The current state of the cannabis market in Canada can be described in one word, which is crowded. Dozens of the nation’s largest growers, producers and marketers of the plant are already searching for creative ways to sell the product they’ve worked long and hard to create. That means going international, which can lead to an entirely new customer base.
The downside of selling the plant and its byproducts outside of the nation’s borders is significant. It entails major challenges with transportation, adapting to new forms of taxation and, especially, figuring out how to adhere to a wild patchwork of laws in other nations. The U.S. presents a unique dilemma for Canadian companies because each of the 50 states has its own set of marijuana laws. New markets offer new opportunities, but they also present challenges for companies to overcome. Here are some strategies Canadian cannabis companies are using to keep profits up and avoid the intense competition of the domestic market.
Sell in Friendly Markets Only
Most sellers rely on in-house or highly competent outsourced legal staff to tell them where the most amenable markets are. Currently, locations ripe for product exist in South America, Europe and parts of Southeast Asia. By focusing on geographic sectors where there is no legal resistance, Canada’s marijuana sellers can do what they do best, which is market a legal product to consumers who want it.
Build Up Worldwide Markets
One way of avoiding the ultra-competitive domestic market is to view the entire world population as a potential customer base. That optimistic view can entail setting up offices in U.S. states where sales are already brisk and fully legal or about to become legal. It also means heading for Europe, Southeast Asia and South America to begin operations there as well.
Avoid the U.S. Headaches
The majority of Canada’s sellers who don’t want the hassle of trying to negotiate with 50 different sets of local U.S. laws have chosen to look elsewhere, like South America and Europe, for fresh batches of consumers. This technique has a couple of distinct benefits. For one, it allows Canadian businesses to find a worldwide clientele and build up a massive customer base. Second, it means that someday in the distant future, when the U.S. passes some form of uniform legislation, the Canadian sellers can expand operations to the neighbor to the south.
Operate as a Wholesaler to Other Sellers
A few companies have decided to do an end run, of sorts, around the legal problems present in other national markets and within specific U.S. states. The simply act as wholesalers to other cannabis companies, primarily to startups who don’t yet have the inventory to service their entire customer base. In the U.S. and elsewhere, there are hundreds of micro corporations that specialize in building up a solid list of potential customers before doing anything else. In effect, these tiny players in the marijuana segment can hook up with a seller based in Canada who has huge inventory but no customers. If done correctly, arrangements like these are a financial match made in heaven.
