Mike Gorenstein, CEO of Cronos Group, said cigarette giant Altria’s investment in his Canadian pot company could lead tobacco growers to switch to growing marijuana instead. CannTrust Holdings is also talking to farmers of other cash crops about cultivating cannabis, CEO Peter Aceto said. (Bloomberg)
Talking point: Farmers might want to think twice about turning their fields over to contract cannabis cultivation. Cannabis producers ramped up supply in anticipation of legalization day in October, but PwC predicts that by 2021, annual industry capacity will be 2,000 tons of pot, against demand of 900 to 1,200 tons. And the consultancy said not all of that excess production can be sold in export market. While Canadian cannabis farmers now qualify for some environmental and innovation funding from the federal government, they’re not eligible for safety net programs that protect against sudden crop price drops because of the volatility of the sector. Combined, that makes growing pot for big marijuana processors a relatively risky proposition long term.