The rundown on the Canadian cannabis shortages

Published Jun 15, 2019 01:38 p.m. ET
iStock / thamyrissalgueiro

Since marijuana legalization came about in 2018, Canada has been faced with shortages in the supply of cannabis. Marijuana dispensary stores are becoming more and more popular as their supply dwindles day by day.

With the legalization of marijuana in Canada and the shortage in supply by government stores, many people are forced to buy from illegal traders.

In 2018, the government stores in Quebec had to close twelve shops for a period of three days due to the shortage of cannabis stocks on the market.

In Ontario, the governmental stores delayed opening their stores until April. As a result, the online Ontario Cannabis Store’s orders exceeded 150,000 in just a week after the legalization of cannabis in Canada. By the way, the Ontario Cannabis Store or OCS is Ontario's only legal store in relation to the supply of marijuana for recreational purposes.

Some experts in the marijuana industry claims that growers of cannabis could open their own retail store or sell cannabis directly from their farms.

There is a limited number of retail licenses that are awarded through a lottery system. Some regions will be left out, without having any retail store near them.

There are eighty-one licensed producers of marijuana. Allowing some of these marijuana producers to operate retail stores in their communities in Southwestern Ontario would help to combat the cannabis shortages.

Also, there would not be much competition with the twenty-five (25) licensed retail stores because the producers would be operated in rural and less industrial communities.

A setback to this initiative is that allowing too many retail stores to open may also cause a strain on the demand of consumers.

Additionally, the producers would not have to transport the cannabis products to the Ontario Cannabis Store’s storage locations. This also means that logistic costs would be very low compared to the cost of transporting them to OCS.

Ontario has made the decision to allow growers of cannabis to have retail licenses. However, the decision to grant the licenses was disregarded. The interest of growers such as Indiva to transition into the retail business is unwavering.

On a good note, Ontario's regulators, the Alcohol and Gaming Commission of Ontario stated that the rules restricting the number of licenses issued to twenty-five (25) is operative until December 13. Although there is uncertainty as to how many licenses will be issued after the specified date.

Unlike the province of Ontario, British Columbia does not limit the number of retailers in the industry. However, applicants must go through certain steps to be considered for a license. An application fee of $7,500 is attached to the application process. There was also an online store shortage that private retailers stepped in and filled the shortfall. On the other hand, in Vancouver there are still many illegal stores in operation. These illegal operations can have devastating impacts on supply of marijuana.

Overall, the reduction in the supply of marijuana on the market can have negative effects if no concrete measure is implemented.

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