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PotCo’s Have Destroyed Millions of Grams of Weed in the Last Few Years

Published Sep 16, 2022 02:07 p.m. ET
Source: Unsplash

Since legalisation in 2018, billions of grams of weed have been grown in Canada by cultivators from sea to sea. Unfortunately, most of this cannabis has never even seen the inside of a consumer package, let alone purchased and smoked by a happy customer. As of August, 2022 a record number of 1.4 billion grams of cannabis sit in warehouses, unsure if it will ever see sale, and that number only continues to grow at accelerating rates.

A Growing Problem

Back in 2018, a few early Licensed Producers (LPs) decided they wanted to grow enough weed to supply the entire country - some wanted to supply the world. They built greenhouses that boasted millions of square feet, sowed hectares of outdoor fields, and built state-of-the-art indoor grows capable of producing millions of grams a year.

But most of the cannabis they grew wasn’t very good, if it even grew at all. Not even good enough to sell at cost. Some of it wasn’t even fit for worthwhile extraction.

And so began the steady growth of cannabis inventories across the country, slowly storing away weed that no one would buy, in the hopes that one-day it might be used for something - or at least keep some value on the books to offset the money put into growing the stuff in the first place.

Dealing with One Billion Grams

Collectively, the one billion grams of cannabis stored away is not homogeneous. While most of it is probably safe to consume, at least half is probably not going to be suitable to smoke, with at least another quarter considered ‘smokable’ only at the cheapest prices.

However, that is as it stands today. Tomorrow, all of it will be one day older - as a perishable crop where freshness matters, clearing inventories is time-sensitive and a problem that only gets worse the longer it’s ignored.

“Everything can be sold,” says Carl Mastronardi, President of Greenway Greenhouse Cannabis (CSE: GWAY), a cultivator in Southwestern Ontario. Carl comes from an Italian farming family, the first to grow strawberries year-round in North America. “With fruit and vegetables, you may sell your first box of strawberries in the morning for $50 and the last at the end of the day for $0.50, because these premium products are degrading in quality by the hour.”

This same urgency must be applied to cannabis as an agricultural crop, lest we destroy another 425 million grams of unsold, unpackaged dried cannabis and 7 million retail packages of adult-use recreational products, like we did in 2021.

A Disconnect with Consumers

The best way to avoid growing inventories and destroyed products is to grow cannabis that people want to buy. It sounds basic enough but it’s complicated by a few things:

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One of the major issues that can’t be avoided, is growing quality cannabis that just barely misses the mark - something that may not be obvious until harvest is complete and samples are tested. This is where hard decisions are made, with the clock ticking.

Clearing the Gram Jam

At the end of 2021, Greenway Greenhouse reported an “impairment expense” of $211,395, lingo usually reserved for the destruction of product. Recently, in line with Mastronardi’s philosophy, the action was clarified: “This was not destroyed product, but a particular new genetic that failed to meet [our] high standards for THC content…the product was sold as extraction grade quality.”

While this is an option for some cultivators to clear inventory that wouldn’t meet consumer demands, it’s unlikely to solve a growing problem the size of one billion grams.

SB 34, or the Compassionate Cannabis Donation Program, in California provides a legal pathway for producers in the state to donate product to charities and nonprofits, usually white labelled and distributed. It nonetheless needs to be tested before going out the door, with the nonprofits handling logistics around getting it into the hands of people who need it for medical purposes.

While nothing like this exists yet in Canada, it might be one of the few ways to clear the mountains of cannabis that are growing by the year.


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