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In Episode 65 of the Legacies Podcast, host Tom Ritchie sit down with Mitchell Osak, Managing Director of Quanta Consulting, for a detailed look at the business realities of the cannabis sector. Drawing on his CPG background at Procter & Gamble, robotics experience, and advisory work for over 200 cannabis clients, Mitchell analyzes the market’s ‘zombie corporations’—companies that continue operating despite constant losses. He explains how early-stage capital reserves, interest income, COVID-19 subsidies, and CRA tax arrears keep these entities afloat. Mitchell also details the parallels between military history and regulatory strategy, the risks of CRA liabilities, why standard industry lobbying fails to move government policy, and how operators can use CPG principles and data-driven retail strategy to survive market consolidation.
Tom Ritchie Says: All right, everyone, welcome to Legacies! I’m joined this week by Mitchell Osak of Quantic Consulting. Mitchell, how you doing?
Mitchell Osak Says: Doing great, Tom. How are you?
Tom Ritchie Says: I’m very well, sir. A quick reminder to our audience that Legacies is powered by AVEO, leaders in sustainable vape hardware. Mitchell, you just landed from Benzinga in Chicago less than 24 hours ago. I don’t travel to many conferences anymore after spending five years doing four-hour daily tech commutes into Toronto, but you are constantly on the front lines. You’ve got quite the background across Procter & Gamble, robotics, and strategic consulting. Let’s unpack who this guy is flaming the industry on Substack!
Mitchell Osak Says: Well, before getting into my background, I do flame certain facets of the industry, but I also celebrate and illuminate the operators doing things right. Born and bred in Toronto, I earned an MBA from the University of Toronto and an undergraduate degree in military history. That military history background turned out to be amazing preparation for cannabis—there are remarkable parallels between warfare on the battlefield and navigating regulatory bureaucracies.
Mitchell Osak Says: I worked in brand management at Procter & Gamble on iconic brands like Ivory Snow, Tide, and Cascade. Later, I founded, scaled, and sold a robotics enterprise, which gave me firsthand operational grit. After selling that company, I moved into management consulting across CPG, pharmaceuticals, and capital markets. In late 2016, I fell into legal cannabis when Canada’s original 30 licensed medical producers began positioning for adult-use legalization. I’ve been in cannabis for eight years—which is 56 in dog years.
Mitchell Osak Says: Over that span, I’ve worked with more than 220 cannabis clients across Canada and globally. I’ve witnessed incredible successes, spectacular flameouts, and a whole lot of ‘walking dead’ zombie corporations trying to survive.
Tom Ritchie Says: That Substack essay you published today—’What is the Formula for Winning in Cannabis?’—hit on so many core operational realities. When you look back at 2016, did you ever envision yourself consulting across 220 cannabis companies?
Mitchell Osak Says: Not in a million years. I grew up in suburban Toronto during the ‘Wayne’s World’ era of weed. There was plenty of flower and hash floating around. What fascinated me was this massive illicit economy operating in plain sight. Looking through a historical lens, vices like gambling and adult entertainment were once illicit until governments realized the immense tax revenues and regulatory control they could extract. Once Canada’s courts established medical access, recreational legalization was never a question of if, but when and how.
Tom Ritchie Says: I spent over thirty years consuming cannabis, starting medical licenses under MMAR and MMPR before the Cannabis Act passed in 2018. I honestly never thought we would get a full recreational market so fast. Did we abandon medical frameworks too quickly, and did you anticipate the structural chaos that followed?
Mitchell Osak Says: I anticipated many of these structural crises, and that’s not hubris—it comes from understanding foundational truisms about government. Truism number one: governments rarely do anything right the first time. Look at Toronto’s Eglinton Crosstown LRT—it’s into its second decade of construction delays! Cannabis was a sudden, complex policy shift. Canada was only the second nation globally after Uruguay to legalize federally.
Mitchell Osak Says: In Canada’s political architecture, federal responsibilities—product standards, health regulations, and packaging—clash with provincial mandates over retail licensing, age of majority, and wholesale distribution. Whenever bureaucracies collide, you end up with what software engineers call a ‘kludge’: a consensus-driven compromise rather than an optimal solution. Overall, Canada earned a passing grade of a ‘C’—it avoided catastrophe, but it was designed primarily as a revenue cash grab.
Mitchell Osak Says: With love and respect to my cannabis community brothers and sisters, advocates view this plant as a sacred, transformational lifestyle. But to government bureaucrats and politicians, it is merely a commodity to be taxed, an electoral promise to check off, and a means to reallocate municipal policing budgets. Because stakeholder goals were never aligned, policy continues to be dysfunctional.
