With legalization now almost a few months away (we hope), the landscape looks like this: current medicinal cannabis growers supply about 170,000 patients. Many producers have reported regularly selling out or running short on strains. At this rate, the industry won’t be able to expand quickly enough to immediately supply all the Canadians who might want to buy recreational cannabis.
“A shortage would compromise one of the government’s major goals in legalization: Stamping out the black market.”
Health Canada estimates alone, between four and six million Canadians will use cannabis recreationally next year. These estimates are from both government and private sources, but frankly we think these estimates are conservative.
So in under 13 months the floodgates will be opened for legal recreational pot. No doubt, there is going to be a short supply. A shortage would compromise one of the government’s major goals in legalization: Stamping out the black market.
Health Canada has been slow to react, even though they doubled the number of staff to review applications for growing licenses, there are still many hoops and hurtles to jump through that slow the entire process.
In the past, obtaining a growing license typically would cost you millions of dollars and several years of filling out paperwork. Health Canada has said it wants to open the market to smaller growers, though. Yet we are unsure how that will look considering little has been done at this point.
Canadians will continue to rely on traditional ways to obtain pot if the supply from legal distributors is short. It’s a huge problem. Estimating both supply and demand is tricky.
We think federal surveys underestimate how many Canadians use cannabis, because of the current stigma surrounding the drug. There are plenty of professionals who keep their habits a secret, but we know they make up a huge portion of the current market.
There is still much to be told about how cannabis will be sold come legalization—we still don’t even know where it will be sold, or how much it will cost. The provinces are in charge of distribution and supply, and none has made any decisions yet.
All we can do is abide by the status quo, wait patiently and hope for the best. Ultimately, we hope to see an emerging craft market for growers.
What do you guys think?