Experts Predict Canada will Run Out of Recreational Cannabis

Recreational cannabis sales kick off on Oct. 17 in Canada, but some experts say the nation’s cannabis producers won’t be able to keep up with the demand. Unless changes are made, the country could face a cannabis shortage within a matter of months.

Rosalie Wyonch is an economist at the C.D. Howe Institute. “There is not currently enough legal supply of marijuana to actually supply all the recreational demand in Canada,” Wyonch told the Canadian Broadcast Company. “We didn’t have enough producers far enough ahead from legalization that they’ll actually be able to deliver enough product to market by the time legalization happens.”

Licensed producers are required to disclose their inventory to Health Canada, making it easy for analysts to determine patterns. According to Wyonch, either prices on cannabis will have to rise, or the country will be faced with a supply shortage.

Several other analysts worry about supply and demand. According to Financial Post, the supply of cannabis will only be sufficient enough for 30 to 60 percent of demand after recreational sales begin. According to Canaccord Genuity, Canada’s annual demand for cannabis will be between 400,000 and 500,000 kilograms per year, but Health Canada estimates that Canada’s demand will be at 926,000 kilograms. Canada’s current supply of medical cannabis was listed as only 66,404 kilograms per year last June—nowhere near any of those demand predictions.

Health Canada is ramping up production with 73 added producers since July 2017, but Wyonch estimates that the country will only have the capacity to produce about 200,000 kilograms of cannabis per year.

One of the major concerns is if whether or not Canadians will be tempted to turn back to the black market, which reportedly is still thriving in nearly all areas of Canada. Ensuring a steady supply of cannabis could abate illegal sales.

Time will tell if Canadian producers are able to keep up with the demand once recreational cannabis sales begin.

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