Pot retailers fear marijuana shortage after Oct. 17
Cannabis will be in short supply in the early weeks of legalization, say a number of retailers who expect to operate in Calgary.
Demand will likely outstrip supply as producers scramble to come up to speed, according to some who plan to open stores when recreational pot becomes legal Oct. 17.
“Everybody ’s well aware of that,” said Nathan Mison of Edmontonbased Fire and Flower, which hopes to operate up to seven Calgary locations.
“There’ll be a shortage, there’s always a shortage at the beginning until you get enough product.”
While there’ll definitely be bud and non-smokable cannabis items available when some of the hundreds of stores vying for piece of the pot pie open for business on Oct. 17, their shelves won’t look like they will months later, said Mison.
“It’ll be sparse in the beginning and it’ll come on line … there’ll be limited stores with limited product but week by week, we’ll be seeing more stores and more products.”
It’s not surprising, given the unprecedented move from pot prohibition to legalization, he said, adding “you continue to focus on being a partner to regulators and being transparent.”
That’s been the experience of legalization in U.S. states, said Mison.
The head of a large liquor chain that’s expanded into cannabis said he also sees leaner kickoff to retail’s legalization.
“We understand supply’s going to be pretty short for the first little while because the growers aren’t up to speed,” said James Burns, chief executive officer of Alcanna, which also operates Liquor Depot outlets.
“It’ll be a pretty severe supply shortage.”
He said it could take up to six months before the amount of product is fully satisfactory for both retailers and consumers.
But he said a saving grace could be the fact not all proposed stores will be opening in the first weeks of legalization, due largely to regulatory hurdles.
Some concerned industry observers point to federal regulations prohibiting licensed suppliers from importing cannabis into Canada for either medicinal or recreational purposes.
A CIBC report from last May on the commercial side of legalization predicts product shortages in a Canadian market, which is expected to consume 800,000 kg of medical and recreational marijuana.
But those among 100 licensed producers in Canada who can deliver will be rewarded, it states.
“We believe the legitimate market will be under-served upon legalization, and it will be those LPs (licensed producers) who actually have product on hand as well as production capacity … who’ll have the opportunity to win a first-mover advantage and gain the ability to develop relationships with distributors, retailers and customers,” it states.
The current legal production potential in Canada, it says, is about 350,000 kg, “nowhere near enough to supply the adult use market.”
Experience from states like Colorado and Washington suggest such a situation will initially drive up prices, before falling once licensed Canadian production reaches a much higher level of 1 million kg, says the report.
Despite those predictions, the Alberta Gaming, Liquor and Cannabis (AGLC) said they’re confident supply will meet demand Oct. 17.
“We have no such concerns at this time,” said AGLC spokeswoman Kaleigh Miller, who noted 15 licensed producers will be providing cannabis products in Alberta.
“Part of (our) planning was calculating how much product the province would require for an estimated number of stores at the launch of legalization.”
The AGLC, she said, is in regular contact with retailers to ensure they receive the necessary support.
Edmonton-based producer Aurora Cannabis has said it’s ready to meet its commitment to retailers.
The CIBC report says last year, nearly five million Canadians over the age of 15 consumed cannabis, spending $5.7 billion, a rate of usage that’s grown five per cent a year.
According to Statistics Canada numbers published last spring, Albertans are among the highest users of cannabis, with 17 per cent of those over age 15 admitting to consuming it in the previous three months.
Only Nova Scotia, at 20 per cent, ranked higher, while 79 per cent of Canadians insisted they aren’t more likely to use marijuana after it’s legalized.