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Cannabis supplies go up in smoke

Cannabis supplies go up in smoke

Posted on: 12/5/2018 | Author: ATB Financial's Economics + Research Team

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Canada’s cannabis industry was flying high in October, with a million dollars worth of sales at Alberta’s retail shops on opening day. While retailers remain busy with the buzz of this new industry, there is one problem: a shortage of supply.

In the run up to legalization, many producers were trying to figure how to operate at a larger scale. Had they been able to expand their operations more quickly, it’s unlikely Canadians would be experiencing the current shortage. There have also been distribution issues like the Canada Post strike. Despite all this, cannabis consumption hasn’t suffered.

According to the Canadian household expenditure report on cannabis, medical and non-medical cannabis use was up 1.1 per cent in the third quarter of 2018. This follows a 1.8 per cent increase in the second quarter. While the third quarter doesn’t include October’s legalization date, spending on cannabis continues to waft higher. In fact, sales of cannabis have risen over the past year and a half at a rate of 1.5 per cent.

Many suggest not much has changed in light of the legalization. Those who consumed cannabis pre-legalization are still doing do so and those that didn’t likely aren’t. Once product returns to the shelves, legal sales will likely continue to increase, especially as supply meets up with Canadian demand.

Cannabis consumption, graph

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