Canada Struggling to Meet High Demand for Legal Cannabis Products
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One month on from Canada federally legalizing recreational cannabis, the nation is having problems implementing the recreational cannabis market that citizens were promised. A majority of Canadian provinces (including the populous Quebec, British Columbia and Alberta provinces) have reported experiencing significant cannabis supply shortages, as Canada’s licensed cannabis producers and distributors have struggled to keep up with the high demand for commercial cannabis products.
How long might this shortage last?
Several warnings about a potential shortage of legal cannabis product were circulating in the media in the run-up to legalization. Analysis from the C.D. Howe Institute, a public policy think tank, suggested that Canada’s cannabis suppliers would only be able to fulfill between 30 and 60 percent of the anticipated demand for products based on reported production levels. A CBC News profile of the Canadian cannabis producer Aphria Inc. also warned consumers to expect cannabis products to be sold out across the country for some time after legalization.
"There will not be any complete satisfaction by any of the provincial regulators out of the box,” said Aphria’s chief executive, Vic Neufeld. "The pipeline fill is not going to be there. But that's just the short term.”
The legal cannabis shortage being seen in Canada is certainly not the first of its kind. The American states of Nevada, Colorado and Washington all experienced cannabis product shortages following the opening of their first retail stores. These lasted for a period of several months to years. Now that full extent of the demand in Canada for cannabis products has been made clear, industry insiders have indicated that the shortages in Canada could potentially continue for several years if no drastic action is taken by industry leaders or regulators and demand continues at these levels.
Provinces and private retailers prepare for the worst
As cannabis is a plant material, attempts to increase production capacity will still take time, and in the meantime provinces are having to take action.
The Quebec Cannabis Corporation slashed the opening hours of its retail cannabis outlets. New Brunswick has temporarily closed over half of its retail stores as a result of the shortages. In the provinces which allow private cannabis retailers to operate, business owners are also being forced to decide whether to temporarily shut up shop while they wait for the cannabis supply to stabilize.
In response to the shortages, Alberta Gaming Liquor and Cannabis (AGLC) have also revamped the province’s cannabis ordering system as a way to improve accessibility. Retailers used to have to continually check the AGLC website to see when more cannabis product would be available, meaning that if your local retailer lacked the resources or the ability to be constantly monitoring the website, they wouldn’t be able to order any more stock. Under the new system the AGLC will release a weekly inventory of the cannabis product stock that is available. Retailers will have 24 hours to submit requests for products that are in stock, which the AGLC will review and use to more evenly distribute products between retailers that choose to remain open.
"It's definitely good for us private guys that aren't the big chains,” said Nick McGahey, owner of Bud Runners Cannabis in Peace River, to CBC News. “We don't have the man power to be as diligent as they are and we don't have the supply agreements with the producers.”
“It'll definitely help even [distribution] out, because now we know how much inventory is in AGLC's warehouse and we're able to order based on that and then they divide that up. What we order we might not get, but it just makes it a little more fair, a little more even.”
In addition to restructuring the cannabis ordering system, the AGLC is also taking steps to improve the cannabis supply chain by issuing more licenses through Health Canada to those involved in the retail cannabis industry.
"If there are more producers that get licensed through Health Canada that we are able to get product from, we might be able to revert back to the original process a lot sooner” explains AGLC spokesperson Chara Goodings, also to CBC News.
Could a black market resurgence be seen?
“There’s no shortage of weed in Labrador City. Just the legal stuff.” said Trevor Tobin, co-owner of Labrador City’s only cannabis retail outlet, High North, in an interview with the Guardian.
This distinction could be key. One of the main motivators for legalizing cannabis is to try to end the cannabis black market by providing cannabis users with an alternative that is proven to be safe, and in some cases may also be cheaper. With cannabis supply problems now blighting the Canadian cannabis industry, there is a significant concern that pre-existing cannabis users may choose to not transition into the legal market and stick to their illegal dealers. This would effectively see the government lose out on hundreds of millions of dollars in potential revenue to the black market, as well as leave users exposed to untested cannabis products obtained through black market channels.