One thing that is clear is that costs of production will trend down as the industry consolidates and gets more professional and technology improves. This means that in order for companies to compete they need to be large and efficient, and minimise overheads such as electricity and labor. Prices will remain highly sensitive to regulation, trade restrictions and changes in supply and demand. We'll continue to see the cannabis industry being more about legalities, compliance, and market positioning and timing, rather than just growing product.

Implications for Cannabis Investors & Entrepreneurs

So what's the smart move for cannabis entrepreneurs and investors?

Our money is on securing a strategic international supply chain through partnership, sales contracts, acquisition or development. We focus on high quality, low cost production of product which can be sold into the most stringent markets. We're focused on trade volume and consistency and secure partnerships rather than looking for the lowest prices or highest margins.

The right approach for you depends on where you are in the market, your resources and goals. The large publicly listed cannabis companies such as Tilray, Canopy etc are investing tens or hundreds of millions of dollars in acquiring or developing production in emerging markets. They are producing at very low cost, sell at high prices, but are primarily interested in building retail market share. But few groups have the resources or expertise to operate at this level.