The legalization of recreational marijuana in October of last year had many people thinking there’d be plenty of product and then some on the shelves of legal pot shops from Coast to Coast. Not so – licensed and open-for-business pot shops are few and far between even in the big cities. Dispensaries are more common, but the majority of them are only serving clientele with medical marijuana cards. The issue, however, is that both the shops and the dispensaries have seen big time customer booms. That’s not a surprise, but the problem is that many regions are saying that marijuana dispensary supplies are running out of product. Pot shops are having the same supply deficiencies.
Industry experts did warn of this possibility, and particularly with the way that much of the local municipal frameworks were still in progress when federal legalization took place on October 17th of last year. So what you’re going to dig deeper into is whether or not this lack of legal marijuana supplies is going to go on for any extended period of time, and how much of a problem it’s going to be. We’ve definitely seen how marijuana supplies online aren’t keeping up with demand there too, so what’s to make of all this?
Biggest Factor? Delays in Licensing Producers
Right from the early days of the feds discussing the possibility of legalizing marijuana it was always the plan to regulate the supply of cannabis at the Federal level. And so it is – supply is regulated by the federal government, with supply for retailers – storefront or online – being dictated by contracts between the government and licensed suppliers.
The biggest issue causing marijuana dispensary supplies shortages is the slow rate of licensing producers, and industry experts are forecasting that this shortfall of legal producers should continue at least until the end of 2019, and may well last longer than that.
Not only are there too few legally Licensed Producers, but the ones who were licensed after lengthy delays haven’t had the time needed to increase their output sufficiently. It’s entirely fair to say that an increase in licensing approvals should have occurred much earlier, and that the feds really dropped the ball there.
A policy analyst extremely familiar with the workings behind the country’s far-from-smooth transition to legal marijuana was recently heard to say, ‘There is not enough legal marijuana to supply all of the recreational demand in Canada’ adding further, ‘the shortages that are being seen are the same ones industry experts predicted in the summer of last year.’
In 2017, there were 59 federal licenses for growing medical marijuana issued, and industry insiders suggest that number has only increased incrementally since then. The bureaucratic hurdles would-be producers have to clear has made it so that an insufficient number of them have been approved to come anywhere close to meeting demand. However, there are other factors contributing to weed shortages in Canada.
One is that producers – and even established, prepared ones – underestimated what would be required to scale their operations. Next, patchwork and conflicting regulatory frameworks in the individual Provinces didn’t help either. Neither did the poorly but retail-chain distribution networks, and especially in Provinces where cannabis sales were to be conducted by the Province exclusively. Add in logistical bad-timing of the Canada Post strike a few months back and it’s fairly clear why marijuana dispensary supplies aren’t nearly what they need to be.
It’s also interesting to note that many producers don’t have the packaging equipment needed to meet the demand for consumer-ready, branded product. That one’s on them though, no way to find blame with the Feds for that part of these hopelessly insufficient marijuana dispensary supplies.
Comparisons and Examples
When evaluating marijuana supplies in Canada, we can look at the timelines of U.S. States like Washington and Colorado. Cannabis has been legal in both for three some years now. In Colorado, it took nearly 3 years for supply to catch up to demand. Considering here in this is a National problem rather than one in a single Province, we should expect a longer timeline for us to have marijuana dispensary supplies meeting demand here in Canada.
Many consumers in Canada assumed that Marijuana supplies online going to be a more reliable source for them to get what they wanted when they wanted it. Again – not so. What happened in Ontario is a good example of how there’s not enough marijuana to be had through online sales too. Within the first 24 hours of legalization on October 18th of last year, the Ontario Cannabis Store website has processed some 100,000 orders. Some of them still hadn’t been filled more than a month later, and some orders were straight up cancelled.
What happened in Ontario regarding online sales was seen in nearly every other Province too – they bought only enough of a supply to test their supply infrastructure. That’s a particularly odd strategic under sight when you’re supposedly working with the Feds to, among other things, eliminate the ‘black market’ for marijuana.
Black Market Continues to Thrive
It’s anticipated that the federal government could lose up to $800 million in revenue to the black market before it effective addresses these supply issues. Needless to say, taking a lackadaisical approach to marijuana dispensary supplies chain logistics is pretty much blowing up in their face as of now.