Tom Ritchie Says: Look at Ontario: major municipalities like Markham, Richmond Hill, and Vaughan opted out of legal retail, leaving over a million residents bordering Toronto without a single legal storefront! Why wouldn’t governments open up marketing and retail access to convert more illicit consumers into tax-paying legal shoppers?
Mitchell Osak Says: Because you are viewing government rationally, Tom! A bureaucrat’s prime directive is never to mess up and never to cost their political bosses an election. Legalizing cannabis was fiercely controversial. Temperance unions and medical associations pushed back hard. To placate anti-cannabis opposition, governments intentionally restricted marketing and imposed a punitive excise tax regime based on overblown police estimates of a $12 billion illicit market.
Tom Ritchie Says: Coming from an advertising and media background, marketing is fundamentally about education. When I worked with consumer packaging at P&G, on-pack communication educated shoppers on how to safely use the product.
Mitchell Osak Says: Exactly. Instead of adopting an alcohol marketing model, regulators imposed an onerous tobacco plain-packaging regime. Marketing is consumer education. By prohibiting brands from explaining formulation differences, onset times, and cannabinoid ratios, regulators inadvertently fostered consumer confusion and accidental overconsumption with edibles. Over-regulation created the very health risks governments claimed they wanted to prevent.
Tom Ritchie Says: In your Substack, you talk about ‘zombie corps’ and the walking dead. In any other industry, companies posting consecutive quarters of catastrophic multi-million-dollar net losses would be shut down. How are these massive operators still alive?
Mitchell Osak Says: It comes down to three factors. First, early massive capital raises. When Bruce Linton and early founders raised billions from global alcohol and tobacco giants like Constellation and Altria, that war chest created a massive runway. Even when companies spend like drunken sailors, hundreds of millions take years to incinerate. Look at Cronos: they parked hundreds of millions in short-term treasury bills, earning risk-free interest that exceeds the operating income of almost every commercial LP!
Mitchell Osak Says: Second, unyielding passion. Craft and mid-sized operators possess near-religious devotion to the plant. Founders will mortgage their homes and take zero salary to keep their teams employed. Third, survival economics. Many operators generate just enough cash flow from international wholesale exports to Israel, Germany, or Australia, paired with COVID-era relief funds, to keep gas in the tank.
Mitchell Osak Says: Here is the silent crisis nobody likes to publicize: between 30% and 50% of Canadian licensed producers are in arrears with the Canada Revenue Agency on excise taxes. For many operators, unpaid excise duties represent 20% to 40% of their gross revenue. They are effectively using the CRA as an unsecured line of credit at low government interest rates.
Tom Ritchie Says: Has the CRA ever actually called the debt and revoked a license?
Mitchell Osak Says: Yes, absolutely. I know of at least one prominent company where the CRA and enforcement officers arrived at the facility, demanded immediate payment, and revoked their operating authority within 48 to 72 hours. The business evaporated overnight. When the CRA finally moves to collect en masse, dozens of Canadian cannabis companies will vanish in a matter of weeks.
Tom Ritchie Says: You mentioned learning some humbling lessons at Benzinga. What gave you that aha moment?
Mitchell Osak Says: Anyone in capital markets who claims to be an absolute expert is suffering from myopic hubris. Look at private debt in cannabis: leaders like Peter Sack at Chicago Atlantic set a benchmark, but there are dozens of alternative credit funds with radically different underwriting criteria and collateral demands. You must maintain intellectual elasticity.
Mitchell Osak Says: The same applies to cultivation. California growers often believe they own the universe of cannabis genetics. Yet I’ve walked outdoor fields in Malawi and Zimbabwe that cultivate indigenous landrace sativas that would blow away anything coming out of Humboldt County. If you aren’t humble enough to adapt your thesis to fresh data, this industry will crush you.
Tom Ritchie Says: You are a huge proponent of data analytics. How should cannabis operators move beyond standard inventory tracking to use data strategically?
Mitchell Osak Says: In the early days, data sat ignored on a laptop in a master grower’s closet. Today, data must close the gap between agricultural supply and retail demand so warehouses aren’t bogged down with aged inventory. More importantly, data allows brands to analyze consumer psychographics and lifestyle habits.
Mitchell Osak Says: If an MSO understands consumer behavioral profiles, they can build strategic crossover partnerships with entertainment giants like Live Nation or professional sports leagues. Cannabis is intersecting with music, festivals, and wellness. Data provides the commercial foundation to monetize that cultural footprint.
Tom Ritchie Says: In provincial wholesale systems with fixed markups and gatekeepers, how can operators effectively test SKU pricing models?
