Cannabis shortages likely to continue into new year
Health Canada says legal cannabis shortages that have been experienced in some provinces, including in Atlantic Canada, will likely continue into the New Year.
Karen Casey, Nova Scotia’s finance minister and deputy premier, said recently, the province is only receiving 35 to 40 per cent of the cannabis it needs to meet the demands of consumers, leading to store closures in some cases and raising concerns about continued reliance on the black market.
Other provinces have been facing similar issues, Casey said, and have approached Health Canada with their concerns.
In an email, Health Canada spokesperson Tammy Jarbeau confirmed the department has observed localized shortages of supply in some markets and in some product lines.
Those shortages were expected, Jarbeau said, and will likely continue in the months ahead, as producers of cannabis and provincial and territorial distributors and retailers aim to match production and shipment levels to market demand.
“It is important to note that Oct. 17 marked the end of nearly a century of criminal prohibition of cannabis and the launch of an entirely new regulated industry in our country. As with any new industry where there is considerable consumer demand, we expect there may be periods where inventories of some products run low or, in some cases, run out,” Jarbeau said.
“As the experience from U.S. states that have regulated access to cannabis has demonstrated, displacing the illegal market for cannabis will take time.”
Jarbeau also noted that given the long-standing illegal status of cannabis, there were no established benchmarks to determine which products would be in high demand and which would not, or to precisely estimate demand levels.
However, based on available data, Jarbeau said there is more than enough dried cannabis and cannabis oils to meet Canadian legal demand in the marketplace, but the challenge will continue to be for licensed processors to work with distributors and retailers to process, package existing inventory and ship final products to meet consumer demand.
Jarbeau’s email also noted that supply arrangements are negotiated directly between federally licensed producers/distributors and retailers authorized by provinces and territories.
As the overall supply chain gains experience marketplace and licensed producers continue to expand their production, Jarbeau said it is expected localized and product-specific shortages will become far fewer in number and overall levels of supply will continue to grow month over month.
According to Health Canada, there are currently 134 companies licensed to produce cannabis in Canada – 90 of those were licensed in the last 16 months – and 60 with a licence for sales. Since May 2017, licensed square footage has increased from two million square feet to more than 14 million square feet.
Recently, a Lower Sackville, N.S.-based company, AtlantiCann Medical Inc., just received its cultivation licence. It operates a new 48,000-square-foot cultivation and extraction facility with a production capacity of 6,000 kg. per year.
Christine Halef, president of AtlantiCann, said the road to getting a licence has been lengthy. Once the company received a green light in the form of a readiness letter from Health Canada back in the spring of 2017 following extensive security and background checks, Halef said they then had to provide what’s called an evidence package to Health Canada after their facility was built. That was sent off in October of this year
“(That evidence package) is videos and pictures and reports indicating that what you were going to build in your application is exactly what you built,” she said. “All of our security footage and our security system ... the way we built our facility every aspect of our facility was assessed.
“It’s been a long process, but it’s just the way the process is. I mean, you have to go through all of your requirements and building a facility of this type is also not a fast process, so that contributes to the length of time in this whole scenario.”
Once a cannabis producer is licensed for cultivation and processing there is an additional process to get a retail licence that permits the sale of their product in stores.
Part of that involves growing at least two harvests – Halef said that typically takes about three months each – which have to pass Health Canada’s quality control.
Health Canada will also come for a site audit and ensure the company is following all regulations and operating procedures.
“Once you’re past all that and Health Canada issues a sales licence, at that point that we can sell both medicinally through patients and recreationally through (retailers).”