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Why legal cannabis growers can’t compete with the black market — yet




Despite the persistent media buzz, there are no cannabis supply shortages in Canada, Brock University pot industry expert Michael Armstrong explains matter-of-factly.

“There’s all kinds of cannabis in Canada,” says Armstrong, who teaches operations management at the St. Catharines school. “It’s the legal cannabis that we’re short of.”

Nearly empty shelves at a Montreal cannabis store in December as supply shortages were felt in many provinces. One B.C. grower hopes to increase its production capacity from just under 10,000 kilograms to 480,000 kilograms annually by 2020.
Nearly empty shelves at a Montreal cannabis store in December as supply shortages were felt in many provinces. One B.C. grower hopes to increase its production capacity from just under 10,000 kilograms to 480,000 kilograms annually by 2020.  (Ryan Remiorz / THE CANADIAN PRESS FILE PHOTO)

And to successfully compete with a stocked and still-thriving illegal market, the country’s licensed cannabis producers must — among a series of moves — ramp up their crop outputs exponentially, offer cheaper, more varied strains and get them into a vastly increased number of stores.

“This is not a new industry, there is an existing industry,” says Armstrong, who analyzed new Health Canada data on the country’s marijuana market for a recent article. “What we have is this new legal version that has to compete with it.”

But that fresh player — who was only allowed into the game on Oct. 17 of last year — is not coming close to competing yet, Armstrong says.

Its primary problem out the gate was production. Armstrong says the Health Canada data suggests the country’s recreational cannabis market requires some 77,000 kilograms of product a month.

“That’s the existing black market, existing legal recreational buyers — that’s the estimate of the whole thing combined,” he says. “In November, roughly speaking, the legal industry produced about one-eighth of that amount.”

Clearly, legal growers have a long way to go to catch up with the ubiquitous pot farms and grow-ops that exist across the country, Armstrong says. The good news, he says, is that federally licensed production is increasing at a breakneck pace and that adequate legal supplies should be available countrywide by early next year.

Federal figures show the industry grew production by 12 per cent a month — compounded — in the first nine months of last year, Armstrong says.

Michael Armstrong says the Health Canada data suggests the country's recreational cannabis market requires some 77,000 kilograms of product a month.
Michael Armstrong says the Health Canada data suggests the country’s recreational cannabis market requires some 77,000 kilograms of product a month.  (Andrew Francis Wallace / toronto star)

“If that continues to grow at that compounded rate, which is really a madcap, frantic rate, they’ll actually have enough raw capacity in about a year.”

As greenhouses and converted factories spring up across the country, and even abandoned soccer bubbles are put to new uses, there are questions about whether that exponential production growth can continue, Armstrong says.

One large licensed grower is planning expansions on such whirlwind scales and beyond.

“We’re currently ramping up all of our facilities, both licensed and those in the licensing process,” says Andrew Grieve, CEO of Zenabis, based in Surrey, B.C.

Grieve says Zenabis is adding two facilities — in Langley, B.C., and Nova Scotia — to its two existing plants in New Brunswick and Delta, B.C. With those additional plants, coupled with planned expansions at its existing facilities, Zenabis hopes to catapult its production capacity from just under 10,000 kilograms to 480,000 kilograms annually by 2020.

“As a result we believe there will be producers, ourselves included, who are able to grow high-quality product and actually satisfy the recreational market in Canada,” Grieve says.

Industry expert Nick Pateras says the widespread carping over product shortages since the legal market opened was unwarranted given the predictable production lags that were forced on growers by simple economics.

Pateras, vice-president of strategy at the cannabis resource and information company Lift & Co., says the licensed producers could not have been expected to build enough stockpile or capacity for day one when they had no revenues to cover those costs.

“That’s a pretty big ask to have them grow it … and sit on it for months and months,” he says. “I think (the supply shortage) was always going to happen.

But Pateras says he’s confident production will scale up enormously.

“I think that you are going to see a ton of production capacity come online” in the next two to three financial quarters, he says. “So within a year that supply demand imbalance that we see now will have narrowed greatly.”

Most industry watchers think product shortages will greatly ease over the coming months. Pateras, however, believes that true production needs may have been underestimated, given the high percentage of raw crops that will be demanded by the edible and beverage products hitting the Canadian market next October.

He says offerings like pot-infused gelatins and beer — which together could attract 60 per cent of the market — require far more plants to produce a desired amounts of THC or CBD than combustible products. “It’s a pretty inefficient production process,” Pateras says.

He adds that industry production growth forecasts are often spotty, and notes that many Canadian producers are looking to export some of their wares and that crop loss is often a wildcard factor.

Brock’s Armstrong stresses that these are far from the only challenges the legal industry will face in its push to displace the black market. “The next trick is taking that raw material and getting it into final-product form and out to the retailers,” he says. “That appeared to be one of the bottlenecks in November.”

