a new book charts the evolution of legalized cannabis in Canada

One of Justin Trudeau’s principal legislative achievements during his near decade as prime minister was the federal government’s legalization of cannabis on Oct. 17, 2018.

But nearly seven years later, what was once considered a golden goose has gone up in smoke according to journalist Ben Kaplan, author of Catch a Fire: The Blaze and Bust of the Canadian Cannabis Industry.

“I just couldn’t believe that things were changing so rapidly. This bad law that had been in place for 100 years was changing in real time,” he said.

“As a journalist, I thought this is a great place to play.”

Kaplan says the transition from medicinal to recreational cannabis was sudden and dramatic.

As he puts it in the book, “It was intoxicating, [like] Silicon Valley if you swapped out computers for blunts.”

Legalization transformed the scale of the business of cannabis irrevocably.

“The value prop of your business is one thing when it’s medicinal. So, say one per cent of the population, but it could still be profitable. It could still be a business. But then when Justin Trudeau comes on the scene, suddenly it’s not going to be this particular medicine [anymore], but it’s going to be more like beer. It just changed everything overnight,” he said.

As Kaplan points out, weed would eventually be sold just like any other CPG – or consumer packaged good.

“Originally, they set out to make these things like [going to] Apple stores or, you know, like buying a Jaguar. It’s not. It’s like buying a six pack.”

His book takes the reader on a dizzying journey to explain how we got to that place. It introduces the reader to colourful characters like Terry Booth, the founder of Aurora Cannabis, and Bruce Linton, the founder of Canopy Growth.

At one point, Canopy Growth had a market cap of $22 billion, making it worth more than US Steel. But by 2022, Canopy had sold off all its Canadian operations, including 28 retail stores nationwide.

John Ackermann speaks to Ben Kaplan, author of Catch a Fire: The Blaze and Bust of the Canadian Cannabis Industry

Kaplan says the early days of legalization were filled with high hopes and naïve players who didn’t quite understand the business they were getting into.

“A good anecdote is a company with a $15 billion valuation that had investorrelations@gmail.com as [the way] to get in touch with their investor relations team.”

Kaplan admits Catch a Fire is something of a rise and fall tale, but also a success story, a ‘Made in Canada’ success story.

“We just did this on our own, created this thing. We’re the number one exporter of weed around the world. So, we did that basically overnight, with startups owned by Canadians, employing Canadians.”

“We’re selling in Australia, we’re selling in Israel. And for a lot of these cannabis companies in Canada, we make better money selling abroad than we do domestically, because it’s so competitive here, it’s a race to the bottom in terms of the prices,” he said.

Today, only a handful of conglomerates dominate the industry. But Kaplan still considers legalization a net positive.

“I definitely think the winners are the Canadian people. I mean, there’s more options. I’m a father of two, and I think for my kids, the world they’re growing up in now, I’d much rather see my kid, during frosh week at university, take a gummy than drink Wild Turkey. So, I think from that perspective, we’ve all won.”

“The idea was to help eliminate organized crime, which is what we’ve done, in essence.”

Kaplan admits the industry is in a transition phase.

As he puts it in the book, “Due to terrible margins, the existence of too many shops, and the still-mighty presence of black market weed, many of the retailers, except chains, will be closed unless something changes soon.”

“I think what’s going to happen is more right-sizing, more stores closing, unfortunately, conglomerates being the things that are going to last. But they’re going to work it out like a Dunkin’ Donuts or a Domino’s Pizza.”

As for what’s next, some feel the new frontier is legalizing psilocybin mushrooms. But Kaplan isn’t so sure.

“There’s certainly some of the same people [who] have parked some of that same money, and there’s some of that same hype [as cannabis], but I don’t know,” he said.

“It seems pretty niche. I don’t know when the last time you took mushrooms was, but I don’t think you’re going down to the store for a six pack of mushrooms and just watching the hockey game.”

Catch a Fire: The Blaze and Bust of the Canadian Cannabis Industry is published by Dundurn Press.