Stock markets aren't the only thing contracting in the first half of 2022.
The cannabis industry is coming out of the pandemic to the same rocky seas that the stock and crypto markets are experiencing.
The situation at Aurora Cannabis may illustrate this new reality best.
Aurora announced that it is selling its Sun facility in Alberta for C$47 million ($36 million) in a deal that hasn't closed yet.
The selling price is a fraction of the more than C$250 million the company spent on the greenhouse facility.
The move has been a long time in coming — the company initially closed the facility indefinitely in November 2020.
But the deal comes just weeks after the company announce the sale of its flagship Aurora Sky facility in Edmonton.
The Sun greenhouse was initially planned to be the largest in the world with a projected capacity above 230,000 kilograms per year.
Turns out the current Canadian cannabis market can't support a facility with that much production power the facility was never put into full use.
In a sign of just how much Aurora overshot demand, Aurora announced in November 2019 that construction of the facility would be suspended and that they would only partially complete the project.
Aurora only built 238,000 square feet of the 1.63 million square foot facility. The company said the remainder of the facility would be completed when market conditions improved.
Cannabis Buyers Market
U.S. and Canadian cannabis companies have been discounting their products in order to move inventory.
The industry continues to dig out of the explosive buildout that occurred leading up to the pandemic.
Retailers are relying on promotions, discounts and markdowns to boost sales, Krista Raymer of cannabis consulting firm Vetrina Group told MJBizDaily.
Combined discounts on mainly recreational cannabis sales in nine U.S. states more than doubled over the past five years, from 7% in June 2017 to 15% in April 2022, according to retail data from analytics firm Headset.
The firm expects cannabis discounting to continue until the industry has "more experience and data" to make better decisions about managing products, prices and inventories.
Total flower discounts in Washington state, one of the most mature cannabis markets in the country, reached 20% for the first time in November 2021 and topped 23% in April.
Germany Takes Another Step Toward Legalization
Germany is stepping into the 21st century when it comes to drug policy on cannabis.
On June 14, the country announced that it will start a review process called "Cannabis - but safe" which Burkhard Blienert, the Federal Government Commissioner for Addiction and Drug Issues, said is the launch of "modern cannabis policy" in the country.
The Federal Ministry of Health will speak with over 200 leading experts from addiction medicine, addiction help, law, business and associations and representatives from federal states about the next steps.
The government has five hearings planned this week discussing issues including: health and consumer protection; protection of minors and prevention; supply chains, ecological and economic issues; criminal liability, control measures and licensing to accompany the introduction of the controlled sale of cannabis for recreational purposes; and international experiences.
"The time has come: We are starting the preparatory phase of legislation," Blienert said. "The hearings are intended to discuss which measures can be used to ensure the best protection for young people, health and consumers in the event of implementation."
Personal possession is already decriminalized in Germany and the country has a medical cannabis program in operation.
But Germany could become the second European country to fully legalize the drug after tiny Malta.
