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Photo by Justin Tang/The Canadian Press

Greg Engel, chief executive of New Brunswick-based licenced producer Organigram Holdings Inc. admits that the tight branding restrictions have been an annoyance for his company and might even become a bigger problem once edibles and extract-based products come onto the market. “But I would say the other way to look at it is that we’re on the same playing field as licensed producers much bigger than us,” he said.

But Gimelshtein is not convinced that companies currently holding superior market positions will be able to maintain that once supply drastically increases and prices drop, “To me, sure San Rafael (an Aurora brand) is the number one brand in Ontario. But is that meaningful? Is that going to create incremental margin in the long run? I’m not so sure.”

For Hass, one of the biggest misperceptions in viewing the Canadian cannabis industry as a growth sector is that consumer demand for weed will continue to grow. “Demand will come from people already using cannabis on the black market, shifting to legal cannabis. And that’s not happening right now because of ease of access and high prices,” he explained.

“If you look at Colorado, user rates increased just two per cent in four years after legalization, and that was accompanied by a price drop,” he said.

Gimelshtein’s view of many licensed producers is that they have “sunk millions” into infrastructure, but are not achieving the kinds of sales figures that they thought they would at this point in the legalization cycle.

“So they’ll ask — how do I get people to buy my product? Well I’ll lower the price, where I make just a bit of money versus nothing at all. And that’s going to cause compression for everybody except those who have really built brands.”

• Email: vsubramaniam@postmedia.com | Twitter: VanmalaS