Business
Canadian cannabis companies back off from US hemp CBD market
Back in the regulated marijuana industry’s more heady days, a U.S. hemp-derived CBD subsidiary seemed like the must-have accessory for any Canadian cannabis company worth its bud.
Canopy Growth Corp. owned a hemp farm in Springfield, New York, and planned to build a $150 million industrial park in Kirkwood, New York, to produce hemp products.
Aurora Cannabis bought Reliva – a Massachusetts-based producer of hemp-derived CBD products – in a $40 million deal that included potential earnouts.
And Cronos Group spent hundreds of millions of dollars to acquire the Lord Jones hemp CBD brand.
The purchases came after the passage of the 2018 U.S. Farm Bill that legalized low-THC hemp, including hemp-derived CBD.
That legislation generated optimism about a new, multibillion-dollar market for hemp-derived products.
Now, after investor exuberance about the cannabis sector has largely worn off, several Canadian marijuana companies have retreated in one way or another from the hemp-derived CBD market south of the 49th parallel:
- Canopy announced in 2020 that it would stop farming hemp in New York in the face of “an abundance of hemp,” although it continued producing and selling hemp-derived CBD products. The Kirkwood project was abandoned, local media reported.
- Cronos announced in June it was exiting the U.S. hemp CBD market and relaunching Lord Jones in Canada.
- This month, Aurora said it was closing Reliva.
- Green Roads, a Florida CBD manufacturer acquired by Canadian cannabis manufacturer The Valens Co. – which was subsequently acquired by Canadian producer SNDL — filed for bankruptcy earlier this year and was acquired by Global Widget, parent company of Hemp Bombs.
The Canadian pullback from hemp CBD in the U.S. partly reflects the diminished fortunes of once-high-flying Canadian cannabis licensed producers.
It also reflects a general lull in the American hemp-derived CBD market, given the U.S. government’s continuing struggle over how to regulate products containing CBD.
“It’s a very, very difficult market in the U.S. right now,” said Bethany Gomez, managing director of Chicago-based cannabis analytics firm Brightfield Group.
Brightfield Group data shows the U.S. CBD market peaked in 2021 at roughly $4.7 billion in sales before contracting to $4.4 billion in 2022, with another decline expected in 2023.
Canadian ambitions
When big Canadian cannabis companies originally invested in U.S. hemp-derived CBD assets, they were well-capitalized and eager to expand their operations around the world.
“And around 2020, it was starting to become clear that there’s only so much that these cannabis companies can grow within the country of Canada – Canada’s only so big, and there’s only so much cannabis that can be consumed there,” Gomez explained.
Canadian licensed producers (LPs) invested heavily in international markets, but Gomez said the U.S. was “the golden prize.”
As publicly traded companies in the U.S., those LPs couldn’t deal with a substance that’s federally illegal.
The American hemp-derived CBD market seemed like a way “to get a foothold there without violating federal law,” Gomez said.
“They could play in the CBD space and then eventually take that presence in CBD into the (high-THC) cannabis space. ”
For Canadian firms, operating in the U.S. CBD space was meant to be “an opportunity to plant the seed of a brand early on (and) get that into the mainstream,” said Beau Whitney, chief economist of Portland, Oregon-based hemp and marijuana data and analysis firm Whitney Economics.
“And then, as the adult-use market opens up, you’ve already got a brand established – and then you just convert over to your adult-use product line.”
American hemp CBD headwinds
So far, the plan to leverage U.S. hemp CBD assets to get a leg up on adult-use cannabis in the event of federal legalization hasn’t played out as expected.
“Fast forward to 2023 – there’s no movement at all on federal legalization for cannabis,” Brightfield’s Gomez said.
“There’s very little optimism in federal legalization toward cannabis, there’s no movement from the (U.S. Food and Drug Administration) on (regulation) of CBD, and that market has really hit a standstill.
“And there’s not a lot of promise, in the near term, of cannabis taking off, or having a type of triggering event that would allow them to really tap the U.S. cannabis market.”
In the meantime, the cannabis industry faces an ongoing “capital crunch,” Gomez added – and investors aren’t willing to wait for businesses to become profitable given the uncertainty of federal legalization.