Mitchell Osak Says: Avoid one-size-fits-all dogmas. I instruct executive teams to test specific, measurable pricing hypotheses using the 80/20 rule. In retail, consumers are hyper-sensitive to the price of high-velocity flower ounces and popular pre-rolls—that 20% of your menu must remain price-competitive. But on the remaining 80% of low-velocity accessories, like rolling papers, grinders, and niche extracts, consumers won’t abandon your store over a 50-cent or two-dollar price difference.
Mitchell Osak Says: Merchandisers should raise margins on accessories and premium edibles while featuring loss-leader flower on front displays. Test hypotheses with localized retail pilots, track point-of-sale scanner data through Headset, and optimize margins without alienating budget shoppers.
Tom Ritchie Says: Out of 220-plus clients, are there sensible operators content with capturing regional market share rather than aiming to take over the world?
Mitchell Osak Says: In 2025, Canadian operators are substantially more mature, cautious, and financially disciplined than during the 2018 euphoria. However, Canada’s consumer market cannot support 500 licensed producers. Look at the alcohol industry: four or five global brewing and distilling conglomerates control 80% of total retail volume. The remaining 20% is fought over by craft producers.
Mitchell Osak Says: Unless a craft producer builds a fiercely loyal direct-to-consumer brand or ultra-premium product, they are operating an unsustainable hobby business heading toward consolidation or insolvency. That is the inescapable arithmetic of mature capitalism.
Tom Ritchie Says: When entrepreneurs pitch cannabis business plans, do any of them have an authentic, achievable exit strategy?
Mitchell Osak Says: Frankly, almost none. Constellation Brands doesn’t even mention Canopy Growth on their quarterly earnings calls anymore! Institutional investors treat early investments as tax-loss write-offs to offset gains elsewhere. Many founders suffer from severe sunk-cost bias—they have poured years of their lives and millions in personal savings into their companies and simply cannot walk away. They are holding on, praying for US federal rescheduling or SAFE Banking to trigger a valuation spike so they can exit near par.
Mitchell Osak Says: At Benzinga, I overheard American bankers bragging that falling alcohol sales prove cannabis is an existential threat to big beer. I pulled up market capitalizations on my phone. The combined enterprise value of the top ten US MSOs was roughly $10 to $15 billion. Constellation Brands alone has a market cap exceeding $300 billion! Anheuser-Busch or Diageo could purchase the entire American cannabis industry out of petty cash without denting their corporate balance sheet.
Mitchell Osak Says: When Warren Buffett pours billions into beverage alcohol companies, cannabis operators shouldn’t assume big alcohol is obsolete. Cannabis needs institutional maturity, not echo-chamber hype.
Tom Ritchie Says: What keeps you energized about the industry over the next twelve months?
Mitchell Osak Says: The international landscape is electrifying. While Canada has matured into steady single-digit growth, international markets resemble Canada in 2016. Germany is launching cannabis social clubs, Switzerland is advancing municipal adult-use trials, and medical exports across Australia and Europe are booming. We are building a global consumer and therapeutic industry from absolute scratch.
Tom Ritchie Says: Why has cannabis struggled to achieve tax and regulatory reform compared to tobacco, alcohol, and pharmaceutical lobbies?
Mitchell Osak Says: Cannabis operators are notoriously ineffective lobbyists. We form half a dozen competing trade associations that squabble over ideological purity instead of presenting a unified commercial voice to cabinet ministers. More fundamentally: governments simply do not prioritize cannabis. In national elections, politicians care about healthcare funding, inflation, immigration, housing, and defense. Cannabis doesn’t crack the top twenty political issues.
Mitchell Osak Says: Winning operators realize that government bailouts aren’t coming. Survival depends on tight operational control, disciplined unit economics, and building products consumers genuinely love.
Tom Ritchie Says: Mitchell, your candor, strategic clarity, and economic discipline are an indispensable breath of fresh air. Thank you for joining us on Legacies!
Mitchell Osak Says: Thank you, Tom. It’s been an absolute pleasure. Keep asking the fundamental questions!
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Managing Director
Mitchell Osak is a management consultant, CPG growth expert, publisher of the Cannabis Management Review Substack, and Managing Director of Quanta Consulting.
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Quanta Consulting is a boutique strategic advisory and business consulting firm led by managing director Mitchell Osak. The firm specializes...
Learn More About Partner ↗Mitchell Osak describes a zombie company as an unprofitable business that remains operational despite negative cash flow, often kept afloat by early-stage funding war chests, government COVID subsidies, or by deferring excise taxes with the CRA.
Osak explains that military history provides valuable lessons in strategy, logistics, risk mitigation, and handling hostile or unpredictable regulatory bodies, drawing direct parallels between warfare strategy and commercial competition.
Osak explains that the government is primarily motivated by minimizing political risk, public health concerns, and maximizing taxation rather than business optimization. This misalignment makes rational industry lobbying arguments less effective.
