As we enter the next phase of Cannabis regulation “cannabis 2.0” we’ve had to ask ourselves whether or not to get excited!
While we are looking forward to introducing these products to our village we also recognize that there are a million and one hurdles that our distribution chain has to jump before these lovely products end up on our shelves.
Lets look at the path a 2.0 product might follow. On October 18th producers were able to submit their potential offerings to Health Canada for approval. Health Canada needed to review, investigate and approve hundreds if not thousands of product proposals before distributors would be able to put them out to market. Health Canada promised that the earliest approval dates for distribution would be 90 days after the products submissions were made meaning that if a producer got their proposed products in for approval on October 18th they could hope to be approved and ready to distribute for December 18th.
Health Canada is working as hard as they can to get through the proposals and each provincial distribution portal is working overtime to decide which of the approved products they would like to offer. Distributors have to order the products, await their shipments, receive their shipments and upload them into their inventory systems before they can consider distributing the products to retailers. As an aside…the products they decide to offer don’t always reflect the desires of all of the retailers they serve so that can add some friction between the end consumer and the products they are looking for. Below is a simple illustration of the road a 2.0 product must travel in order to reach you as a consumer!
Layer 1 The producers have to formulate products and request approvals from Health Canada. This is a very costly endeavour. Once approved the products need to be produced, tested, packaged and shipped. Note that this means months of development if not years. Formulating, testing, branding, packaging and finally getting the products to market in hopes that their investment into the product is well received. Not an easy task considering there is little to no advertising of Cannabis products allowed in Canada.
Layer 2 Health Canada (a veritable vortex) This is where all of the proposed products are introduced to HC. They will be vetted and either approved or sent back to the makers to make adjustments as per the Cannabis Act. Lets just say we don’t long to sit in those chairs making those decisions as there is no doubt a never ending stream of product submissions filling up their inboxes.
Layer 3 Distribution channel (a quagmire) Canadian Cannabis retailers we have a patchwork of distribution models to navigate. Each province has set up its own model of distribution some have decided that a private distribution model is a good idea while others have decided to use a government monopolized distribution route (BC) and others have selected a hybrid model (Saskatchewan) Suffice it to say each model has its benefits and its challenges. Suffice it to say distribution is the place where bottlenecks are exposed and highlighted and wether they deserve it or not much of the frustration ends up landing in their laps.
Layer 4 Retailer. Depending on the distribution model you may or may not find an engaging selection of 2.0 products on offer. If the retailer has a distributor that employs an allocation model (where each shop is rationed out some of each product) you are guaranteed some options whereas a first come first serve model where bigger retailers who may employ bots and who have deep pockets can purchase all or most of the offerings in one fell swoop you may find you have less to choose from. The BC model is the latter. We are lucky enough to have a wonderful person at the helm of our ordering ship and while she’s not a bot she’s sharp as a tac and we’ve got lovely chocolates, Gummies and vape carts on order though shipping over the holiday season may be less than adequate. We don’t want to get your hopes up but we promise to let you know when they’ve arrived!
Here is what we had to say on the eve of 2.0 product launches-CTV