Canada’s cannabis industry has already gone through its post-legalization growing pains.
Now, surviving producers are poised to expand markets internationally — including the U.S. — as demand for recreational weed flourishes.
“There’s not enough cannabis flower to supply all those international markets,” says Beena Goldenberg, CEO of Canada’s Organigram Global. “We can capitalize on the international markets that are opening up and the U.S. cannabis companies can’t, because it’s not federally legal.”
Canada is the world’s largest cannabis exporter shipping tonnes of product to budding markets in Australia, Germany, Israel, the U.K. and Portugal.
In a nod to that international growth, Organigram even rebranded to ‘Organigram Global’ in late March and this week acquired U.S. hemp-based beverage brand Collective Project Beverages.
International markets, Goldenberg says, could be further expanded by reducing excise duties and loosening some of the limitations on marketing and branding.
“The industry has been screaming for change and support, and have been effectively ignored,” Goldenberg says. “Now is the time, because of the macro-environment — with tariffs and all that’s happening — for us to go and support a Canadian-grown industry that has a first-mover advantage.”
The Montreal-native came to the industry after studying chemical engineering at McGill University, followed by a master’s degree in food and fermentation, before starting her career in research for Pillsbury.
After gaining exposure to branding, Goldenberg pivoted to marketing, and later management, for Canadian pasta-maker Catelli Foods, before becoming CEO of health food maker Hain Celestial Canada in 2005.
When she joined Organigram as CEO in September of 2021, the company had 650 employees, a single growing facility, five per cent market share in Canada, and revenues of about $80 million.
Today, the company employs more than 1,250 people across five facilities, with a 12 per cent market share and $250 million in revenues and is largest cannabis company in the country by market share.
The Star spoke with Goldenberg from her home office in Toronto about her journey into the cannabis sector, the opportunity she sees for the industry and the regulatory handcuffs the company faces:
What made you want to work in the cannabis sector?
I had spent the previous 15 years in the organic food space, and when I joined it was a burgeoning category. Suddenly people were thinking about eating healthier and more natural ingredients, looking after their bodies through food. I really saw it go from its infancy to a point where all the major global food companies were getting into it.
That’s what was exciting about the cannabis industry. There was a similarity to what it was like in the natural food world, and I wanted to help shape that industry and be part of that growth, and I already had experience with the volatility and regulatory challenges that come with an emerging category.
Are you a consumer?
I’m less of an enthusiast on the combustible products, but the beverages, the gummies, that’s an area that is more comfortable for me, and we have some great products in those categories.
What opportunity did you see for Organigram specifically?
I spent my first year and a half in the cannabis industry at Supreme Cannabis, and it was a challenged business. It had limited runway and owed lots of cash, and I was able to help them extend that runway and sell the business. I liked the industry, but I wanted to work for a company that had a good reputation, a focus on innovation, regulatory expertise, and most importantly, a strong balance sheet.
A few months before I joined, Organigram received their first strategic investment of $221 million from British American Tobacco (BAT), which gave the company money to expand and innovate.
What does innovation look like in this sector?
We have a Centre of Excellence in Moncton, and our product development collaboration with BAT is about developing science-backed innovation.
For example, we pioneered and patented Jolts Edible Extracts, a lozenge that gives access to cannabinoids faster. We launched Rip-Strip Hash, which comes in a two-by-two square of strips that make it easier for new consumers that don’t know how to use hash to try it. And then our FAST nano-emulsion technology, which increases the onset of the effects of edibles like gummies and beverages by 50 per cent.
That’s just on the product innovation side, but there’s also been cultivation innovation. Cannabis is usually grown from clones, but if you look at most mature agricultural industries, they do it from seeds. We’re investing in seed genetics research, and now about a quarter of our facility in Moncton uses seeds instead of clones, which grow faster, which means less labour, lower costs, better yields and they’re more predictable.
Why didn’t the industry live up to the pre-legalization hype?
How often does a business go from prohibition to legal?
There was lots of hype, lots of capital, lots of facilities getting built, but no real effort to understand the market size compared to capacity. Many overspent on build-outs, and some of these facilities could never get to cost efficiency. At the same time, the legal business had to pay all these taxes and spend on compliance, so it was hard to compete with the illicit market on price.
It’s taken this many years for companies to get cash-flow positive; a lot of facilities shut down, a lot of companies went into creditor protection, so what’s left is a mature industry with much more efficient operations.
When I joined in 2020, the illicit market had 75 per cent of market share. Now, it’s 30 per cent, which has only happened because of better pricing, and more access through retail stores.
What was behind the recent rebrand?
After we acquired Motif in December we became the market leader in Canada based on market share, we had filled out our portfolio gaps in all major categories, and it was time to tell that market where we’re going.
We were already exporting to Australia, Germany and the U.K., but this was about sending the message that we’re now a global company that’s looking to grow around the world.
Why can’t other countries build their own production facilities?
In the heyday of pre-legalization, there was so much capital available to companies in Canada to build out facilities that cost hundreds of millions of dollars, and most had massive breakdowns as the cannabis industry unfolded, because pricing came down and the demand wasn’t as high.
Markets around the world saw the amount of money spent and the number of companies shutting down, and no one has the capital today to build up the way Canada did then. Building out a facility in Germany like the one we have in Moncton would cost hundreds of millions of dollars. It’s also worth considering the biggest input is electricity, and electricity costs are very high in those markets.
It’s also hard to predict demand. Germany decriminalized last April, and suddenly their market grew fourfold, and it takes time to grow and harvest and prepare products, but they needed cannabis on the spot. The market is too volatile in the beginning. That’s a lesson Canada learned the hard way, and nobody wants to go through that.
How significant is the opportunity for Canadian cannabis exporters?
The cannabis industry contributed over $7 billion in GDP last year, we have over 80,000 employees across the country, and we’re shipping all over the world, so it’s a massive opportunity.
It’s also an interesting macroeconomic time, with all the noise about tariffs and interprovincial trade barriers, because in the U.S. they can’t even ship between states, let alone internationally, so there’s a great opportunity to sell our products to the global market.
How could Canada capitalize on this opportunity?
Cannabis can only be sold in stores with opaque windows, we can’t advertise — even to educate people trying to understand the product — you can’t sell a cannabis beverage in a bar, even though it’s an age-gated setting, so I think there’s an opportunity to address some of the regulatory barriers.
In the initial regulation the excise duties were 10 per cent of the retail price, or $1 per gram, whichever was higher.
That was based on the assumption that the average gram would cost around $10. But when licensed producers were forced to cut prices, they were paying $1 in taxes on a $3 gram.
Instead of being taxed at 10 per cent they were paying up to 35 per cent of revenue on duties, which is about 12 times as much as wine.
The original idea was three years post-legalization there would be a Cannabis Act review to fix things they didn’t get right, but that was delayed a year because of COVID. Addressing the excise tax was put forward for consideration in the budget last year, but didn’t make it in, which was very disappointing for the industry.
We have great quality products, there’s demand from around the world, and reducing the excise burden, loosening some of the regulations around marketing, and creating a national export strategy would give us the opportunity to better service that global market.
