Canada - 2 years after legalization, cannabis producers are making too much marijuana

[S.J.B.]

2 years after legalization, cannabis producers are making too much marijuana
CBC
December 11th, 2020

Two years after marijuana was legalized in Canada, cannabis producers are sitting on "piles and piles" of inventory that are hampering their ability to turn a profit, says a Toronto-based business reporter.

"The problem is, prior to, you know, the stores getting their licences and opening, cannabis producers were cultivating at a massive rate," said Vanmala Subramaniam, who writes for The Logic.

"Usually in a supply chain … you need about two months' worth of inventory, and now you have seven times the amount of sales," she told The Current's guest host Mark Kelley.

"You can't keep producing at this rate. And that's what the cannabis companies have been figuring out over the last year, and [they are] adjusting the operations to kind of meet this demand."

On Wednesday, cannabis company Canopy Growth announced it is closing five of its facilities and laying off about 220 employees in a bid to save up to $200 million and boost profitability. The company, which is based in Smiths Falls, Ont., will cease operations in St. John's, Fredericton, Edmonton, Bowmanville, Ont., and at an outdoor grow facility in Saskatchewan.

Read the full story here.

 

[SunriseChampion]

I swear there's been "too much" weed here for decades.

This seems like it's still a problem related to the fact that the market share of the black market is still so high.

I wonder if inventories will see notable decreases now that Ontario has opened up the market. It's gotten ridiculous here in Toronto. We went from five shops a year and a half ago (legal ones) to what seems like more weed shops than Timmy's...and that's saying something.

My fav pub closed down at the beginning of the plague lockdown in the spring....and is now the third weed shop on its block. That's just one example of what's happened here. Like, what's the point? And they still have too much inventory?

Looks like prices might have to crater.

 

[S.J.B.]

Looks like prices might have to crater.

The Statistics Canada data is pretty informative. Legal recreational cannabis prices shot up for the first nine months after legalization but have been decreasing ever since; yet, overall spending on legal recreational cannabis has been rapidly increasing the entire time. Black market cannabis prices have been declining since legalization, as has the overall spending on black market cannabis and its market share. In fact, as of the third quarter of 2020, legal recreational cannabis has a larger market share than black market cannabis in Canada. It took less than two years to get there.

The crime data is also worth looking at. In 2018, there were 26,000 charges for cannabis possession in Canada. In 2019, there were 46. Trafficking charges dropped from 3,400 to 20.

 

[neversickanymore]

Looks like prices might have to crater.

I don’t think this will be the case. The retail price of marijuana is incredibly stable, incredibly. The wholesale market is not. Shops and grows will fail or scale down, but I bet the retail price will stay stable.

 

[SunriseChampion]

I don’t think this will be the case. The retail price of marijuana is incredibly stable, incredibly. The wholesale market is not. Shops and grows will fail or scale down, but I bet the retail price will stay stable.

I don't know.....mushrooms were always a fiver for a gram whereas weed was a tenner and I always said that the potheads were getting ripped off compared to us mushroom users.

I think 5$/g for weed is where this is all going.

 

[SunriseChampion]

The Statistics Canada data is pretty informative.

Good link, cheers.

In fact, as of the third quarter of 2020, legal recreational cannabis has a larger market share than black market cannabis in Canada. It took less than two years to get there.

Whoah....I had heard about the increasing market share but was wholly unaware of the fact that it's overtaken black market product. Everyone I know who regularly uses still buys black market to legal 10:1....if not more.

The crime data is also worth looking at. In 2018, there were 26,000 charges for cannabis possession in Canada. In 2019, there were 46. Trafficking charges dropped from 3,400 to 20.

Yeah, I'm still dreaming of these sorts of numbers for everything else.

What a waste of time, money, and people's lives it's all been!

 

[S.J.B.]

Whoah....I had heard about the increasing market share but was wholly unaware of the fact that it's overtaken black market product. Everyone I know who regularly uses still buys black market to legal 10:1....if not more.

Looks like the black market share is higher in Ontario than in the country as a whole.

 

[SunriseChampion]

Yeah, that's probably because of the slow opening of the market from the beginning of legalisation. Should probably catch up to the national average soon enough.

Half the potheads I know grow their own though....and lots of it so I don't see that ending any time soon/ever.

My old man even got in on it.