Business

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. 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. However, the surplus may include waste.

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.

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 Hemp.im provide some clarity and can help prospective investors understand the market. 

(Featured image by Craig Adderly via Pexels)

First published in FAKTYKONOPNE.PL, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Hemp.im assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Hemp.im is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.

Daphne Freeman

Daphne Freeman has worked in the crowdfunding and impact investing industry for the past few years, gaining experience in marketing, and connecting businesses and entrepreneurs in need with the right investors. As a seasoned grant writer as well as financial market journalist, she is passionate about making a social impact in the world. A free spirit, Daphne also enjoys writing and exploring topics of interest, currently CBD, health and beauty, and social media influencers.

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