Canada is facing a significant cannabis oversupply issue with the country currently holding 1.5 billion grams of unsold cannabis. The imbalance of supply and demand has led wholesale prices to plummet by over 40% in just the past year. Despite some licensed producers halting operations, record harvests and a shrinking cultivation area indicate that the oversupply issues will persist.
Packaged and unpackaged cannabis stocks in Canada jumped to a historic record of 1.47 billion grams in December 2022, according to the latest data from Health Canada, which tracks the overall unsold stocks of licensed producers, wholesalers and retailers.
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Canada Is Sitting on a Mountain of Unsold Cannabis
Canada is sitting on 1.5 billion grams of unsold cannabis. That’s up from 1.3 billion grams in December 2021. Federally licensed growers held 1.39 billion grams of packaged and unpackaged inventory in December 2022, while stores and wholesalers held 80.7 million grams of packaged inventory.
The data suggests that the cannabis industry in Canada is still mired in an imbalance of supply and demand, despite the fact that many of the largest producers have halted operations of their largest crops.
Last year, for example, Aurora Cannabis closed its flagship Aurora Sky facility in Edmonton, Alberta – one of the largest in Canada.
Oversupply and Cannabis Prices
The surplus situation in Canada is believed to be one of the factors forcing cannabis prices down.
The retail price of cannabis has fallen nearly 30% since 2018, when Canada legalized adult-use sales, according to Statistics Canada’s Consumer Price Index.
Other estimates suggest the overall price drop is more drastic.
Wholesale cannabis prices in Canada fell by more than 40% last year alone, according to the Canadian Cannabis Exchange (CCX), a wholesale cannabis trading platform.
Canada Posts Record Harvests
Canadian growers produced a record amount of marijuana last October – when it comes time to harvest cannabis from outdoor crops.
Dried cannabis flowers produced in September, October and November last year totaled 640 million grams, up 14% from the previous year.
Shrinking Cultivation Area in Canada
Licensed cultivation area in Canada continues to decline, according to Health Canada.
The total area inside licensed cultivation, where indoor/greenhouse cannabis cultivation activities took place, was 1,595,724 square meters in December 2022.
This is nearly 30% less than the record 2,217,216 square meters reached in May 2020. The area under outdoor cannabis cultivation in Canada is also on a downward trend.
The area under outdoor cultivation activities in December 2022 was 595 hectares. This is about 16% less than the record 713 hectares Canada reached in December 2021.
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