Canada’s policy of legalising cannabis use seems to have backfired because it has many warehouses piled high with unsold marijuana.
Cannabis producers overestimated demand for the drug and across the country cannabis inventories came to almost 400 tonnes at the end of August, enough to cover two-and-a-half years of demand, according to the latest government data.
Meanwhile the price of the drug has slumped as legal and illegal cannabis distributors vie for market share. The stockpile suggests that a year after Canada became the first large economy to allow nationwide recreational use of cannabis, the industry has overestimated how much the country’s pot-smokers can burn through and underestimated the illegal market’s ability to respond to competition.
“There is a huge surplus of cannabis just for domestic demand,” said Matt Bottomley, analyst at Canaccord Genuity. Canopy Growth, a company listed in Toronto under the ticker WEED, said it harvested 40,570kg.
Aurora Cannabis, a competitor, reaped 41,436kg. Each company’s production alone was enough to meet the entire nation’s legal recreational demand, according to Cannabis Benchmarks, a data group. There are many other examples.
Legal recreational cannabis sales declined across the country in September, with New Brunswick charting one of the largest month-over-month drops, according to the latest data from Statistics Canada.
Approximately C$123 million in legal adult-use cannabis was sold across Canada, down 2.4 per cent from C$126 million in sales in August.
New Brunswick — the province that is looking to sell its retail weed business to the private sector because of compounding losses — sold 40 percent less cannabis in September than it did the previous month.