Canopy Growth Corporation (CGC): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear path through the cannabis sector's volatility, and for Canopy Growth Corporation (CGC), that path runs straight through Washington D.C. and Ottawa. The company closed its 2025 fiscal year with an Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) loss of $23.5 million (CAD), a 60% improvement, but near-term momentum hinges less on cost-cutting and more on the US federal scheduling review, which is the single biggest political swing factor right now. We need to be realists: the opportunity for global medical growth is massive, but the Canadian excise tax burden and the complex US legal patchwork are defintely still dragging down the bottom line. Let's map out the six macro factors-Political, Economic, Sociological, Technological, Legal, and Environmental-to see where you should focus your strategic attention.

Canopy Growth Corporation (CGC) - PESTLE Analysis: Political factors

US federal cannabis scheduling review is a key driver.

The biggest political variable for Canopy Growth Corporation remains the US federal cannabis scheduling review. While the Department of Health and Human Services (HHS) recommended moving cannabis from Schedule I to the less restrictive Schedule III of the Controlled Substances Act (CSA), the final decision is in a holding pattern as of November 2025, stalled by an appeal process.

If the Drug Enforcement Administration (DEA) finalizes the move to Schedule III, it would be a game-changer for the entire industry. Crucially, it would relieve the massive federal tax burden under Internal Revenue Code Section 280E, which currently prevents cannabis businesses from deducting ordinary business expenses. For Canopy Growth Corporation, which operates its US assets-like Acreage Holdings, Wana Brands, and Jetty-through an unconsolidated structure called Canopy USA, this change could immediately boost cash flow. Analysts project that eliminating 280E could reduce effective tax rates by 10-15%, a significant bottom-line improvement. That's a huge lift for profitability.

Canadian excise tax structure remains a significant burden.

The Canadian excise tax structure continues to be a major headwind, squeezing the already thin margins of licensed producers like Canopy Growth Corporation. The current system imposes a tax of $1 per gram or 10% of the producer's selling price, whichever is higher. This high rate is often cited as the primary reason the illicit market remains robust, undercutting legal prices.

For the fiscal year ended March 31, 2025 (FY2025), the total excise tax burden on Canopy Growth Corporation was substantial, totaling $44.974 million (all figures in Canadian dollars). This breaks down as:

• Adult-Use Cannabis Excise Tax: $36.442 million
• Medical Cannabis Excise Tax: $8.532 million

While the Federal government is exploring a transition to a single, national excise stamp in 2025 to reduce administrative complexity, a direct reduction to the tax rate itself has not yet been enacted. Simply put, the tax structure is still crippling the legal market's competitiveness.

Global market access hinges on shifting national import policies.

Canopy Growth Corporation's international strategy, particularly its Global Medical segment, relies heavily on the evolving import policies of key medical cannabis markets. In fiscal 2025, International markets cannabis net revenue was $39.7 million. The company has seen strong growth in Europe, specifically in Germany and Poland, which helped offset a decline in Australia medical cannabis sales.

The German market is a major driver, with imports increasing by 400% year-over-year in the first half of 2025. However, market access can shift rapidly based on regulatory enforcement. For example, raids on licensed facilities in Portugal in May 2025 led to over 25 tonnes of cannabis sitting in limbo, which actually gave Canadian companies with EU-GMP (European Union Good Manufacturing Practice) certification an advantage for direct shipments to the UK and Germany. Canopy Growth Corporation has responded by integrating its Canadian, European, and Australian businesses to better scale its supply chain and navigate these complex, country-specific regulations.

Lobbying efforts focus on passing the SAFE Banking Act in the US.

The industry's lobbying efforts are intensely focused on the Secure and Fair Enforcement Regulation (SAFER) Banking Act. This legislation, which has passed the House multiple times but remains pending in the Senate as of September 2025, is critical for Canopy Growth Corporation's ability to fully integrate and optimize its US assets.

The Act would provide a safe harbor for financial institutions serving state-legal cannabis businesses, allowing them to move away from dangerous, cash-only operations. This isn't about legalization; it's about public safety and financial transparency. Support is bipartisan and growing; in July 2025, a majority of state attorneys general sent a letter urging Congress to pass the SAFER Banking Act. The improved banking access would also streamline tax collection for states and reduce compliance risk for Canopy USA, making it a defintely more attractive investment vehicle.