“There’s this pressure to get rid of anything that is not profitable. … Cash is king, and people are starting to run low on cash in many areas.”
Cronos, for example, said it was exiting its American hemp CBD operations “to improve its cash flow in the near term and position itself to directly enter the U.S. THC market” when regulations permit.
Cannabis economist Whitney said Canadian LPs are “pulling back (and) focusing in on their core business” as well as cutting fixed costs in both the U.S. and Canada.
Whitney noted another challenge for companies operating in U.S. hemp CBD: State-level uncertainty amid a lack of federal regulatory guidance.
“And so this is also a risk-mitigation play,” he said, citing shifting state regulations regarding hemp-derived cannabinoids.
Despite the pullback, Canadian cannabis companies haven’t entirely abandoned the U.S. hemp market.
Canopy Growth still sells Martha Stewart and This Works CBD products in the U.S.
Tilray Brands’ Canada-based wellness brand, Manitoba Harvest, operates in the U.S., although Brightfield’s Gomez noted the Tilray subsidiary is more focused on hemp foods than CBD products.
Village Farms International, the parent company of Canadian LP Pure Sunfarms, also owns hemp CBD company Balanced Health Botanicals, although Village Farms isn’t strictly Canadian.
Evolving business practices
The continuing Canadian pullback from U.S. hemp CBD comes as overall hemp production has declined, with U.S. Department of Agriculture data showing a nearly 50% decline in planted hemp acreage between 2021 and 2022.
For hemp CBD, “the amount of licensed acres in the United States right now is less than what it was before the 2018 Farm Bill,” economist Whitney said.
“And so, the number of cultivators have been dramatically reduced for cultivation of hemp with the intention of cannabinoid use, or cannabinoid productization.”
Meanwhile, Whitney sees an evolution in the way some companies approach the cannabis market, citing as an example Canopy’s move toward an “asset-light model” with third-party sourcing.
Whitney expects companies will “develop that very same model for hemp and hemp-derived products.”
By way of analogy, Whitney offered ketchup.
Canadian LPs and U.S. multistate marijuana operators alike have “tried to be experts in the equivalent of growing tomatoes, of processing tomatoes, of making ketchup and distributing that ketchup,” he said.
But ketchup kings such as Heinz or Hunt’s “don’t do that with their ketchup,” he continued: They contract out to tomato growers and processors, then brand and sell the ketchup themselves.
“I think that’s the very same model that we’re starting to see evolve for cannabis, for the LPs out of Canada, and for some of the MSO brands in the United States,” he said.
“Now it’s starting to come into a branding play and an outsourcing play, (a) contract-manufacturing play, much more so than a vertical-integration play – even though, with the Trump tax cuts a few years ago, it was favorable to develop a vertically integrated model.”
The retreat of some companies from the American hemp CBD sector might benefit those who remain, suggested Brightfield’s Gomez.
Hemp CBD assets are “being sold at a fraction of the cost that these companies paid for them,” she said, “which indicates that valuations are an order of magnitude lower, and there’s a lot of people that are out there right now that are shopping for distressed assets.”
Source: https://mjbizdaily.com/canadian-cannabis-companies-back-off-from-us-hemp-cbd-market/
Business
EU Pressure Builds on Google as Regulators Face Calls for Massive Fine Over Search Practices
A growing coalition of European industry groups is intensifying pressure on regulators to take decisive action against Google over allegations of unfair search practices that could reshape competition rules across the region’s digital economy.
Investigation Under Digital Markets Act Gains Momentum
The case is being examined by the European Commission under the European Union’s landmark Digital Markets Act (DMA), introduced to curb the dominance of major technology platforms and ensure fair competition.
Launched in March 2024, the investigation focuses on whether Google has been prioritising its own services in search results, potentially disadvantaging rival businesses that rely on online visibility to reach customers.
Industry Groups Demand Swift Action
Several prominent European organizations have jointly urged regulators to conclude the probe without further delay. They argue that prolonged investigations allow alleged anti-competitive practices to continue, putting European companies—especially startups—at a disadvantage.
Signatories include the European Publishers Council, the European Magazine Media Association, the European Tech Alliance, and EU Travel Tech.
