Demise of Canadian cannabis website a symptom of failed dreams: Don Pittis

There's an increasing view that the Canadian cannabis bonanza was little more than a pipe dream. That may not quite be true.

End of brave venture The Leaf News is proof of Canada's collective pot delusion

Employees at the Fire and Flower store prepare an order for a customer in Ottawa on April 1. As Canada legalized pot last year it seemed everyone had an idea for how to get rich. But should they have realized the business would be boom and bust? (Chris Wattie/Reuters)

Who could have imagined attracting an international audience to a cannabis website produced in the middle of Canada from Manitoba's windswept capital?

Paul Samyn is who, the editor of the venerable Winnipeg Free Press, one of Canada's last independent regional dailies, who in the early stages of the country's move to pot legalization saw an opportunity.

Samyn's idea was to create a credible specialist online news site not so much intended for the burgeoning Canadian business sector but aimed at the anticipated multitude of pot consumers anxious for information about the soon-to-be-legal drug. To cover the costs, the paper's advertising department would sell display ads to a growing corporate sector and to the retailers looking to attract new customers.

As it turned out Samyn's entrepreneurial dream, like so many during the early heady days of what the Globe and Mail trumpeted as "the biggest new business sector in Canadian history," was not so promising as he hoped.

Bloom is off the rose 

One year after legalization, as pot share prices sag, the number of cannabis users remains stagnant, and provincial distribution systems still fail to compete with the illegal sector, the bloom is off the rose.

As it turns out Samyn was half right. People really did want a popular and reliable information source about the emerging pot sector. The site got respectable traffic not just from Canada and the U.S., but from around the world. But as with so many other cannabis-related ventures begun with such high hopes, the business case just didn't work out.

Tell us what you think!

Help shape the future of CBC article pages by taking a quick survey.

Last week The Leaf News, as the Free Press pot venture was called, bid farewell, that is "until the next time Canada legalizes a drug," said the online newsletter in the cheeky style it had cultivated.

The Leaf News, Canada's pioneering cannabis news and information site, announced its closing last week, but its archive of useful information will remain. (Winnipeg Free Press)

When I spoke to Samyn just over a year ago, the writing was already on the wall.

"The advertising revenue has been negligible," said Samyn, who had anticipated rules on pot promotion would be more like the lucrative liquor sector, with high-value lifestyle ads and glittering product displays. As it turned out, the plain brown wrapper style of packaging decreed by federal law was never going to make for a pretty image.

Besides, advertising rules intended to discourage use rather than help develop a new lucrative industry did not allow for showing people actually enjoying the product and its effects.

"They're treating it like tobacco," he said.

The vision thing

The current disillusionment with the Canadian pot industry is partly due to the contrast with the business hype of startup companies trying to sell "vision," said Michael Armstrong, a professor at Brock University's Goodman School of Business, in St. Catharines, Ont., who writes regularly for the Globe and Mail's paid-subscription cannabis newsletter, Report on Business Cannabis Professional.

"Two years ago we had all these entrepreneurs big or small selling vision of the empires they were going to build and how wonderfully profitable they were going to be," said Armstrong.

That's the job of entrepreneurs, like Tesla's Elon Musk or WeWork's Adam Neumann, painting the picture of success to inspire investors to give them money. But not all visionary ideas work out. Last week Canopy Growth and Aurora Cannabis, Canada's two biggest pot companies, revealed that revenue was falling and announced stunning losses.

Cam Battley, chief corporate officer of Aurora Cannabis, in better times. Now as the industry contracts Aurora is scaling back plans for new production. (Scott Neufeld)

Now, of course, experts who once declared that a shortage of pot supplies would be hard for the industry to overcome are saying they saw the current glut coming.

"If you were a rational investor or a wise investor ... you would be realizing at that point, OK, this is going to be a brand new industry. It's almost certainly going to go through some kind of boom and bust," said Armstrong.

Armstrong says the flood of new pot publications and specialist cannabis reporters was less over-optimistic than entrepreneurial as the shrinking journalism industry sought an opportunity for growth. That includes the Globe's specialist site for which, so far, Armstrong still writes a monthly op-ed.

"This is what the private sector does. They place educated bets and the Globe and Mail said, 'This is a brand new industry, there's potentially money here,'" he said.

The Globe and Mail's Report on Business avoided The Leaf News's advertising problems with a $2,000 subscription, but as gloomy news dominates its headlines, that price has come down to $999 for individual users. (Don Pittis/CBC)

Solomon Israel, though hired to fill the pages of The Leaf News, is now a staff reporter for the Winnipeg Free Press, covering stories that will include the cannabis beat. He says that while in the end ad revenue was not as good as expected, the two-year run of the site was a success as a public service and in helping to put Winnipeg and the paper on the map.

"Something that I tried to do every day," said Israel, "was to try and focus on things that don't only matter to people who own stocks in cannabis companies but simply to people who might use cannabis and be interested in learning more about legalization and the laws just for themselves."

Archive of cannabis wisdom

And the public service work the site generated has not disappeared. The Ask Herb feature, an advice column, continues on the Free Press site as a kind of FAQ of Canadian cannabis wisdom.

Brock's Armstrong, who is scandalized at the mismanagement of the Canadian pot rollout, especially in Ontario, says there is still potential growth in the industry once legal sales cut into the black market that retains the vast majority of the Canadian trade. But he says that requires more stores and more competitive pricing.

Israel, who effectively spent two years full time becoming a cannabis expert, also sees the industry transforming slowly over the coming decades, just as alcohol only gradually became a normal retail product in the years after Prohibition. And from his point of view, the fact that pot smoking has not exploded in popularity since cannabis became legal is not a bad thing.

"From a public health perspective that's good news, right?" said Israel. "When you get down to it, the legislation was public health legislation first and foremost, it wasn't legislation that was meant to necessarily create an enormous industry."

Follow Don on Twitter @don_pittis


Don Pittis

Business columnist

Based in Toronto, Don Pittis is a business columnist and senior producer for CBC News. Previously, he was a forest firefighter, and a ranger in Canada's High Arctic islands. After moving into journalism, he was principal business reporter for Radio Television Hong Kong before the handover to China. He has produced and reported for the CBC in Saskatchewan and Toronto and the BBC in London.