On October 17th, expectation ran high amongst consumers and pot shop owners, as Canada became the second country (and first mayor economy) to ever legalize recreational consumption nationwide.
However, less than a semester from that day, excessive demand and a lack of proper regulation for production standards have resulted in a situation that nobody in the industry is calling favorable, with special concerns from medical marijuana users, who are afraid producers could be prioritizing better deals overseas.
Empty Shelves Could Become the Standard
George Robinson, CEO of RavenQuest, a Canadian Cannabis Biomed company, told CTV News that 5 million kilograms of product are currently needed to meet present demand, yet only about one million was commissioned nationally. According to him, it could be another 5 years until supply meets demand.
For some consumers, this is no news. Certain locations have started experiencing shortages as soon as days after legalization took place, and provincial governments have already started to take action: in Quebec, retailers were forced to open just three days a week. In Ontario, only 25 dispensary were granted licenses among more than 17,000 applicants, and Alberta shutdown approval for new retail licenses altogether until further notice. British Columbia, Manitoba, Saskatchewan, Nova Scotia and New Brunswick have also reported different levels of shortage.
So, Where’s All the Weed?
The first cause, of course, comes from a rise in demand. An official report from Health Canada shows how from November to December, total sales of dried cannabis were increased by 4% in that month alone. And while the total inventory of finished and unfinished product held by cultivators, processors, distributors and retailers adds up to over 17 times what was bought during that month, most of the product is actually unfinished, since the decrease in total finished inventory was exactly the same 4% purchased, showing that although demand is on the rise, production remains stagnant.
According to provincial distributors, the main responsible behind the scarcity are producers and federal regulators, whose policies allegedly difficult and bottleneck the flow in the standard production process. Khurram Malik, CEO Biome Grow explained his view of the situation:
“The rules here are so difficult to grow cannabis — quite frankly more difficult than anywhere else in the world — that if you’re a new license holder and you’ve never done this before, it’s going to take you a year, year-and-a-half, or two years to get any decent, consistent quality product out the door in any predictable volumes.”
Everett Knight, an executive at Valens Groworks Corp. predicted a future not as dark as that of Robinson’s, but still quite difficult, stating it will take at least three years for the situation to balance out.
Although Federal Regulators dodged the bullet by stating an increase in industry inventories and producer licenses, the actual situation is far from ideal, with retailers reporting a complete lack of supply for long periods of time.
A Problem for Medical Patients
Medical marijuana patients could be the worst victims of this shortage. Just days after legalization, members of the medical cannabis community expressed concern about the possible outcome of recreational being legalized.
Although growers are expected to prioritize medical markets, the current lack of policies to ensure this happens could leave patients out of their medication, as producers who used to supply medical users before Oct. 17th, are now also allowed to provide recreational markets.
According to Khurram Malik, although the federal agency is rushing to provide new licenses that would solve the scarcity, today’s situation was more than predictable, and if this measures would have been taken a lot earlier, much of the shortage could have been prevented.