A new study from Health Canada predicts that demand for cannabis will be 41% higher than previous estimates when it’s legalized.
It commissioned the Marijuana Policy Group to study the economic impact of marijuana in Canada, and it found that Canadians will consume 926,000kg in the first year. That sparked fears that there will not be enough supply to meet demand, which could cause initial challenges in what should be an exciting new industry.
“We all know there is not going to be enough product on day one,” said financial analyst and cannabis specialist Greg McLeish, of the Mackie Research Capital Corp. who specializes in cannabis. “Not nearly enough.” He anticipates that supply will not catch up with demand until 2020.
The Marijuana Policy Group’s study makes for fascinating reading. It calculates that 5.3 million Canadians have used cannabis in the past year, equivalent to 17.9% of the adult population.
Adults in the western provinces are the most prolific cannabis users, with 20.1% having enjoyed it in the past year. That figure falls to 13% for Quebec, while Ontario and the Atlantic provinces both worked out at 18.8%.
It said heavy users consume 1.72g per day, weekly users consume 0.92g and occasional users 0.46g.
In total it forecasts that 926,000kg will be consumed. That’s a sharp 41% rise on the 2016 estimate of 655,000kg made by the Parliamentary Budget Officer.
The Marijuana Policy Group study used data from a Health Canada cannabis use survey conducted in 2017, and researchers then made several adjustments. Some experts believe demand will actually be considerably lower than 926,000kg, and they’ve brushed off fears that there will be a shortage of supply.
Producers needed to wait for the Cannabis Act to pass before investing heavily in expanding their capacity for production, so now they’re in a race against time to produce stock for the October 17 legalization date.
Others are caught up in red tape as the Health Canada team is swamped with permit applications for cultivating marijuana. That is why the industry will not be running to its full capacity until 2020, but there are several big firms that should be able to meet local demand before long.
Canopy Growth Corp, Aurora Cannabis, Aphria, MedReLeaf, The Green Organic Dutchman, Organigram Holdings, Hydropothecary and Emerald Health Therapeutics are all expected to have significant production capacity, ranging from 100,000kg to 550,000kg, and estimates suggest Canada will produce between 2 million and 3 million kilos per year, leaving plenty of room for exports.