EXETER, Ontario — The mayor of the largely rural community of South Huron, Ontario, was looking forward to an employment boom when a marijuana producer used its soaring stock value to buy an enormous greenhouse on the edge of the municipality’s largest town.
The purchase three years ago, in Exeter, promised to make his sprawling community a major hub for what seemed like Canada’s next big growth industry: legal pot and the high-paying jobs it would bring.
But before any of the 200 or so anticipated jobs in the greenhouse were filled — or before a single marijuana seed was even sown there — it became apparent that Canada was already growing far more marijuana than the market wanted.
After sitting idle for two years, the one-million-square-foot greenhouse was sold last year for about one-third of its original purchase price of 26 million Canadian dollars, or $20.75 million.
Like plastics in the film “The Graduate,” marijuana seemed destined to become Canada’s next big thing.
The investment craze produced a strong echo of the dot-com stock boom of the late 1990s. And it ended with the same collapse.
Even with a slight recovery propelled by the spreading legalization in the United States — New York legalized marijuana last month, and voters in four states backed legalization in November — one marijuana stock index is still down about 70 percent from its peak in 2018.
Two and a half years after legalization, most marijuana producers in Canada are still reporting staggering losses.
And a major new competitor is looming: Mexico’s lawmakers legalized recreational pot use last month. So the business climate for Canada’s growers could become even more challenging.
“There’s probably going to be a series of shakeouts,” said Kyle B. Murray, the vice dean at the University of Alberta School of Business in Edmonton. “Things were way overblown. It’s very similar to the dot-com boom and then bust.”
previously the heart of Canada’s illegal marijuana industry. There, sales in legal stores grew 24 percent from June to October 2020.