Record Amount of Cannabis Destroyed in Canada as Sales Forecasts Continue to Outstrip Demand

Record Amount of Cannabis Destroyed in Canada as Sales Forecasts Continue to Outstrip Demand - GCI Content Hub - Global Cannabis Intelligence

The oversupply of cannabis by Canadian licensed producers has been brought into question once more, as figures posted for 2021 reveal record amounts of the plant have been destroyed for the fourth year running, since adult-legalization in the country.

As forecasted sales continue to outweigh the reality of actual sales in Canada, licensed producers saw 425 million grams (equivalent to 468 tons) of unpackaged, unsold cannabis destroyed last year, according to Health Canada, via MJBizDaily.

The figures have exponentially risen, year on year, with 279 million grams destroyed in 2020, preceded by 155 million grams in 2019.

Moreover, data suggests that between legalization in 2018 through to 2020, less than 20% of product cultivated by Canadian licensed producers was sold.

The data shows that it wasn’t just unpackaged, dried cannabis flower that had to be destroyed, as over 7 million packaged cannabis products – including packaged dried cannabis, vapes, extracts, edibles, beverages and topicals – also met their end before ever reaching the hands of consumers.

Why is there so much oversupply of cannabis in Canada?

As the industry geared up for the launch of Canadian recreational cannabis sales in October 2018, the first wave of licensed producers competed against one another to build – or retrofit buildings like aeroplane hangars – and create the largest cultivation facilities in town.

Overly ambitious sales projections for the domestic market, paired with unrealistic expectations of the pace of regulatory change overseas, have been compounded by eager investors keen to seize their own treasure chest of doubloons by being a first mover, culminating in a perfect storm for the nascent cannabis market in Canada.

Early licensed producers were able to raise exceptionally vast sums of money, pushing a model of vertical integration across their supply chain and extremely punchy sales projections to legitimise the development of cultivation facilities that could satisfy imminent demand.

Herein lies the problem – the sheer quantity of licensed producers that were able to sell the promised land of green rush riches to investors meant that eventual supply of cannabis far outstripped the realistic demand for cannabis in Canada.

Moreover, restrictions on cross-border sales of cannabis products and somewhat protectionist policies around the domestic industry, have led to epic amounts of plant product going unsold.

Comparisons can be drawn here with what was seen in many U.S. states after the 2018 Farm Bill was passed, as an extraordinary amount of budding cannabis entrepreneurs flooded the market with CBD flower, creating enormous oversupply of the product.

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