Its common knowledge that Canadian cannabis companies were poorly equipped to handle the massive amount of demand from the Canadian marketplace.
With many provinces struggling to receive even a fraction of quantities that suppliers have promised, marijuana shortages have become a common problem in most provinces across the country, and the inability for cannabis producers to meet their promised quotas has left investor confidence in Canadian firms at an all-time low.
Bearishness in the market aside, many CEO’s have come out and stated that it could take up to multiple years for supply and demand to equalize. Canadian Prime Minister Justin Trudeau, whose party campaigned on the promise of legalizing weed, said today that he expects cannabis shortages to disappear in less than a year.
According to Global News, Mr. Trudeau spoke in an end-of-year interview with the Canadian press, predicting that shortages would sort themselves out “during the coming months and perhaps the coming year,” adding that supply problems were most prevalent in Eastern Canada (Ontario and Quebec). His main qualms were in how Quebec has handled marijuana legislation, specifically how the province raised the legal age for cannabis consumption from 18 to 21.
“If young people aged 18 to 21 are forced to buy pot from criminals, it will not help us eliminate the black market,” he remarked. Instead, he argued that it will maintain a “black market that is going to sell to 18-to-21-year-olds, but that is also maybe going to sell to youth of 17 or 16.”
Many elsewhere are not as optimistic as the Prime Minister. The Ontario provincial government, for instance, announced that it’s retracting its previous statement about not capping the number of licenses for retail pot stores, now says that it will only issue 25 licenses by April via lottery. In an official statement last evening, the province said it intends to take a “phased approach” to authorizing new outlets due to “severe supply shortages.”
“Taking into consideration the required investments for a prospective Ontario private legal retailer, we cannot in good conscience issue an unlimited number of licenses,” read an official statement according to CBC. “We will continue to urge the federal government to take immediate action to ensure licensed producers ramp up production in order to meet the anticipated market demand for recreational cannabis.”
While Eastern Canada has been hit hardest by cannabis shortages, many Western provinces have been struggling as well. Three weeks ago, Alberta Gaming, Liquor, and Cannabis (AGLC) – the province’s regulator for retail cannabis – revealed that the province had received on 20 percent of marijuana they had ordered. One major issue that prospective store owners are facing is the numerable licensing fees that they have to face, adding tens of thousands of dollars per location.
At the same time, cannabis producers are adding millions of square feet in cultivation facilities over the coming months in hopes to address the shortages. However, some worry that the market will reach a point sometime in 2019 or 2020 where supply eclipses demand, leading to a glut of production that will no longer be needed, and an eventual contraction in the marketplace will occur. However, such an possibility is still far down the horizon.
