INN caught up with EY Canada’s national cannabis leader to discuss the state of the cannabis industry in the country.
New leadership in the Canadian cannabis industry is paving the way for changing tides in the space, according to one expert market watcher.
The Investing News Network (INN) had the chance to catch up with Monica Chadha, EY Canada’s national cannabis leader, to discuss the current cannabis landscape in Canada.
EY’s cannabis team is intricately attached to the Canadian sector, serving as a business advisor that engages with the players in the market and follows the steps taken by the entire cannabis ecosystem.
Chadha said Canadian marijuana companies are moving forward with themes of globalization as the worldwide cannabis play continues to expand.
“With the … changing of the guard and getting new executive leadership teams in, it’s certainly inviting individuals into the organization who do have that global experience and who can run a public multinational organization as international expansion occurs,” the EY researcher told INN.
While 2019 offered the first round of rotations for the Canadian cannabis market at large, the trend has continued into 2020; recently Aurora Cannabis (NYSE:ACB,TSX:ACB) joined Aphria (NASDAQ:APHA,TSX:APHA) and Canopy Growth (NYSE:CGC,TSX:WEED) in confirming a new CEO.
Near the end of 2019, following a dip in sentiment surrounding the Canadian market, Chadha wrote that in 2018, EY had done EBITDA projections for the 25 largest companies trading on Canadian exchanges. The reality eventually fell short of the projections made by EY.
When asked about the growth of brands and brand appeal with Canadian consumers, Chadha confirmed what the data has been showing: Cannabis brands in Canada have not made a significant impact yet.
“A lot of the branding and brands that percolate up to the top in terms of SKUs that gain popularity amongst consumers, it really is at this particular day and age through social media or through direct or indirect lines of communication happening in the general populous,” the EY expert said. “I think that’s what you can expect to see in the near term. It really is just based on what they’re hearing through these public forums, but less so through direct forums of what could be perceived as marketing or advertising.”
Branding in the country has faced multiple challenges given the tight regulations on promoting products and experiences related to the drug. In fact, a survey conducted this past summer found that Canadian consumers are largely ignoring branding efforts. In total, no brand was found to have recognition of over 41 percent among the 3,000 Canadian consumers surveyed.
“When product options increase and brand awareness remains low, consumers get confused. They can get decision fatigue when they do not see a product that aligns with their complex purchasing decisions,” the Brightfield Group explained in its findings. “This has led to a significant gap between consumers aware of Canadian brands and those that report purchasing them.”
Watch the video above to hear all of the comments from Chadha. And click here if you want to check out a conversation between two fund managers about the state of cannabis investments.
Don’t forget to follow us @INN_Cannabis for real-time updates!
Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.