Canada is the second sovereign nation to legalize marijuana for adult use, after Uruguay, but it is still grappling with many of the same problems, such as pricing, supply, demand, international activity and the traditional marketplace.

Licensed Canadian growers and producers are hoping to supply European countries, as the United States producers remain frozen out due to Republicans blocking legalization for the past two years.

Democrats new control of the House of Representatives offers some hope to the U.S., but from now on, it will only be a game of catch up with other countries.

The Demand

Estimating the demand for Cannabis after legalization is complicated.

In 2016, Health Canada calculated about over a million pounds of cannabis would be needed, while independent research analysts estimated in 2017 that it would be more like half a million more than the previous estimates.

A Canadian Imperial Bank of Commerce report published in May announced that the current production is nearly 800,000 pounds Per annum. The report shows almost behind the estimated value of Health Canada unless someone’s out there is hiding about 200,000 pounds of cannabis, then they are looking at a substantial shortfall.

The demand for medicinal products including medical marijuana autoflower seeds are expected to shoot up. Analysts expert in research and development projected that there would be 630,000 registered medical cannabis patients in the country by 2024, more than twice from 260,000 in 2018. That will push the demand up from about 210,000 pounds in 2018 to 510,000 pounds in 2024, the market value projected to be worth up to 2.6 billion dollars in six years.

A report also shows that majority of marijuana users have been purchasing their weeds in the traditional underground market and it is projected that it won’t significantly change after the legalization. Black market sources will supply until the legal enterprise gets fully established. There are some pieces of evidence that even in the United States, the black market is still proliferating.

The Import/Export Dilemma

Health Canada prohibits licensed growers and producers from importing any cannabis for marketing purposes, but Canada based growers and producers are exporting. Many of the medical cannabis patients are complaining about this issue.

Licensed Cannabis growers and producers are now expressing to supply with European countries but have not signed binding contracts to provide with the local medical cannabis patients. Moreover, wondering for whom they were given this freedom to grow and sell medicine.  And that, along with cost escalations, medical cannabis users convinced to get licensed to grow their own cannabis plant and buy marijuana seeds online. They still need to purchase in between harvests but have had to distribute what they grew weeks or months ago. Thus, licensed suppliers should be required to sign a binding contract to supply deals with their consumers.

The Colorado Experience

Last 2014, when Colorado legalized the recreational use of marijuana, a similar supply-shortage confusion hit several recreational marijuana dispensaries and seed banks in the state. Dispensaries feared that it would take a year or less before the supply side to consistently meet the demand. In that first year of legalization, recreational dispensaries did run out of stocks, but it appears there was no general supply shortage in the recreational industry.

Interestingly, sales of medical marijuana rose and outpaced the sales of recreational marijuana during that first year. Consumers who did find their local dispensaries running out of stocks could have still purchased marijuana from other sources: a medical dispensary or black market, both of which will be possibilities for Canadians in this coming month.

The Monitoring System

Health Canada is starting a national tracking system to trace the movement of cannabis from growing to processing up to marketing. The tracking system may provide insights into supply and demand courses for both medical and recreational uses. The government should be obliged to ensure individuals who require cannabis for medical purposes have equitable access to legal and quality-controlled cannabis products.

The Government has been monitoring and evaluating patients’ equitable access to cannabis for medical schemes after the implementation of the Cannabis Act. And, the government should design and organized a system for the application process for licensed cannabis suppliers to launch and ramp up production prior to the Bill. It has issued more licenses along with more than 160 expansions or adjustments of existing facilities.

The government is also amending its regulations so that patients will be able to inquire that their medical record is returned or transferred from one accredited producer to another.

The demand for cannabis after the legalization will be higher than broadly predicted, but that’s not because more people are smoking pot. Most of the rise in demand is from the people who use cannabis in a daily basis, the report by the Marijuana Policy Group found that the proportion of people who smoke pot on a daily basis is higher than earlier estimates indicated. Regular users also consume more each time they use than occasional cannabis consumers.

Supplies

Canada’s big-three licensed growers, Aurora Cannabis, Aphria Inc., and Canopy Growth are collectively forecasting to grow more than 2.6 million pounds in lying facilities across the country after extensive expansion in capacity. Many others are in growth-mode, too, but development takes time along with growing plants, and the establishment and delivery of products.

Insufficient supply has been a concern for more than a year. Well-connected and financed cannabis corporations and companies lobbied to be the sole suppliers of medicinal cannabis but can’t meet the current demand, never mind the large stalk anticipated with the legalization.

Major players are exporting their products to Europe, where they can sell it for 20 Dollars per gram, four times what they get in the local market. That leaves medical cannabis users, on whom the industry was founded, out in the cold.

HEXO Corp., which produces cannabis for medical clients, reports that they have no shortage of cannabis product for medical consumers. They are committed to their medical clients to provide the same quality and supply they’ve been accustomed to delivering. They got product allocated for their existing medical customers and into the future.

The company is increasing up its capacity from a regular 55,000 pounds a year under 310,000 square feet of production to 240,00 pounds across more than 1.3 -million square feet. The expansion is targeted to be finished by the end of the year.

Final Thoughts

Is it true that there’s a lack of supplies of medical cannabis in Canada? If so, will it significantly affect the market’s inflation rate? I think the government needs to focus on home growing by encouraging more people to plant. It takes awareness, knowledge, and innovations to make a difference.