Canadian cannabis spending hit $5.9 billion in Q3 2018

Despite the good news, growing demand for cannabis in Canada is not being met

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Canadian cannabis spending hit $5.9 billion in Q3 2018

Bethan Rose Jenkins, Cannabis News Writer/Editorial

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Canadian cannabis spending is on the rise, according to recent data from Statistics Canada. The national statistical agency reported how people living in the Great White North, where cannabis was legalized on October 17 under the Cannabis Act (Bill C-45), spent $5.9 billion on an annualized basis in the third quarter of 2018.

Approximately 84 percent (equivalent to $4.9 billion) of cannabis purchases in Canada were for non-medical and illegal recreational use. This is less than the 98 percent recorded in mid-2014, what with the number of medical cannabis consumers in the North American country increasing as the years have progressed.

Majority of Canadian cannabis spending not spent on homegrown produce

Statistics Canada predicts that a mere 1.9 percent of the $4.9 billion spent on illicit, non-medical cannabis purchases was cultivated in a home environment. During Q3 of 2018, Canadian cannabis spending topped $836 million for medical cannabis. Personal production accounted for $88 million of that amount.

For the past six consecutive quarters, Canadian households have been spending more money on weed, at an average growth rate of 1.5 percent. Statistics Canada says that household spending on the green stuff has soared 73 percent since Q2 of 2001,  the same time that Canada’s government legalized medicinal cannabis.

Canada’s cannabis supply shortage could hamper business operations for weeks

It’s been almost two months since Canada’s cannabis legalization went into effect. The initial launch of the market has been successful, but it seems that demand is outpacing supply. Weed stores in various provinces are said to be struggling to increase their supply. Since most pot producers have evaluated their profit potential on the basis that they would be selling heaps of the plant, Canada’s cannabis supply shortage isn’t exactly ideal. What’s more, the issues aren’t likely to be figured for a good few months.

According to a report from MarketWatch, officials and retailers located in eight of the 10 provinces scattered around Canada claimed that their orders have not been fulfilled. British Columbia is one such example, where dispensary owners might have to wait 6-18 months for the issue to be rectified. A private Canadian cannabis retailer even described the situation as “a national shortage” of cannabis.

Growing demand for cannabis in Canada is not being met

Scarcity in Canada’s cannabis supply indicates that the country might have rushed into legalization sooner than it really was capable of. In November, earnings reports were released by five of the biggest cannabis companies in Canada:

  1. Aurora Cannabis Inc. ACB-5.03% CA:ACB-5.06%  
  2. Canopy Growth Corp. CA:WEED-2%  CGC-2.41%
  3. CannTrust Holdings Inc. CA:TRST-4.36% CNTTF-4.46%
  4. Cronos Group Inc. CRON+2.41% CA:CRON+2.86%  
  5. Tilray Inc. TLRY-3.32%  

Even the most innovative producers are struggling to meet the demands of Canadian cannabis spending. During the last two weeks of September, investors discovered that the aforementioned companies had shipped less than one percent of the total recreational sales forecast by Statistics Canada for 2018 – US$755.5 million.

Nonetheless, Canadian Health Minister Ginette Petitpas Taylor has affirmed that, in spite of supply hiccups, “everything is fine.”