Geopolitical tensions affect supply chain stability for inputs.

Geopolitical instability and shifting trade policies create significant supply chain risks for Canopy Growth Corporation, particularly for ancillary equipment and inputs. The cannabis industry is heavily reliant on global supply chains for everything from specialized lighting to vape hardware and packaging.

Recent trade policy shifts, such as President Trump's increase of the tariff on China to 145% in April 2025, are a direct threat to profitability. These tariffs have already caused the cost of key inputs like aluminum, electrical equipment, and security systems to rise by 10% to 40%. This volatility forces the company to invest in building more resilient, multi-tier supplier visibility and seek out alternative, often more expensive, domestic sourcing to ensure supply consistency.

Canopy Growth Corporation (CGC) - PESTLE Analysis: Economic factors

Gross margin improvement is vital after recent restructuring.

The economic viability of Canopy Growth Corporation hinges on its ability to drive meaningful gross margin improvement after years of restructuring and asset sales. For the full Fiscal Year 2025 (FY2025), the company reported a consolidated Gross Margin of 30%, which is a positive step, representing an increase of 300 basis points (bps) compared to FY2024. This improvement is defintely a result of shifting the sales mix toward higher-margin medical cannabis products and sustained cost-reduction actions.

Still, the margin performance remains volatile, as seen in the Q4 FY2025 consolidated Gross Margin dropping to 16%. The good news is the trend appears to be moving in the right direction, with the most recent reported Consolidated Gross Margin for Q2 FY2026 climbing to 33%. This volatility shows that while the strategy of focusing on core, higher-margin products is working, the business is not yet structurally immune to quarterly pressures like inventory provisions or product mix shifts.

• FY2025 Gross Margin: 30% (up 300 bps Y/Y).
• Q2 FY2026 Gross Margin: 33%.

High interest rates increase the cost of capital and debt servicing.

The high-interest rate environment of 2025 significantly raises the cost of capital, making it more expensive for Canopy Growth Corporation to finance its operations and service existing debt. However, the company has taken clear, aggressive action to mitigate this risk. They reduced their total principal debt balance to $304 million as of March 31, 2025, which is a massive 49% reduction from the prior fiscal year.

This deleveraging is key. For example, an early prepayment of US$100 million on their senior secured term loan is expected to reduce their annual cash interest expense by approximately US$13 million. Plus, further prepayments of US$50 million are planned by March 31, 2026, which should reduce annual interest expense by an additional US$6.5 million. While the Bank of Canada's policy rate stood at 2.25% in October 2025, reflecting a potential stabilization, the company's proactive debt management is what truly insulates them from the full bite of elevated borrowing costs.

Inflationary pressure impacts cultivation and operational expenses.

While headline inflation in Canada eased to 2.2% year-over-year in October 2025, underlying cost pressures are still very much a factor in the cannabis sector. For a cultivation and manufacturing business, this is a real headwind. Core inflation measures, which strip out volatile items like gasoline, were running higher, between 2.6% and 3.0%.

Honesty, rising costs for energy, labor, and compliance are pressuring profit margins across the industry. An estimated 80% of Canadian cannabis companies cite rising costs as their biggest challenge to profitability in 2025. For Canopy Growth Corporation, this means their cost-reduction initiatives-like the additional $20 million in annualized savings identified in Q4 FY2025-need to be executed flawlessly just to outrun these inflationary increases in their Cost of Goods Sold (COGS).

Canadian market oversupply continues to depress wholesale prices.

The Canadian adult-use market remains hyper-competitive, and oversupply, particularly of lower-quality flower, still depresses wholesale pricing. This is directly visible in Canopy Growth Corporation's Canadian adult-use cannabis net revenue, which fell to $78.8 million in FY2025, down from $92.8 million in FY2024. The decline is attributed to continued price competition.

To be fair, the market for high-quality, desirable flower is showing signs of stabilizing, with wholesale dried flower prices averaging $1.39/gram in Q1 2025, a three-year high in April 2025. Canopy Growth Corporation's strategy focuses on premium and medical products to bypass the race to the bottom in the mass-market flower segment. Their Canada medical cannabis net revenue, for instance, grew to $77.0 million in FY2025, a strong counter-trend to the adult-use decline.

