Reefer sadness: Day 1 shortages?

Canadians’ use of cannabis wildly underestimated, report suggests

With just weeks to go before recreational pot becomes legal across Canada, a new report commissioned by Health Canada predicts the demand for it will be substantially higher than widely anticipated.

The report used a 2017 federal survey on cannabis use to estimate how much adult Canadians will consume in the first year of legalization.

It calculated the amount at 926,000 kilograms for both recreational and medical use. That’s a whopping 41 per cent higher than the estimate of 655,000 kilograms by the Parliamentary Budget Officer in 2016.

It’s also higher than estimates by many private investment companies. A recent report by CIBC World Markets Corp., for example, estimated demand would reach 850,000 kilograms by 2020.

If the new report is on the mark, Canadians could face shortages after recreational marijuana becomes legal across the country on Oct. 17.

Some industry experts have long predicted that Canadian cannabis growers would not be able to produce enough, at least initially. The new report suggests the problem might be worse than expected.

“We all know there is not going to be enough product on Day 1,” said Greg McLeish, a financial analyst with Mackie Research Capital Corp. who specializes in cannabis. “Not nearly enough.”

McLeish predicts that supply won’t match demand until 2020.

The president of Canadian grower Canntrust says growers will scramble to meet demand. His company has already received requests from provinces to supply more cannabis than the initial supply deals specified. Brad Rogers said he’s not sure if that’s because other growers were unable to meet their quotas or the provinces are banking on more demand.

Initial orders of 10,000 kilograms from three western provinces have been increased to 17,000 kilograms, he said in an interview.

The demand for cannabis after legalization will be higher than widely predicted, but not because more people are smoking pot, says a new report commissioned by Health Canada.

Most of the increased demand is from heavy users, the report by the Marijuana Policy Group found, and the proportion of people who smoke pot daily or almost daily is higher than earlier estimates indicated. Daily users also consume more each time they use than occasional cannabis consumers.

Overall, 17.9 per cent of Canadians over age 18 said they used marijuana at least once in the past year, the report found. That number is in line with other recent surveys conducted by both the Canadian government and private firms, says the report.

However, the number of users who said they consumed daily or almost daily was substantially higher than in an older Canadian survey, the report said.

The newer survey found that 24.6 per cent of adults who consume cannabis use it daily or almost daily. That is nearly twice as large as the estimate of 14.8 per cent of that category of users contained in the 2012 Canadian Community Health Survey.

The increase could be due partly to the survey methodology, said the report. The more recent survey might paint a more accurate picture of users.

The 2012 survey was conducted live by telephone. Studies show that survey respondents tend to underreport “unwanted behaviour traits” when surveyed by people as opposed to taking a survey online.

The 2017 survey canvassed respondents randomly by phone, but those who agreed to take the survey filled it out privately online.

It’s also possible that respondents in 2017 were more likely to admit to daily use because the stigma against recreational pot has lessened and medical marijuana is more widely accepted.

Collecting data on cannabis use is challenging, said McLeish.

Smoking pot may be fairly widespread, but except for the minority of users who have obtained approval for medical marijuana, it’s still illegal.

“If it’s illegal and someone calls you up and asks you about it, what are you going to say?” says McLeish. “Are you going to tell the truth?”

There is still a huge stigma around cannabis use, says John Fowler, chief executive of The Supreme Cannabis Company, a grower that specializes in premium products for experienced users.

He is skeptical about use surveys, saying he doubts that respondents are always honest.

His company relies on its own market research, using techniques such as focus groups, to estimate demand.

Fowler estimates that 20 per cent of cannabis users will consume 80 per cent of the supply.