Canada is short on cannabis, despite the fact that legalization is officially due to roll out on today. Based on a recent report released by the C.D. Howe Institute, the Great White North’s supply of bud will meet a mere 30-60 percent of total consumer demand once recreational sales kick off.

Industry analysts eagerly anticipate the looming publication of this C.D. report on Canada’s cannabis supply, which states how consumers are expected to buy more than 610.6 metric tons of cannabis in Canada. However, only 146.13 metric tons will have been produced by the country’s licensed cultivators in Q4.

Report on Canada’s cannabis supply to be released next week

Initially documented by the Financial Post, the C.W. report on Canada’s cannabis supply claims that the aforementioned figure will merely creep up to 210 metric tons by the close of Canada’s first year of legalization. Detailed in the report, which has a release date sometime in the looming week, tallies a total of 97 Licensed Producers CPR Q4, with predictions that this figure will climb to 144 in Q3 of next year.

“The important policy conclusion is that there will not be enough legal supply, especially during the first half of the year following legalization, primarily because of the slow rate of licensing producers,” writes C.D. Howe policy analyst Rosalie Wyonch and University of Waterloo economics professor, Anindya Sen.

Canada’s cannabis industry forecasts only represent half the market

While the projected value of Canada’s cannabis industry is pretty impressive at a whopping $4 billion, analysts from the Deloitte say that this figure does not represent the entire market. Instead, it represents just half.

Failure to meet consumer demand with a restricted supply means that illicit substances will continue to be dealt outside of the legal system. Black market cannabis sales are unregulated and untaxed, leaving plant advocates concerned that “dealers” will be able to undercut on pricing.

According to the Deloitte, the combined market could be worth an estimated $7 billion.

Another concern associated with the shortage in Canada’s cannabis supply is the tax revenue that government officials will be missing out on. Based on statistics published by the Financial Post, as much as $1.3 billion could be accrued if the market was fully taxed. Despite this, lack of cannabis reduced the figure to somewhere in the range of $490 million.

“Our results show that both pricing and supply shortages will contribute to maintaining the black market,” write the report authors. “Resulting in lost tax revenues and a continued need to spend significant resources on law enforcement activities related to the market.”