Why it matters: Canada has been experiencing a significant oversupply of cannabis, leading to the destruction of millions of pounds of unsold and low-quality product. This indicates a significant disparity between how much cannabis is grown and how much people actually consume.
What they are saying: Industry experts and consultants note that the majority of the discarded product is destroyed because it is too old and has low levels of THC. There is no demand for such products, and manufacturers of finished goods do not buy them as inputs. Consumers are becoming more discerning and are less likely to purchase cannabis products with older packaging dates, contributing to the increasing trend of waste.
The big picture: Canada’s cannabis industry may have already reached the peak of its supply-demand mismatch. The excessive cultivation of cannabis due to investors’ focus on production volume rather than sales figures has resulted in a surplus of lower THC cannabis that does not meet consumer demand. Bankrupt companies are also forced to discard unsold products, adding to the waste. The oversupply issue is exacerbated by new labeling standards and ineffective business models.
What to watch: The Canadian federal government should work towards better aligning public policy and regulatory activities with provincial regulators and license holders to manage the oversupply issue. More coordination and communication between the federal and provincial governments, as well as improved oversight and data sharing, would help control the production of excess cannabis and balance it with consumer demand. Cultivation license holders should focus on producing cannabis that meets minimum THC requirements to increase marketability.
My take: The oversupply and subsequent waste of cannabis in Canada highlight the challenges that can arise when the industry focuses solely on production volume without considering market demand. It is crucial for the government and industry stakeholders to work together to find solutions and prevent further environmental and economic waste. Additionally, producers should adapt to consumer preferences and ensure they are meeting quality standards to avoid excess inventory.