Michael Armstrong says that with the mass increase in shipping volumes that producers faced in October, many also experienced logistics problems in transporting, testing and warehousing their products.
Michael Armstrong says that with the mass increase in shipping volumes that producers faced in October, many also experienced logistics problems in transporting, testing and warehousing their products.  (Steve Russell / toronto star)

Armstrong says that with the mass increase in shipping volumes that producers faced in October, many also experienced logistics problems in transporting, testing and warehousing their products. He also says producers and retailers have to put much more work into assessing which products and strains are most popular with consumers and adjust appropriately.

In comparison with the black market, however, price, quality and access — along with increased policing — are going to be key, Armstrong says.

The stick of more and increased legal perils for black-market sellers will surely help the sanctioned industry make headway, he says. Provinces have vowed to boost enforcement of the illegal trade while the federal criminal code sets out harsh sentences, especially for anyone selling to minors.

“I think the main emphasis has to be on the carrot side,” Armstrong says.

Aside from formulating the most desirable and consistent products — something legal producers can do better with laboratory backing — growers and regulators must make cheaper products available to complement high-end wares, he says.

“Governments so far have kind of talked about $10 a gram including taxes, (and) that’s not going to cut it very well against the black market that’s charging $5.50 or $6.50,” Armstrong says.

“It doesn’t have to be all cheaper, but if you can at least have a value brand (so) people can say, ‘I’m not saving any money going to the black market why not go legal?’ ”

Armstrong says the industrial-scale operations legal growers will build will give them and advantage over their furtive, underground counterparts in offering cheaper goods — should regulators allow them to go on sale.

Grieve says his company is intent on offering such cheaper alternatives if allowed.

To compete with underground dealers, many of whom offer customer loyalty discounts and pizza-like delivery times, the legal market must also open far more stores, Armstrong says. While product shortages have limited initial store openings in Ontario to 25, for example, this province needs 1,000 or more stores to be competitive, Armstrong says.

Armstrong says producers must also be freed from the draconian advertising and promotion restrictions Health Canada’s legalizing regulations have imposed.

While regulators have a duty to limit the use of a product with known health and public safety risks, producers need some latitude to compete, Armstrong says.

Current rules limit virtually any advertising and promotion and insist on plain packaging with minimal product information and a tiny producer label.

“But if you really want to get people to switch, you’ve got to explain why, you have to make a sales pitch,” Armstrong says. “And that’s something industry is really going to struggle with.”

Joseph Hall is a Toronto-based reporter and feature writer. Reach him on email:


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Nostalgia and much more with Starburst XXXtreme




Get a taste of adventure with Starburst XXXtreme based on the legendary NetEnt Game. The nostalgic themes are sure to capture fans of the classic version as they get treated to higher intensity, better visuals, and features. The most significant element of the game is its volatility. Patience will not be an essential virtue considering the insane gameplay, and there is a lot of win potential involved. It retains the original makeup of the previous game while adding a healthy dose of adrenaline. 

Starburst Visuals and Symbols

The game is definitely more conspicuous than before. The setting happens over a 5-reel, 3-row game grid with nine fixed win lines, which function if a succession from the left to the right reel is present. Only those players that that attain the highest win per bet line are paid. From a visual standpoint, the Starburst XXXtreme slots illustrates lightning effects behind the reels, which is not surprising as it is inherited from the original version. Available themes include Classic, Jewels, and Space. The game is also available in both desktop and mobile versions, which is advantageous for players considering the global pandemic. According to Techguide, American gamers are increasingly having more engaging gaming experiences to socialize to fill the gap of in-person interaction. Starburst XXXtreme allows them to fill the social void at a time when there is so much time to be had indoors. 

Starburst XXXTreme Features

Players get to alternate on three features which are Starburst Wilds, XXXtreme Spins, and Random Wilds. The first appears on reels 2,3, or 4. When these land, they expand to cover all positions while also calculating the wins. They are also locked for a respin. If a new one hits, it also becomes locked while awarding another respin. Starburst XXXtreme offers a choice between two scenarios for a higher stake. In one scenario with a ten times stake, the Starburst Wild is set on random on reels 2,3, or 4, and a multiplier starts the respin. The second scenario, which has a 95 times stake, starts with two guaranteed starburst wilds on reels 2,3, or 4. it also plays out using respin game sequence and features. The game also increases the potential with the Random Wilds feature to add Starburst Wilds to a vacant reel at the end of a spin. Every Starburst Wild gives a random multiplier with potential wins of x2, x3, x5, x10, x25, x50, x100, or even x150.

The new feature is sure to be a big hit with the gaming market as online gambling has shown significant growth during the lockdown. AdAge indicates the current casino customer base is an estimated one in five Americans, so Starburst XXXtreme’s additional features will achieve considerable popularity. 

