By / November 11, 2019

Cannabis producers in Canada worry about large surplus

Cannabis producers in Canada are sitting on more than 300,000 kg of cannabis that is not ready for sale. This is a huge surplus, given that Canadians only buy 13,000 kg of cannabis a month.

Shortly after Canada became the world’s largest legal cannabis market, serious supply shortages forced legal cannabis stores to close only a few days after opening. 

Now, a year later, Canada is suffering from a reverse problem. Cannabis producers in Canada and wholesalers have huge stocks that they will not be able to sell quickly.

Cannabis stocks have tripled despite surplus from cannabis producers in Canada

Canadian cannabis stocks have tripled since the beginning of 2019.

Health Canada defines surplus as dried cannabis flowers that have not been packaged, labelled or otherwise prepared for sale.

In January, cannabis producers in Canada had a surplus of about 118,000 kg, but in August this figure increased to 328,000 kg. However, in August, Canadian manufacturers had 60,872 kg of ready to sell cannabis.

The same month, cannabis retailers sold only about 13, 000 kg of dried flower, which means that today’s wholesalers have 30x more cannabis plants in stock than customers are willing to buy. 

However, the surplus may include waste from cutting flowers. So the actual amount of cannabis available for sale is not entirely clear.

“If a large part of these 328,000 kilos is dried flowers, it’s gonna be a big problem,” said Matt Financial, Marijuana Analyst at Canaccord Genuity Corp.

cannabis producers in canada are facing a surplus
In January, cannabis producers in Canada had a surplus of about 118,000 kg, but in August this figure increased to 328,000 kg. (Source)

The new product line from Hexo Corp.

Cannabis prices in Canada have already started to fall. One company, Hexo Corp., has launched a new product line that costs $4.49 per gram. This is about half the average current price for legal cannabis.

On the positive side, legal cannabis sales have been steadily increasing over the last year. Every month from March to August, legal retail sales were breaking a new record. Sales exceeded $127 million in August alone. 

In its first year of retail sales, cannabis producers in Canada and others in the cannabis industry generated more than $1.1 billion in revenue. However, this figure is expected to increase when THC groceries will be available for sale.

The cannabis industry is becoming very popular in emerging markets.

One prominent example is Europe’s CBD and hemp sector, predicted to be worth $14.67 billion by 2026. 

These new industries can be difficult to navigate, but cannabis investing apps like provide some clarity and can help prospective investors understand the market. 

(Featured image by Craig Adderly via Pexels)

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