ASSESSING THE VIABILITY OF CANADA'S REGULATED CANNABIS MARKET

Cannabis Manufacturer

Consumer Packaged GoodsData, Insights & MeasurementChange Leadership & Organizational Alignment

The Situation

A licensed producer sought an objective assessment of whether remaining in Canada's legal cannabis market was financially sustainable. Despite solid operations and brand discipline, the business faced heavy regulatory costs, ongoing price compression, and oversupply. National sales plateaued, monthly growth slowed to +1.1%, and the company retained only ~27% of retail value, with taxes and markups consuming nearly half.

Outcome

"We uncovered a hard truth: within Canada’s regulatory landscape, profitability had a ceiling. Rather than force-fit a model that couldn’t win, the organization reallocated investment to markets where it could. The engagement highlighted a simple but overlooked principle—exiting can be a growth strategy."

Approach

Why

Evaluate commercial viability under current and potential policy conditions.

How

Combined economic modeling, industry benchmarking, and internal performance analysis to test profitability scenarios.

What

•Benchmarked taxation and pricing structures showing government share of ~47% of final price
•Modeled both long-term participation and managed-exit options
•Identified that structural profitability was unachievable without excise duty reform, pricing flexibility, or marketing liberalization

3 Things That Worked

Grounding recommendations in data, not perception.
Framing clear "stay vs. exit" scenarios for decision-makers.
Aligning finance, regulatory, and commercial functions around one economic reality.

3 Things We'd Do Differently

Engage policymakers earlier to test reform appetite.
Deepen consumer insight into illicit-to-legal migration.
Transfer learnings sooner to other regulated markets.

Engagement Lead

Wendy Montgomery