In a joint statement, these groups warned that delays in enforcement are affecting innovation, profitability, and growth prospects for regional businesses competing in digital markets.
Google Denies Allegations
Google has rejected claims of bias, stating that its search algorithms are designed to deliver the most relevant and useful results to users. The company has also proposed adjustments to address regulatory concerns.
However, critics argue that these changes are insufficient and fail to address the core issue of market dominance.
Potential Billion-Euro Penalties
If found in violation of the DMA, Google could face significant financial penalties. Under EU rules, fines can reach a substantial percentage of a company’s global turnover, potentially amounting to billions of euros.
Regulators may also impose corrective measures requiring changes to business practices, which could have long-term implications for how digital platforms operate in Europe.
Wider Implications for Big Tech
The case highlights ongoing tensions between European regulators and major U.S. technology firms. In recent years, the EU has taken a more aggressive stance in enforcing competition laws, aiming to create a level playing field for local businesses.
A final ruling against Google could set a major precedent, influencing future enforcement actions and shaping the regulatory landscape for global tech companies operating within Europe.
As scrutiny intensifies, the outcome of the investigation is expected to play a critical role in defining the future of digital competition across the European Union.
AI & Technology
Amazon Faces Potential Criminal Trial in Italy Over €1.2 Billion Tax Evasion Allegations
Milan: U.S. tech giant Amazon is facing the prospect of a major legal showdown in Italy, after prosecutors in Milan formally requested a court to move forward with criminal proceedings over alleged tax evasion totaling approximately ₹12,500 crore (€1.2 billion).
The case targets Amazon’s European division along with four senior executives, marking one of the most significant tax-related investigations involving a global e-commerce platform in Europe.
Trial Push Despite Multi-Million Euro Settlement
The move comes even after Amazon reached a financial settlement with Italian tax authorities in December, agreeing to pay around ₹5,500 crore (€527 million), including interest, to resolve part of the dispute.
Typically, such settlements lead to the closure of criminal investigations. However, Milan prosecutors have opted to proceed, signaling a tougher stance on alleged corporate tax violations.
A preliminary hearing is expected in the coming months, where a judge will decide whether to formally indict the company and its executives or dismiss the case.
Allegations of VAT Evasion Through Marketplace Sellers
At the center of the investigation are claims that Amazon’s platform enabled non-European Union sellers to avoid paying value-added tax (VAT) on goods sold to Italian consumers between 2019 and 2021.
Prosecutors allege that the company’s marketplace structure allowed thousands of foreign vendors—many reportedly based in China—to operate without fully disclosing their identities or tax obligations. This, authorities argue, led to substantial VAT losses for the Italian government.
Under Italian law, online platforms facilitating sales can be held partially liable if third-party sellers fail to comply with tax requirements, a key point in the prosecution’s case.
Italian Government Named as Affected Party
In their filing, prosecutors identified Italy’s Economy Ministry as the injured party, citing significant financial damage resulting from the alleged tax evasion.
Legal experts say the outcome of the case could have wide-ranging implications across the European Union, where VAT systems are harmonized and similar compliance rules apply to digital marketplaces.
Multiple Investigations Add to Pressure
The VAT probe is just one of several legal challenges facing Amazon in Italy. The European Public Prosecutor’s Office is reportedly examining additional tax-related issues covering more recent years.
Meanwhile, Milan authorities are pursuing separate investigations into alleged customs fraud linked to imports from China and whether Amazon maintained an undeclared “permanent establishment” in Italy—potentially exposing it to higher tax liabilities.
In a separate regulatory action, Italy’s data protection authority recently ordered an Amazon unit to stop using personal data from over 1,800 employees at a warehouse near Rome.
Amazon Denies Allegations
Amazon has consistently denied wrongdoing and indicated it will strongly contest the allegations in court if the case proceeds. The company has also warned that prolonged legal uncertainty could impact investor confidence and Italy’s appeal as a destination for international business.
Broader Impact on Europe’s Digital Economy
If the case moves to trial, it could become a landmark moment for the regulation of global e-commerce platforms in Europe. Governments across the region are increasingly scrutinizing how digital marketplaces handle tax compliance, especially in cross-border transactions.
With online retail continuing to expand, regulators are under mounting pressure to ensure that multinational platforms and third-party sellers adhere to the same tax rules as traditional businesses.
