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According to statistics from Health Canada, the regulator of the marijuana industry in Canada, exports of medical marijuana from the country have reached a record-setting $189 million as local producers grapple with numerous domestic challenges ranging from prohibitive taxes to cutthroat competition on the domestic market.
The current value of exports for the year ended March 2024 marked a 36% increase from exports registered last year ($116.5 million). This notable increase in exports follows a growing trend that saw the country export medical marijuana products worth $5.8 million in the 2019–2020 fiscal year, $28.4 million in 2020–2021 fiscal year and $77.9 million in fiscal year 2021–2022.
Health Canada commented that the latest data could change as more figures become available and the agency adjusts current records.
Many Canadian marijuana businesses have been looking to leverage overseas opportunities amid stifling hurdles on the domestic front. The near-prohibitive, excise-sales levies imposed by local governments and the federal government are some of the main reasons why the domestic market isn’t as lucrative as it previously was. Deepak Anand, the head of Surrey-based ASDA Consultancy Services, says Canada is reaping the benefits of being a first mover in the marijuana industry after it legalized cannabis toward the end of 2018.
Several other factors have combined to position Canada well on the international market, he says. First, the country has built a reputation as a supplier of top-quality medical marijuana products internationally. Secondly, other countries that have also legalized marijuana, such as Colombia, have faced regulatory issues that have hamstrung their ability to compete internationally.
Those challenges holding back potential competitors have given Canada an edge on the international market, Anand believes.
The rising exports of medical marijuana are in sharp contrast to sales on the domestic market. Sales have been declining consistently over the past few years due to several factors, such as lack of access to medical marijuana products in pharmacies and low levels of reimbursement for marijuana products by insurers in the country.
Quanta Consulting’s Mitchell Osak asserts that conditions for local medical-marijuana producers are worsened by the fact that individuals can often buy the same products at a cheaper price by simply visiting a recreational-marijuana retail outlet. This has robbed medical marijuana suppliers of a significant proportion of that market, especially price-sensitive buyers.
Savvy licensed producers of medical marijuana have discovered that they can see higher profits by penetrating the international market for their products, and that has encouraged many to explore sales abroad.
As the regulatory climate in the Unites States shows no sign of improving to the extent that entities there can thrive, companies such as Trulieve Cannabis Corp. (CSE: TRUL) (OTCQX: TCNNF) could also benefit from exploring the opportunities that exist in markets outside the country.
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