Canada’s cannabis supply far greater than demand

The cannabis market in Canada offers huge opportunities for licensed producers. However, it’s a critical period, and a good time to ask important questions about the future. 2019 was not the best year in the cannabis industry as many shareholders suffered serious losses, while 2018 was significantly better for legal cannabis companies. Canada could become a leading cannabis exporter.

Canada is playing a very important role in cannabis cultivation. However, Canada’s cannabis supply may be causing issues for the industry.

Industry leaders such as Canopy Growth and Aurora Cannabis are based in the country. There were several reasons for the upward trends of these Canadian cannabis stocks. However, cannabis is also cultivated in numerous U.S. states.

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The cannabis industry experienced heavy losses in 2019

Cannabis shares have been trading very high on the stock exchange for a long time. Rising prices and even a hundredfold increase in capital were not uncommon.

2019, however, was the year in which many shareholders suffered heavy losses.

The analysis of the cannabis market suggests that the overproduction of cannabis could be an insignificant factor for the decline. As such, and overage in Canada’s cannabis supply could be weighing on the industry.

Most of the cannabis companies have shown positive growth in 2019, but CannTrust, Tilray and KushCo stocks have fallen more than 40% this year.

Canada’s cannabis supply is growing

In Canada, 328,187 kilograms of cannabis were stored in August 2019, and only 12,917 kilograms were sold that month. This was shown by the data of the “Government of Canada.”

In addition, a clear trend can be observed. The gap is widening month by month, stocks are increasing sharply, while sales are rising only slightly.

Germany is showing low results in cannabis sales

While Canada’s cannabis supply continues to grow, in Germany, about 3,100 kilograms of cannabis were legally imported in 2018.

This makes it clear how high the stocks in Canada and Oregon seem to be at just under 330,000 and 450,000 kilograms respectively.

Nevertheless, the Federal Institute for Drugs and Medical Devices decided that cannabis should also be cultivated in Germany in the future.

This year, a total of 2,600 kilograms of cannabis were grown. Sales of medical cannabis covered by insurance continue to increase in Germany, reaching new highs in the second quarter, according to newly released data.

Canada’s cannabis supply has possible impact on cannabis stocks

The drug policy spokesman said that the “market has been swept away” and that there are “supply bottlenecks.”

However, the data rather suggest that there is an oversupply of Canadian cannabis. It seems that the hype surrounding the new “green gold” has led companies to grow far more for Canada’s cannabis supply than can actually be sold.

This could put pressure on the price of cannabis and thus also making it difficult for many cannabis stocks.

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(Featured image by Ndispensable via Unsplash)

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