Aviation
IndiGo Crisis Exposes Risks of Monopoly: What If Telecom or E-commerce Collapses Next?
Airports across India witnessed scenes of distress and confusion as thousands of passengers were stranded due to IndiGo’s massive flight disruptions. Families with medical emergencies, funerals, and personal crises were left helpless as the airline cancelled hundreds of flights without adequate communication or support.
Passengers described desperate situations — a mother pleading for sanitary pads for her daughter, a woman unable to transport her husband’s coffin, and others stranded while trying to reach family funerals or hospitals. “It was like a lockdown at the airport,” one passenger said, describing the panic that unfolded as IndiGo’s mismanagement crippled operations nationwide.
Root Cause: IndiGo’s Market Monopoly
The turmoil, industry experts argue, stems from IndiGo’s monopolistic control over India’s domestic aviation market. The airline operates nearly 2,100 flights daily and holds around 60% market share — meaning every second plane flying within India belongs to IndiGo.
This dominance has given the company unparalleled influence. When IndiGo falters, the entire aviation system suffers. Passengers are left with few alternatives, as other airlines lack capacity to absorb stranded travellers. The result: skyrocketing ticket prices, chaos at terminals, and total dependence on a single private operator.
Aviation pioneer Captain G.R. Gopinath, founder of Air Deccan, criticised the government’s inaction, noting that on some routes, IndiGo’s economy fares surged to ₹1 lakh. He compared the situation to a hostage crisis, writing that the airline “held the system ransom” and forced regulators to defer new safety rules meant to protect pilots and passengers.
Government Intervention and Regulatory Weakness
The crisis erupted after IndiGo failed to comply with the Flight Duty Time Limitations (FDTL) — rules introduced by the DGCA in January 2024 requiring adequate rest for pilots. Despite having nearly two years to adapt, IndiGo blamed the rule for operational disruptions, citing a shortage of pilots.
Under mounting public pressure, the government stepped in, temporarily relaxing FDTL norms and capping airfare hikes. Officials claimed the move was to protect passengers, but analysts say it exposed the state’s vulnerability to corporate monopolies. “The government had no option but to yield,” said one aviation policy expert, pointing out that ignoring safety regulations for short-term relief could have long-term consequences.
The crisis also rekindled memories of the June 2025 Air India crash near London, which claimed over 240 lives. Experts warn that compromising pilot rest and safety standards to maintain flight schedules could risk another tragedy.
If Telecom Giants Fail: A National Paralysis
The article raises a troubling question — what if a similar crisis struck the telecom sector, where Jio and Airtel together control nearly 80% of subscribers and serve over 780 million users?
If both networks failed simultaneously, the repercussions would be catastrophic. Internet shutdowns would halt UPI transactions, online banking, OTP verifications, video calls, OTT streaming, and emergency communications. Critical services such as airports, hospitals, stock exchanges, and small businesses — many of which rely on WhatsApp and digital payments — would come to a standstill.
In essence, a telecom breakdown could paralyse India’s digital economy, exposing the nation’s dependence on a duopoly.
E-commerce Monopoly: Another Fragile Ecosystem
The same risk looms over the e-commerce sector, where Amazon and Flipkart dominate nearly 80% of the market. A disruption similar to IndiGo’s could cripple daily life — halting delivery of groceries, medicines, and essential goods, freezing refunds and customer support, and leaving small sellers without platforms to trade.
Local retailers, freed from competition, might exploit shortages by inflating prices. Such a scenario underscores the perils of market centralisation in sectors critical to everyday living.
A Wake-Up Call for Regulators
The IndiGo crisis, analysts say, is a warning shot for policymakers and regulators. A single company’s operational failure exposed systemic weaknesses in India’s infrastructure and consumer protection mechanisms.
As the aviation regulator DGCA investigates and IndiGo works to restore normalcy, the broader lesson remains clear: unchecked monopoly power in any essential service — whether air travel, telecom, or e-commerce — poses a direct threat to economic stability and citizen welfare.
Without stronger competition laws, redundancy frameworks, and regulatory oversight, India risks repeating this crisis across multiple sectors — each time with millions of citizens paying the price.
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