Focus shifts to positive adjusted EBITDA for financial health.

The single most important financial metric for the market right now is the path to positive Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Canopy Growth Corporation has made significant strides, reporting an Adjusted EBITDA loss of $23.5 million for the full FY2025, which marks a 60% improvement from the prior year.

The company's goal is to achieve positive Adjusted EBITDA in the near-term. The improvement is a direct result of the realized benefits from their cost savings program and the shift toward higher-margin medical sales. Here's the quick math on their progress:

The trend is clear: cut costs, cut debt, and grow the high-margin medical segment. This is a survival strategy, and the numbers show it's working.

Canopy Growth Corporation (CGC) - PESTLE Analysis: Social factors

You're operating in a market where public opinion moves faster than regulation, so understanding these social shifts is defintely the core of your product strategy. The biggest takeaway for Canopy Growth Corporation (CGC) is that the consumer base is segmenting sharply: one group wants high-potency, value-driven recreational products, and the other is seeking targeted, high-margin medical and wellness solutions.

This dual demand means you can't be everything to everyone, but it does create clear, profitable lanes for focused brands like Tweed and Spectrum Therapeutics. Your job is to align production with these two distinct consumer psychologies, or you'll lose margin to more agile competitors.

Increasing social acceptance drives demand for recreational products.

The normalization of cannabis use across North America is the single largest driver of market expansion. As of early 2025, 24 U.S. states have legalized both medical and recreational use, which is a massive psychological shift for consumers. This growing acceptance is fueling a market that is projected to reach a global value of $70.6 billion by 2025.

In the U.S. alone, legal cannabis sales are expected to hit $34 billion by the end of 2025. This trend is not just about more people consuming; it's about consumption moving from the black market to the legal one. Canopy Growth is strategically responding by focusing its adult-use portfolio on the most popular formats, including vapes, high-THC flower, pre-rolls, and edibles, to capture this mainstream consumer.

Health and wellness trends boost interest in CBD and medical formats.

The health and wellness movement is pushing cannabis into the mainstream medicine cabinet, not just the recreational market. Consumers are increasingly seeking natural, functional products, which is why the global CBD market is projected to reach $20 billion by the end of 2025.

Canopy Growth is capitalizing on this through its medical division, Spectrum Therapeutics, which saw Canada medical cannabis net revenue jump 16% in Q3 FY2025 compared to the prior year. The growth isn't limited to North America; international markets, particularly Germany and Poland, drove a 14% increase in international cannabis net revenue in the same quarter. The next wave is minor cannabinoids (like CBG and CBN) that target specific ailments like sleep and anxiety, moving beyond just CBD.

Brand reputation is crucial in a fragmented, competitive market.

The cannabis industry is saturated, and brand differentiation is now a matter of survival. You can't just sell a commodity; you need a trusted name. Canopy Growth is leveraging its established portfolio to stand out, with its Storz & Bickel vaporization devices seeing a 19% revenue increase in Q3 FY2025.

New product introductions also need immediate traction. For example, the Claybourne infused pre-rolls, launched in late 2024, quickly became a top performer, reaching \#2 market share in Alberta and \#3 nationally in the infused pre-roll category in Q4 FY2025. This shows that consumers are willing to shift loyalties for quality, high-potency innovation under a strong sub-brand. Innovation is your only shield against commoditization.

Consumer preference is shifting toward value and higher-potency products.

Consumers are demanding more for their money, which translates to a preference for high-potency products and formats that offer a better experience or greater convenience. This is a clear shift from the initial novelty phase of legalization.

In Canada, Canopy Growth's adult-use net revenue in Q4 FY2025 declined 3% overall, but this was partially offset by strong growth in infused pre-rolls, demonstrating a clear pivot toward higher-THC, value-added products. The most popular formats that Canopy Growth is prioritizing reflect this trend:

• High-THC Flower: Prioritizing potency over volume.
• Vapes: Convenient and discreet, especially with new CCELL all-in-one technology.
• Infused Pre-rolls: A high-potency, ready-to-use format.
• Edibles/Beverages: Alternative, smoke-free consumption methods.

Labor shortages in specialized cultivation and processing roles persist.

