On Wednesday, Rod Phillips, Ontario’s minister of finance, and Doug Downey, Ontario’s attorney general, criticized a federal cannabis supply shortage when announcing Ontario will be licensing 50 new cannabis retail locations across Ontario.
Blair shot back, saying Ontario was “making excuses” and using a “non-existent supply shortage,” for their slow success in subverting the illegal cannabis market in the province.
Blair pointed to Health Canada data that showed in April alone, Canada’s overall cannabis inventory was 24 times more than total sales that month.
But Michael Armstrong, a professor at the Goodman School of Business at Brock University, said the federal government is using seemingly impressive data to skirt around the fact that there are still significant supply issues in Canada.
“They are wildly incorrect to say there’s no cannabis shortage and that there’s enough legal cannabis for those who want it,” Armstrong said in an email.
Canada’s cannabis supply
Armstrong says the majority of Canada’s cannabis inventory, more than 85 per cent of it, is unfinished — that means raw cannabis product that has not been processed, packaged and made ready to sell.
Some of that inventory may also never be ready to sell.
“Some of it, unfortunately, may not be sellable, whether that’s contamination or microbial risk or pesticides or anything of that nature,” said John Fowler, president of Supreme Cannabis and vice-chair of the Cannabis Council of Canada, a cannabis business association. “The law does not allow licensed producers to sell that product but it also doesn’t require them to immediately destroy it.”
Armstrong also criticized Blair and Health Canada for equating sales of legal cannabis with national demand.
“Sales isn’t the relevant measure of demand here, because legal sales satisfy just a fraction of total consumption; most is met by black markets,” Armstrong says.
Legal marijuana retailers are competing with illegal dealers, Armstrong says, so to use legal sales as a benchmark for demand in Canada is wrong.
“No one really knows how big the black market is and how much total consumption there is,” Armstrong said.
Nevertheless, he has estimated, using Health Canada data from a report they commissioned on estimated cannabis use in the fall, overall demand of dried cannabis, including illegal and medical sales, would land somewhere around 56,000 kilograms a month.
Health Canada has been tracking cannabis sales since legalization on their website. Numbers for April show dried cannabis sales reached just below 9,000 kilograms, leaving just over 13,000 kilograms inventory available to sell.