Cannabis R Us grows cannabis at its facilities in Fredericton, New Brunswick. Since legalization the firm has been primarily a seller of dried flower products to retailers.

With legislative changes, it has become legal to sell processed cannabis products which include things like drinks and edibles, such as chocolates or gummy bears. Cannabis R Us is looking at an opportunity around making cannabis gummy bears.

Currently Cannabis R Us grows and processes raw canabis at a cost of $450,000. The market value of the flowers at that point is $875,000. Cannabis R Us is naturally exploring its option with the change in regulations and cannabis infused gummy bears are popular. According to its own own analysis, Cannabis R Us would have to spend $225,000 to process raw cannabis flower into cannabis infused gummy bears and expects that the sales of gummy bears would generate revenue of $1,050,000.

1) Should Cannabis R Us process the flowers into gummy bears, or not? (5 marks)

2) Why? 5(marks)