Canadian Cannabis Companies Have 1.5 Billion Grams of Unsold Cannabis

Canadian cannabis companies have produced a significant amount of cannabis that has not been sold. Canada’s inventory of unsold cannabis has risen to a whopping 1.5 billion grams. Overall, this reflects the current challenges facing the Canadian cannabis industry.

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Canadian cannabis companies are scrambling to find solutions to address this situation and make their businesses profitable

There are many reasons for this unsold inventory. First, since the legalization of recreational cannabis in 2018, Canada has a significant number of licensed producers, which has led to excessive production, fierce competition, and price erosion. According to Statistics Canada’s Consumer Price Index, the retail price of cannabis has dropped nearly 30% since 2018. Falling prices are putting pressure on businesses throughout the cannabis supply chain in Canada.

Additionally, regulatory challenges and retail licensing bottlenecks in some provinces have hindered the proliferation of legal outlets. This has resulted in legal suppliers facing a limited number of distribution channels to sell their products.

In addition, the COVID-19 pandemic has exacerbated the situation. Business closures, travel restrictions, and other pandemic containment measures have affected the sale of cannabis products. Supply chains have been disrupted, and some retail stores have been temporarily closed.

Although Canada has legalized cannabis, the international market remains limited

Companies in the industry have tried to boost demand with discounts and other promotions to clear unsold inventory. The unsold inventory has further financial implications for companies as they have to bear high inventory-carrying costs. Some companies have already written down inventory to mitigate the impact on their balance sheets.

To overcome these challenges, Canadian cannabis companies are looking for alternative outlets. They are exploring opportunities in the export business and looking for opportunities in other countries where cannabis is legal. Another aspect of the problem here, of course, is the limited ability to export surplus cannabis from Canada.

Although Canada has legalized cannabis, the international market remains limited, which means companies are struggling to sell their excess inventory outside of the country. They also hope to improve demand in the domestic market with the introduction of new products such as edibles and beverages, which were legalized in October 2019.

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First published in Hanf Journal, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.

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