Five years after cannabis was legalized in Canada, experts and industry players say regulatory issues have weighed on the success of the industry. Nawan Butt, a portfolio manager who oversees a cannabis ETF, told that regulation is the biggest challenge to Canada’s cannabis industry, and a main reason why things have been slow ever since legalization in October 2018.

“They came up with a set of rules and directives, which then moved very slowly and evolved very slowly to keep up with what were the actual demands of the consumer,” Butt, also head of capital markets at Purpose Investments, said in an interview. “We've seen Canada just under-serve its consumers, to some extent.”

According to Butt, the industry’s underperformance is due largely to the limitations of regulators. Slow progress in that area has led to the cannabis sector having the “highest proportion of all bankruptcies in Canada” in 2022, he argued.

“Regulators have done a disservice of sorts to the investors and operators in the space that really were sitting on an industry that was net new, could generate a lot of taxes (and) could generate a lot of jobs,” Butt said.