Ann: CEO Roadshow Presentation, page-43

I rechecked a link to Cannabis Benchmarks that RB referenced on this thread back in July. The following is a quote from the latest edition:
This week we review Cannabis Benchmarks® estimate of monthly cannabis supply coming to market with the release of Health Canada’s August demand and stored inventory data. Our estimates of supply show that cannabis market volumes peaked in June with 62,671 kg generated by licensed producers (LPs) across Canada. Since then the quantity of cannabis has declined by 15.6% to 52,913 kg in August.

Our expectation is that Canadian cannabis supply will rise above the June peak in November with outdoor product being harvested in September and early October at higher latitudes. Finished product can take six weeks to reach the marketplace after harvests are cut down, as the product is trimmed, dried, tested, and packaged.

Source: Cannabis Benchmarks, Health Canada​

We have routinely reported that current supply levels have been outpacing legal market consumption. The build out of production capacity by LPs has caused a severe oversupply, with roughly 80% of cannabis users still turning to the illicit market due to lower prices, higher quality product, and more convenient access. For the month of August, we analyzed the disposition of the 52,913 kg of supply generated by LPs. Only 3% was consumed by medical patients, while 24% was consumed by recreational consumers. The remaining roughly 73%, or 38,626 kg, went into inventory as either finished or unfinished goods across the country.

Source: Cannabis Benchmarks, Health Canada​

This has been a persistent issue in the Canadian cannabis markets, especially as growth in supply has been outpacing demand since March. Since that time, nearly four-fifths of monthly available product has been going to federal and provincial storage facilities, resulting in a dramatic expansion of unsold inventory. As of the end of August, the current finished inventory levels sit at approximately five times the demand reported for August, while unfinished inventory amounts to 23 times the volume of product purchased in August.

Source: Cannabis Benchmarks, Health Canada


Unless there is a mitigating factor, this situation looks completely unsustainable. It is perhaps somewhat analogous to the Australian wool stockpile of the 1980s, which resulted from regulated marketing and a monopoly government-backed seller. The system collapsed in 1990, along with the price of wool and the decimation of the industry
Canada has a habit of favouring particular domestic industries - potash mining being a prominent example. The government has enabled and promoted cannabis as a new national champion, but the above charts suggest that unless real (as opposed to hyped) demand increases very rapidly, then the industry will be in serious difficulty before it has gone past the project development stage.
Canadian Government intervention in marketing as well as even tighter production controls would not be a surprise.