D+3 and already cannabis shortages in Canada

Three days after the cannabis legalization, The first shortages are already arriving in Canada. Delayed production, supply chain delays, excess demand - there are many causes. In any case, it seems that Canadians' enthusiasm for legal cannabis has been greatly underestimated: endless queues are forming in front of legal cannabis stores, where some people wait a whole day without even being allowed in.

The success of legal cannabis

• In Ontario, the stores won't arrive until next year, but the online site is already up and running, recording some 38,000 orders in just a few hours on its first day. According to Bill Blair,Minister of Border Security and Organized Crime Reduction, states that approximately 750,000$CA of cannabis was sold via the site.
• In Nova Scotia, legal sales brought in around 660,000$CA or 441,000 euros, while in Prince Edward Island, Canada's smallest province, they reached 152,000$CA or around 100,902 euros.
• In Quebec, Société québécoise du cannabis (SQDC) has already processed over 42,500 transactions since Wednesday: 12,500 in-store and 30,000 online.. Nevertheless, the pace seems to be slowing since yesterday the online site only recorded 8500 orders.

Here's a summary of our activities since the opening:
Web orders day 1: 30,000 / day 2: 8,500
In-store orders day 1: 12,500 / day 2: 13,800

- La_SQDC (@La_SQDC) October 19, 2018

The first stock-outs

Most Canadian provinces are already experiencing cannabis shortages, even in sparsely populated provinces such as Newfoundland, Saskatchewan and Nunavut. Ontario has warned its customers of delays of up to 5 days, and in Quebec some products are already unavailable. SQDC has stated that it «expects major supply challenges for branches in the short term».

According to the latter, the products most likely to be subject to shortages are oils, capsules and atomizers and pre-rolled joints. At Tweed's store in St john's, the one that sold the first gram of legal cannabis, stock-outs of oil, pre-rolled joints and certain strains of cannabis began on the first day of legalization at just 2pm.

The independent institute for economic analysis C.D Howe estimated that Canadian producers will only be able to meet 30% to 60% of demand for the time being. According to the think tank's estimates, current production stands at 210 to 300 tonnes a year, whereas 611 tonnes would be needed to meet annual demand. On federal sites such as Statistics Canada or the CIBC, 773 tonnes or even 800 tonnes are even mentioned.

The supply chain

Canadian producers have to supply a certain quota of products, and most have not yet reached their quotas for this first month. In other words, some of the shortages are due to products just not being supplied on time, slow or missing production, or lack of materials or packaging in the supply chain.

The CEO of Canopy Growth, Bruce Linton, announced that it will have sent out 100% of the products required for this month by next Friday. Not all the expected products are on the shelves yet, but if stock-outs are already significant in less than a week of legalization, shortages are likely to last for several months. What's more, supply agreements are drawn up on a year-round basis, and production is calculated accordingly. Very popular products could be sold out very quickly, and not renewed until next year.

This is an experimental year for Canadian cannabis. Once more is known about Canadian consumption, production will be calculated on a more concrete basis.