Feds Say There’s No Cannabis Supply Shortage in Canada. So Why Are Shops Always Short on Pot?
Ever since recreational cannabis was legalized last October, Canadian retailers have struggled to keep their shelves stocked with marijuana. Some stores have reduced their staff, cut back on their hours of operation or closed down altogether due to inventory problems. But instead of offering help, the federal government is dismissing the issue. Simply put, there is no cannabis supply shortage, according to federal regulators.
“As of the end of December, total inventories of cannabis…were nearly 18 times greater than monthly sales,” Tammy Jarbeau — a senior spokeswoman for Health Canada — told the Calgary Herald. “There is not — as some have suggested — a national shortage of supply of cannabis.”
Jarbeau was referring to a recently released report on the state of cannabis inventory in Canada, which showed there is way more weed sitting in warehouses and production facilities than is actually reaching consumers. In December, the total nationwide sales of dried cannabis equaled 7,252 kg while total oil sales came in at 7,127 litres. Meanwhile, the “total inventory of dried cannabis (finished and unfinished) held by cultivators, processors, distributors and retailers stood at 128,321 kg at the end of December.”
Based on those numbers, there should be more than enough cannabis to not only meet but exceed demand.
But what’s happening on the ground tells a different story. Just last week, a private cannabis retailer in Newfoundland shuttered its doors because the owner could not get enough stock to stay afloat. At the same time, Quebec’s cannabis stores continue to be open for only four days a week because of inventory shortages. And New Brunswick’s provincially owned chain of cannabis retailers has laid off some 60 employees due to their inability to meet market demand.
Yet the federal government insists that the problem isn’t with supply — it’s with distribution. Last week, Bill Blair — Canada’s Minister of Border Security and Organized Crime Reduction — tweeted that provinces need to sort out their distribution problems in order to keep stores well stocked.
But that’s difficult when the system is rigged against you, according to Chris Felgate, who runs Small Town Buds — a private cannabis retailer in Alberta. Felgate alleges that the Alberta Gaming, Liquor and Cannabis (AGLC) — the group that oversees cannabis distribution in the province — is favoring larger retailers and its own online store when deciding who gets dibs on the region’s supply.
“The AGLC has not been transparent with us,” Felgate said.
But the provincial distributor denies those allegations.
“You can look at our website and see we’re not hoarding it,” said AGLC spokesperson Heather Holmen, who added that if there really is enough cannabis supply, then the feds should ship it to Alberta, stat. “If the federal government indicates there’s enough product, we would welcome that product into Alberta.”
Others are also sceptical about the federal government’s data, which could be outdated, according to Allan Rewak — Executive Director of the Cannabis Council of Canada. And even if the numbers are accurate, Rewak believes that the numbers are misleading because there isn’t enough supply of the products that consumers demand most — cannabis strains with a high percent of THC. In other words, Canada might have an abundance of cannabis in general but not enough of the specific kinds that consumers actually want.
“Nobody should look at this and say ‘we’ve got enough cannabis in Canada,’ we’re still scaling up and we’ll face challenges for a few more months,” Rewak noted.
On top of that, the logistical challenges of adhering to federal regulations are causing more distribution challenges. In order to sell cannabis legally, federal excise stamps have to be stuck to each and every product before it can hit the shelves. And that process has proven to be a huge time suck because it has to be done manually.
“[The stamp] is not designed for automation,” Rewak said. “There’s no machine for it and there’s no adhesive.”
So, even if there really is a huge supply of cannabis just waiting to be shipped to retailers across the country, the time-consuming process of getting it on shelves could be creating an artificial shortage.
The only thing that’s absolutely clear right now is that stores won’t be able to meet consumer demand until licensed producers, distributors, retailers and federal regulators can agree on where the kink in the hose is happening.