What We Think About The Game

The gambling market has continued to diversify post-pandemic, so it is one of the most opportune times to release an online casino-based game. Thankfully Starburst XXXtreme features eye-catching visuals, including the jewels and space themes. These attract audience participation and make the gameplay inviting. The game also has a nostalgic edge. The previous NetEnt iteration featured similar visuals and gameplay, so the audience has some familiarity with it. The producers have revamped this version by tweaking the features to improve the volatility and engagement. 

That is characterized by the potential win cap of 200,000 times the bet. Starburst XXXtreme does not just give betting alternatives for players that want to go big. The increase of multipliers also provides a great experience. If the respins in the previous version were great, knowing that multipliers can go hundreds of times overtakes the game to a new level. 

Players should get excited about this offering. All of the features can be triggered within a single spin. Whether one plays the standard game or takes the XXXtreme spin route, it is possible to activate all of the features. Of course, the potential 200,000 times potential is a huge carrot. However, the bet size is probably going to be restricted and vary depending on the casino. It is also worth pointing out that a malfunction during the gameplay will void all of the payouts and progress. Overall, the game itself has been designed to provide a capped win of 200,000 times the original bet. 

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‘We’re back’: Montreal festival promoters happy to return but looking to next year




In downtown Montreal, it’s festival season.

In the city’s entertainment district, a musical act was conducting a sound check on stage Friday evening — the second day of the French-language version of the renowned Just For Laughs comedy festival. Tickets for many of the festival’s free outdoor shows — limited by COVID-19 regulations — were sold out.

Two blocks away, more than 100 people were watching an acoustic performance by the Isaac Neto Trio — part of the last weekend of the Festival International Nuits d’Afrique, a celebration of music from the African continent and the African diaspora.

With COVID-19 restrictions continuing to limit capacity, festival organizers say they’re glad to be back but looking forward to next year when they hope border restrictions and capacity limits won’t affect their plans.

Charles Décarie, Just For Laughs’ CEO and president, said this is a “transition year.”

“Even though we have major constraints from the public health group in Montreal, we’ve managed to design a festival that can navigate through those constraints,” Décarie said.

The French-language Juste pour rire festival began on July 15 and is followed by the English-language festival until July 31.

When planning began in February and March, Décarie said, organizers came up with a variety of scenarios for different crowd sizes, ranging from no spectators to 50 per cent of usual capacity.

“You’ve got to build scenarios,” he said. “You do have to plan a little bit more than usual because you have to have alternatives.”

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MELS new major movie studio to be built in Montreal




MONTREAL — MELS Studios will build a new film studio in Montreal, filling some of the gap in supply to meet the demand of Hollywood productions.

MELS president Martin Carrier said on Friday that MELS 4 studio construction will begin « as soon as possible », either in the fall or winter of next year. The studio could host productions as early as spring 2023.

The total investment for the project is $76 million, with the Quebec government contributing a $25 million loan. The project will create 110 jobs, according to the company.

The TVA Group subsidiary’s project will enable it to stand out « even more » internationally, according to Quebecor president and CEO Pierre Karl Péladeau. In the past, MELS Studios has hosted several major productions, including chapters of the X-Men franchise. The next Transformers movie is shooting this summer in Montreal.

Péladeau insisted that local cultural productions would also benefit from the new facility, adding that the studio ensures foreign revenues and to showcase talent and maintain an industry of Quebec producers.


The film industry is cramped in Montreal.

According to a report published last May by the Bureau du cinéma et de la télévision du Québec (BCTQ), there is a shortage of nearly 400,000 square feet of studio space.

With the addition of MELS 4, which will be 160,000 square feet, the company is filling part of the gap.

Carrier admitted that he has had to turn down contracts because of the lack of space, representing missed opportunities of « tens of millions of dollars, not only for MELS, but also for the Quebec economy. »

« Montreal’s expertise is in high demand, » said Montreal Mayor Valérie Plante, who was present at the announcement.

She said she received great testimonials from « Netflix, Disney, HBO and company » during an economic mission to Los Angeles in 2019.

« What stands out is that they love Montreal because of its expertise, knowledge and beauty. We need more space, like MELS 4, » she said.

There is still not enough capacity in Quebec, acknowledged Minister of Finance, the Economy and Innovation Eric Girard.

« It is certain that the government is concerned about fairness and balance, so if other requests come in, we will study them with the same seriousness as we have studied this one, » he said.

Grandé Studios is the second-largest player in the industry. Last May, the company said it had expansion plans that should begin in 2022. Investissement Québec and Bell are minority shareholders in the company.

For its part, MELS will have 400,000 square feet of production space once MELS 4 is completed. The company employs 450 people in Quebec and offers a range of services including studio and equipment rentals, image and sound postproduction, visual effects and a virtual production platform.

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