Article by David Clement, Growth Op
In less than two years, cannabis has gone from an illegal product to an essential service during a pandemic. But despite reports of increased sales as consumers stockpile for COVID-19 lockdowns, Canada’s cannabis market is struggling.
We kicked off this year with declining stock prices for licensed cultviators, stagnant sales and rumours of a pending insolvency crisis for many medium-sized companies. The current coronavirus crisis could make this trend worse as global markets plummet.
There are a lot of reasons why Canada’s cannabis industry stumbled out of the gate. Poor retail access, specifically Ontario; over-regulation and high tax rates. And establishing brand awareness in a market that prevents even the most modest forms of advertising and branding is challenging.
But there’s an additional factor at play: The program for growing medical cannabis for personal use is undermining the legal market and fueling the illicit market. Far more cannabis is being grown than medical cannabis consumers require — and some of that cannabis is being sold on the illicit market. I’d like to propose a few potential solutions.
Breaking down the numbers
As a result of several Supreme Court rulings, medical cannabis consumers have the constitutional right to grow their own medicine and can apply to do so through Health Canada.
The latest figures show that there are 28,869 Canadians who have their personal production permits. Similar to a prescription, an individual is authorized to consume a amount of grams of cannabis per day, and the number of plants they are allowed to grow as a result of that authorization is determined by Health Canada. Medical consumers are generally authorized to consume between five and 60 grams of cannabis per day.