Two Weeks In, Canada Cannot Meet Marijuana Demand
That didn’t take long.
For years, Canada promised to end prohibition on recreational marijuana. Then, by October 17, 2018, after debates in the Senate, they legalized the use of marijuana.
Weeks later, Canada is already running short on supply. But this comes as no surprise.
“Initially, Canada is expected to face a pot shortage. Business Insider noted months prior to legalization. “There’s [a] potentially crippling shortage of marijuana in Canada.”
Practically everyone saw this coming – by a significant margin.
We already knew Health Canada said demand could hit a million kilograms each year, even though production wouldn’t meet half that demand. We also knew there was staggered growth. Growers had to be certain legalization was a sure thing before spending millions on expansions.
The other reason for the shortage is Health Canada itself.
The government body is responsible for issuing sales permits to domestic growers. At the moment, according to Marijuana Business Daily, they’re backlogged with 500 applications.
Worse, just to get a cultivation license can take six months.
Then, once a cultivation license is in hand, a company has to wait another 341 days, according to Marijuana Business Daily, for the sales permit.
All of that can exacerbate the supply-demand situation.
So, of course, there’s a supply problem. In fact, it probably should have been figured out long, long, long before legalization.
However, once it’s figured out, there’s sizable opportunity.
Massive Growth in Store for Canada
The legalization of recreational marijuana just in Canada is expected to generate $5 billion in sales. The industry could balloon to $8.7 billion shortly after, as marijuana retail sales just in Canada are likely to surpass beer, wine and spirit sales combined.
However, some analysts believe even those predictions are too low.
In fact, according to Oracle Poll Research, Canada could see more than 11 million marijuana users by 2021 instead of 5.2 million, which could produce between $8 billion and $12 billion in annual sales.
“This is a multibillion-dollar industry going from black to white,” says Vahan Ajamian, an analyst with Beacon Securities in Toronto. “It’s like the end of alcohol prohibition in the US. It’s a once in a generation kind of investment opportunity.”
Health Canada estimates demand could reach one million kilograms domestically per year.
By2021 analysts say Canada could have nearly four million recreational marijuana users, creating a monstrous multi-billion dollar industry.