The industry's workforce is maturing, but specialized labor remains a bottleneck, especially in cultivation and processing. The U.S. legal cannabis sector saw a 3.4% drop in employment in 2024 despite a 4.5% increase in retail sales, which tells you companies are running lean and relying on automation and strategic staffing.

This labor tightness, coupled with wage inflation, is one of the highest cost pressures for operators, squeezing already thin margins. For a large Multi-State Operator (MSO) like Canopy Growth, this presents both a risk and an opportunity. You have the resources to offer the incentives and higher wages needed to attract and retain specialized talent, giving you a competitive advantage over smaller, less capitalized firms. The reliance on temporary and flexible workers in growing and processing is a cost-control measure, but it introduces quality and consistency risks.

Next Step: Operations: Review Q1 FY2026 labor costs per gram/unit to quantify the impact of wage inflation and temporary staffing on your cash gross margin.

Canopy Growth Corporation (CGC) - PESTLE Analysis: Technological factors

Advanced genomics and breeding for higher-yield, specific-cannabinoid strains.

Canopy Growth's long-term viability hinges on its ability to produce high-potency, consistent cannabis at a lower cost, and that starts with genetics. Their R&D efforts, though subject to overall cost reductions, are focused on developing new, proprietary cultivars (strains) that meet specific consumer demands, particularly in the high-THC flower category. For instance, the company is actively rolling out new genetics under the Tweed brand, including high-THC cultivars like Sour Sucker Mints and Blood Orange Kush, which were launched in the first quarter of fiscal year 2026 (FY2026).

This focus isn't just about new flavors; it's about increasing the yield and consistency of the active compounds. Canopy Growth is making a deliberate, quality-focused investment by dedicating its British Columbia Georgia site exclusively to medical cultivation for its Spectrum Therapeutics patients. This site is specifically set up for craft and small-batch production, where the product is bucking and hand-trimming to ensure quality and consistency. This is a strategic technological choice-using high-touch, controlled processes for premium medical-grade product, even as they streamline for efficiency elsewhere.

Automation in cultivation and processing to reduce labor costs.

The company's shift to an 'asset-right' operating model is fundamentally a technological and operational play to drive down the cost of goods sold (COGS). Canopy Growth achieved a significant improvement in its financial health in FY2025, with Gross Margin increasing by 300 basis points (bps) to 30% compared to FY2024. This margin expansion was directly tied to ongoing cost reduction actions and operational changes designed to implement cultivation-related efficiencies.

Here's the quick math: reducing labor and waste through automation directly lifts the bottom line. The overall Operating Loss from continuing operations improved by a remarkable 83% in the fourth quarter of FY2025 compared to the same period in FY2024, a change driven primarily by a reduction in operating expenses, which includes automation-driven labor savings. This move is defintely a necessary evil in a competitive commodity market.

Proprietary non-combustible delivery systems for new product forms.

Canopy Growth maintains a leadership position in the non-combustible segment through its wholly-owned subsidiary, Storz & Bickel, a German manufacturer of medical-grade vaporization devices. Their flagship product, the Venty vaporizer, showcases the company's proprietary technology. Storz & Bickel's net revenue for FY2025 was $73.4 million, representing a 4% increase over FY2024, driven by a full year of Venty sales.

The core technological advantage lies in the Venty's patented heating and airflow system:

• Uses a patented combination of full hot air convection and additional conduction heating for efficient extraction.
• Features a newly developed flowmeter that dynamically adjusts the heating to match the user's inhalation for a consistent experience.
• Offers the highest adjustable airflow in their portable line, up to 20 liters per minute.

Data analytics are used to optimize inventory and demand forecasting.

In a market plagued by oversupply and product obsolescence, sophisticated data analytics are crucial for managing inventory write-downs. Canopy Growth has implemented a new sales and operations planning (S&OP) process and a more stringent procurement control to tightly manage inventory.

This investment in tighter controls is already paying off. In the first quarter of FY2025, the company's gross margin saw a massive increase of 1,700 bps to 35%, a factor partially attributed to a decline in write-down of excess inventory. This shows that using data to align production with actual market demand, rather than relying on gut feeling, is directly improving profitability.

Investment in low-cost, energy-efficient indoor growing technology.

