Marijuana Shortage After Legalization? Canada is in For a Weed Drought
Last month, Health Canada attempted to placate the Canadian public, as many feared that cannabis demand would outpace supply come legalization. However, it appears that many cannabis enthusiast’s worst nightmare will be realized, as one prominent public policy think tank is predicting a marijuana shortage come October.
The C.D. Howe Institute is a non-profit research organization that investigates sound public policy in an attempt to improve living standards. The institute is not optimistic about the immediate transition into the post-prohibition world. This is particularly true concerning Canada’s diminished capacity for cannabis production. One of the non-profit’s economists, Rosalie Wyonch believes that this unpreparedness will result in a legal marijuana shortage.
“There is not currently enough legal supply of marijuana to actually supply all the recreational demand in Canada. We didn’t have enough producers far enough ahead from legalization that they’ll actually be able to deliver enough product to market by the time legalization happens.”
This fear of a legal marijuana shortage is not mere speculation either. Wyonch’s assessment is based on concrete data from a number of sources. Licensed producers are legally obligated to provide Health Canada with their inventory numbers. When these numbers were cross-examined with demand projections by Statistics Canada and the Parliamentary Budget Officer, something did not add up.
These findings were cross-referenced with valuable data attained from existing legal cannabis markets such as Colorado and Washington. This enabled Wyonch to study patterns of supply and demand in legal cannabis economies such. These investigations yielded some noteworthy predictions.
This economist has deduced that there might be a delay in the effects of this legal marijuana shortage. The deficit might not strike the cannabis economy immediately, but it could result in some unforeseen consequences down the line.
“I don’t see empty shelves manifesting on the first day probably, and not the first month. But as the year progresses, what we’ll see is either prices in the legal market will have to rise, or we’ll actually see the supply shortage.”
So how severe does the marijuana shortage promise to be exactly? Probably worse than you might think. Wyonch estimates the licensed producers will only be able to supply one-third of what Canadians need in the first year of legalization. With forecasts this severe, the marijuana shortage could spiral into a devastating drought.
Could the Marijuana Shortage Be More Severe Than Predicted?
Economists such as Rosalie Wyonch are confined to the limited data that is provided to them. Cannabis in Canada has been an illegal industry, and thus consumption patterns can be notoriously hard to measure. Undoubtedly, Canadians who are concerned about their professional reputation, or fear the stigma associated with cannabis might be reluctant to answer survey questions honestly.
Additionally, sample size is a persistent issue when such broad surveys are concerned. All Canadians cannot be surveyed, thus statisticians must often rely on a small sample size and use this as a representation of the population at large.
With such practical limitations, estimates of how many Canadians use cannabis are likely to be vastly understated. These projections also say nothing of comically law-abiding Canadians who are waiting until legalization to use cannabis. This means that the legal marijuana shortage might be more severe than previous assumptions suggest and that its effects felt more immediately.
Are Dispensary Owners Concerned About the Marijuana Shortage?
Dispensary owners are on the front lines of the cannabis economy. Many of them have been servicing the cannabis needs of Canadian consumers in a semi-legal grey market economy prior to legalization. Some of these business owners have expressed concern over the looming marijuana shortage and its potential effects on their success in the legal market.
Angus Taylor of Alberta is just one of these anxious entrepreneurs.
“I recently heard comments from some of the CEOs, saying that they don’t expect there to be enough product in the system, and that, of course, is of great concern to us. We’re concerned about the second or the third orders when the storage facilities at the licensed producers start to get a bit bare.”
It would seem that hearsay and rumors are the only information that cannabis business owners have to rely on… at least for the time being. Therefore, many of these cannabis retailers might find out about the severity of the marijuana shortage the hard way.
The Marijuana Shortage and the Black Market
When questioned on illegal cannabis sales, Rosalie Wyonch had this to say.
“Canada has a very prolific and highly functional black market,”
Go figure. Who would have suspected that 100 years of prohibition of a harmless plant would force Canadians to pick up the ball and supply themselves?
This “highly functioning and prolific black market” is likely to not go quietly into the night after legalization either. In California, cannabis was fully legalized on January 1 of this year, despite the plant being federally illegal. While the west coast state has been remarkably successful in its termination of cannabis prohibition, it is still waging a battle against the black market to this day.
Canada’s situation promises to be even more precarious. With a legal marijuana shortage on the horizon, Canadians will have to get their cannabis somewhere.
By: Stefan Hosko