Small medical cannabis growers and producers in the Canadian province of British Columbia are coming together to form a co-op in order to bridge the supply gap. This co-op venture will be incorporated at the provincial level instead of seeking national incorporation.
This undertaking involves a partnership with Victory Square Technologies and Grow Tech Labs. The supply shortages that have plagued the Canadian recreational cannabis market prompted the initiators of this co-op to take action.
The company will be called the British Columbia Small Cannabis Producer and Processor Co-op. This is intended to reflect the character of the province as a leader in the cannabis industry both nationally and internationally.
Barinder Rasode, the CEO of this new company, revealed during its launch that the entire province and the cannabis industry will benefit greatly if small producers and processors come together to continue making a contribution in the industry.
Rasode added that once these small players combine their capacity, they have the potential to become a formidable player in the cannabis industry not just in Canada but globally.
The new company is calling on small producers to send them an email expressing interest to join this new group and to get additional information about this new entity.
The co-founder and CEO of Victory Square Technologies (Shafin Diamond) remarked that he was excited to see that micro-growers of medical cannabis were coming forward to take part in the co-operative.
It is not clear whether the desire to combine forces wasn’t driven by a survival instinct. As the cannabis industry has grown, large scale operations have increasingly taken an upper hand due to their economies of scale that lower the cost of producing each unit of cannabis.
While production costs are being driven downwards, the cannabis market hasn’t sufficiently segmented (as yet) in order to sustain the niche growers and producers. Consequently, the small growers and producers may have felt some pressure on their profit margins as the large producers brought more products to the market at lower rates.
This pressure could be the reason why the initiators of the co-op decided that they should either combine forces or fold. Such a factor may explain why Grow Tech Labs and Victory Square Technologies were brought on board to provide a way to standardize the products from the small growers and producers.
If that is the case, then that is a positive step forward since the entire industry, including Net Element (NASDAQ: NETE) and Medical Cannabis Payment Solutions (OTC: REFG), would want every entity that can chip in to do so in order to nurture this nascent industry.
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