Shortage of legal cannabis may drag on into 2022 as cannabis edibles, drinks expected to cause ‘2nd wave’ of legalization in October

Much anticipated legalization of recreational cannabis went into force in Canada on Oct. 17 last year. Canada is the first to completely legalize cannabis nationally among the advanced countries, and the second to do so in the world, only after Uruguay. Four months have passed since then without big social confusion, except for empty store shelves spreading across the country soon after the legalization.

Persistent shortage of legal cannabis continues as high demand in the boom continuing since the legalization does not seem to be slowing soon. “Licensed producers have been adding capacity in droves. Millions of square feet of new greenhouse space has been built since last summer. But for every new gram produced, new demand is piling up as well.” (CBC News, Jan. 23)

The CEO of a major Canadian cannabis company predicts the current legal cannabis shortage will drag out into 2020 at the current pace of demand. U.S. media reports said that if this demand-supply situation continues, Canadians would have to turn to the black market for pot, even though it became legalized.

When recreational cannabis became legal last October, only dried and fresh cannabis, oil, plants and seeds were allowed. But, medical cannabis has been legal since 2001, and according to Statistics Canada, the medical cannabis market had grown to the size of 5.7 billion Canadian dollars already in 2017 – a year before the recreational cannabis legalization.

And this medical cannabis market still grows by about 5% a month, according to CBC News quoting Chuck Rifici, CEO of Toronto-based cannabis company Auxly. Cannabis users in the 15-64 age group total 4.9 million, accounting for 16% of all Canadians – and 90% of them are cannabis users for non-medical purposes, according to Reuters.

Now that Canadian adults can openly buy cannabis and cannabis oil at various licensed stores or on the Internet from licensed growers, and they even possess up to 30 grams of dried cannabis in public space. Canadian Imperial Bank of Commerce has forecast the recreational cannabis sales in Canada will reach 6.5 billion Canadian dollars by 2020 – almost equal to Canada’s wine market, according to CBC.

However, this market is expected to expand even faster and cannabis stock shortage to become more serious and prolonged as edible and drinkable cannabis products will be coming into the market in October. The federal government said last October that edibles containing cannabis and cannabis concentrates would become legal on or before Oct. 17, 2019. (CBC News, Nov. 12, 2018)

The same CEO predicts that in that event, the shortage could drag out for more years into 2022 before the industry has demand-supply equilibrium or oversupply.

Cannabis companies as well as beverage makers, food makers and even candy makers and chocolatiers have been busy to take the advantage of the coming “second wave” of cannabis legalization boom, making trial products – cannabis-infused drinks, cannabis chocolates, gummy bears – and all types of unique edible and drinkable cannabis products.

For example, “the makers of Corona beer and Kim Crawford wines teamed up with Canopy Growth and expect to roll out cannabis-infused beer and wine. Budweiser partnered with Tilray, and Molson-Coors created their own joint venture with Quebec-based Hexo” to develop non-alcoholic, cannabis-infused drinks in Canada. (CBC News, Jan. 23)

One survey report found 49% of probable cannabis users in Canada are willing to try edibles. An industry insider predicts edibles will prove to be a much larger segment of the industry than the current smokeable pot. “In the next 10 years, you’re going to see the smokeable cannabis (comprising) maybe only 10 to 20% of the market.” (ibid) Even sleep aids or sports recovery products using cannabis may be on the way to the market next October. Canadian cannabis users can’t wait.

 

By Yoshikazu Ishizuka, senior consultant, TOCS

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