While Canopy Growth has not released a specific CapEx figure for energy-efficient technology in FY2025, their strategy is implicitly focused on low-cost, efficient operations. The overall trend is a reduction in capital expenditures and a shift to an 'asset-right' model, which means leveraging the most efficient facilities and outsourcing the rest. This strategic pivot involves closing high-cost, older facilities and consolidating production into the most technologically advanced and energy-efficient sites to lower the cost per gram.

The company is actively pursuing 'streamlining processes, smart investment to deliver improved yield and quality as well as tighter supplier management' in FY2026, a clear indicator that capital is being directed toward technologies that improve yield per square foot and reduce energy consumption. This focus on efficiency is a necessary response to market pricing pressure, making every kilowatt and every square foot count.

Canopy Growth Corporation (CGC) - PESTLE Analysis: Legal factors

Complex, state-by-state US regulatory patchwork creates compliance hurdles.

The core legal challenge for Canopy Growth Corporation remains the fundamental conflict between U.S. federal and state law. Cannabis is still classified as a Schedule I controlled substance under the federal Controlled Substances Act, yet 24 U.S. states and Washington, D.C. have legalized it for recreational use as of May 2025. This forces a complex, expensive legal structure.

To access the lucrative U.S. market while maintaining its NASDAQ listing, Canopy Growth uses a non-consolidation strategy through its holding company, Canopy USA, LLC. This entity holds the company's strategic U.S. cannabis investments, including Acreage Holdings, Wana Wellness, and Jetty Extracts. The arrangement is a legal tightrope walk, as consolidating the revenues of these federally illegal activities could jeopardize the company's listing status. This legal maneuvering adds substantial overhead and complexity to every U.S. transaction.

Intellectual property (IP) protection is essential for new product formulations.

Protecting proprietary formulations and delivery systems is defintely critical for maintaining a competitive edge in a rapidly commoditizing market. The company actively secures its intellectual property (IP) in key jurisdictions, especially for its pharmaceutical and consumer-focused products.

In the first half of 2025 alone, Canopy Growth secured multiple U.S. patent grants, underscoring its focus on novel product technology. This is where the long-term value is built.

Strict advertising and marketing restrictions limit brand building.

The ability to build a recognizable brand is severely hampered by strict legal limits on promotion, both in Canada and the U.S. The Canadian Cannabis Act prohibits any promotion that could appeal to youth, uses testimonials, or associates cannabis with a desirable lifestyle. You can't just run a normal ad campaign.

This forces marketing spend into highly restricted channels, limiting mass-market awareness and brand loyalty compared to alcohol or tobacco. For example, digital advertising platforms are only just starting to test the waters:

• Google Ads launched a limited pilot program on August 25, 2025, allowing certain search ads only for federally licensed producers in Canada.
• Ads cannot use lifestyle imagery, endorsements, or depictions of persons, characters, or animals.
• Packaging regulations across North America, updated throughout 2025, further prohibit cartoonish imagery or bright colors that could appeal to children.

Licensing and permit renewals are ongoing operational risks.

Maintaining a global footprint means managing hundreds of licenses, permits, and certifications across multiple countries, provinces, and U.S. states. Each one carries a renewal risk and a compliance cost. The sheer volume of this administrative burden is a major operational drain.

This isn't a one-time cost; it's a perpetual operational expense. For instance, in a large U.S. market like Los Angeles, an annual cannabis license renewal fee can be around $8,486 per license. Multiply that by the number of cultivation, processing, and sales licenses across all of Canopy Growth's operations, and you see the scale of the compliance budget. The company's focus on an expense review, targeting at least $20 million in annualized cost savings for fiscal year 2026, is a direct response to the need to streamline these high operational costs.

International trade agreements govern cross-border movement of cannabis.

Canopy Growth's global medical strategy is constrained by international law, primarily the 1961 Single Convention on Narcotic Drugs, which limits cross-border recreational cannabis trade. This means the company must focus on medical markets and navigate complex import/export regulations for its Spectrum Therapeutics brand in markets like Germany, Poland, and Australia.

The regulatory environment in these international markets is highly volatile. For example, the company's Q4 FY2025 financial results showed that International Markets Cannabis net revenue was $8 million, a 35% decrease year-over-year, largely due to regulatory changes that negatively impacted the medical cannabis market in Poland. This volatility shows that even a small regulatory shift in a single country can have an immediate and material financial impact on the company's global revenue stream.

