“The optimistic scenarios get us to 2.26 to one – that’s still way too high,” he said. “We have too much inventory.”

Wiggins went on to say that cultivation must be curbed, inventory destroyed, or sales must increase to an “impossible” level. Which made it sound like a near-impossible feat.

“Plus, you know what? The unregulated market is good at keeping clients,” he said. “Exports simply will not fix this problem. They’ll be too late and not enough. We have a massive issue that we have to deal with.”


(Craig Wiggins, Co-Founder and Managing Director, The Cannalysts. 2020 Lift & Co. Vancouver. Dave Jackson / Stockhouse)


Next up Company CEO Andrew Udell. He said, while LPs are hopeful that the introduction of legal edibles will help displace the black market, it will take time to displace illegal sales.

Udell then asked the audience a simple question:

“How much inventory has Canopy (Growth) written off in inventory in the last 18 months? Anyone got a number?” Crickets. “It’s $190 million.” Ouch.

But referring to his version of the Silver Linings Playbook, Udell provided hope. And he says it’s in genetics and extraction. And, for cultivars to start treating cannabis as if it was any typical outdoor crop or commodity, like tomatoes. And he had a no-holds-barred, imperative message about scientific cultivation for the licensed producers in the audience:

“If you’re an LP and you’re not doing outdoors, you’re screwed. Because outdoors has a price signal that has a bottom. You’re farming molecules. You’re not growing cannabis. You’re growing molecules. And as an LP in a program, if you’re not specialized as an indoor grower – like Broken Coast (Cannabis Ltd.) or Flowr (TSXV: FLWR, Forum) that does very high-end, specific grow in that space and you’re not doing outdoors – then I think you’re done.”

Now that’s some tough love for the assembled who were listening…very intently.


(Andrew Udell, CEO of the popular blog The Cannalysts, 2020 Lift & Co. Vancouver. Dave Jackson / Stockhouse)


About Lift & Co.

Lift & Co. (TSX-V:LIFT) is a publicly traded technology company modernizing the cannabis industry.

The Company hosted Canada’s biggest cannabis tradeshow and conference returned to Vancouver – Thursday January 9th through the 11th – with a mammoth three-day exposition and conference at the Vancouver Convention Centre.

More info on LCBC and the Expo can be found here.

New to investing in cannabis? Check out Stockhouse tips on How to Invest in Cannabis Stocksand some of ourTop Cannabis Stocks.

For more of the latest info on cannabis, check out the Cannabis Trending Newshub on Stockhouse.


FULL DISCLOSURE: Flowr Corp. is a client of Stockhouse Publishing.