Canopy Growth Corporation (CGC) - PESTLE Analysis: Environmental factors

You're right to focus on the 'E' in ESG (Environmental, Social, and Governance) for Canopy Growth Corporation. The reality is, cannabis cultivation is an energy-intensive business, and while the company has spent FY2025 focused on financial triage-reducing total debt by $293 million (49% reduction) and cutting the operating loss to $117 million-the environmental ledger still carries significant risk.

The biggest environmental challenge is the massive energy footprint, especially from indoor growing. This isn't just a cost issue; it's a regulatory and reputational one. Honestly, the political and legal blocks are the biggest swing factors for CGC right now.

Next step: Strategy: Model three scenarios based on the US Drug Enforcement Administration (DEA) rescheduling decision by end of the year.

High energy consumption from indoor cultivation is a sustainability challenge.

Indoor cannabis cultivation is notoriously power-hungry, requiring intense lighting and climate control. For perspective, researchers estimate the median emissions of growing one kilogram of cannabis in the U.S. to be about 3,600 kilograms of $\text{CO}_2$ equivalent emissions, which is a staggering figure.

Canopy Growth Corporation's most recent public baseline, from the 2020 calendar year, reported total Scope 1 (direct) and Scope 2 (indirect, from purchased energy) greenhouse gas (GHG) emissions at just shy of 59,000 metric tons of $\text{CO}_2$ equivalent. While the company has closed facilities since then to cut costs, the core challenge remains: every gram of indoor-grown product carries a heavy energy burden. The lack of a public 2025 update on this metric, despite the global push for mandatory climate disclosures, is a red flag for investors focused on environmental risk.

Water usage regulations are tightening in key growing regions.

The sheer volume of water needed for large-scale cannabis cultivation is a growing regulatory headache, particularly in drought-prone areas where Canopy Growth Corporation operates or has supply chain partners. Water stewardship is now a critical factor in securing long-term operational resilience, especially in North America.

The tightening of water usage regulations, especially in US states, forces companies to invest in closed-loop irrigation systems and water-efficient HVAC (Heating, Ventilation, and Air Conditioning) systems. This is a non-negotiable capital expenditure (CapEx) to maintain licenses and avoid fines, which runs counter to the company's FY2025 focus on CapEx reduction seen in the improved Free Cash Flow outflow of $177 million (a 24% improvement over FY2024).

Focus on sustainable packaging to reduce plastic waste.

The cannabis industry has a massive plastic waste problem, mainly due to regulatory requirements for child-resistant (CR) and tamper-evident packaging, which often mandate the use of bulky, non-recyclable plastic. Consumers and regulators are pushing back, demanding mono-material (single-type plastic) or paper-based solutions.

Canopy Growth Corporation needs to pivot its packaging strategy to:

• Reduce virgin resin use in its core product lines (Tweed, Deep Space).
• Simplify packaging to mono-materials for easier recycling.
• Adopt reusable or refillable systems, a trend gaining traction in 2025.

This shift is costly upfront, but it reduces future Extended Producer Responsibility (EPR) compliance costs-a form of regulation where manufacturers pay for the recycling of their products.

Compliance with increasing carbon emission reporting standards.

The trend is clear: mandatory climate disclosures are here, requiring companies to report comprehensive data, including the notoriously difficult-to-calculate Scope 3 emissions (emissions from the entire value chain, like trucking and product end-of-life).

The following table illustrates the disclosure gap Canopy Growth Corporation faces as of its FY2025 reporting period:

The market expects full Scope 3 reporting now, so the current lack of updated data increases the company's ESG risk rating, potentially impacting its cost of capital.

Waste disposal of plant material and byproducts requires specialized handling.

The disposal of cannabis plant waste-stems, leaves, roots, and byproducts-is heavily regulated because of its status as a controlled substance. This material cannot simply be thrown in the trash; it must be rendered 'unusable and unrecognizable' before disposal, typically by grinding and mixing it with an aggregate material like soil or paper.

This process creates a costly, complex waste stream that requires specialized waste management plans and licensed disposal companies. For a company focused on streamlining operations and reducing costs, like Canopy Growth Corporation was in FY2025, optimizing this waste handling process is a direct path to operational efficiency. They need to defintely shift from disposal to composting or other value-added reuse programs to turn this regulatory burden into a cost advantage.