What are they thinking?

No matter what the product, there is a practical limit on how much demand exists within a specified number of people within a specified geographic area. When speaking of cannabis, consider that over the past decades the entire Canadian demand for recreational cannabis (we’ll leave medical cannabis out of the issue for now) has been adequately supplied by a combination of importers and a widely-dispersed group of small, domestic growers. That these operators have existed for decades demonstrates the ineffectiveness of law enforcement on such a widely-distributed supply base – so it’s probably safe to say that, regardless of the federal legal status, this production will continue. Now enter the legal guys with >2.2 million pounds of fully-funded recreational cannabis. The new source is legal and semi-centralized (and therefore easily policed) but Health Canada (“HC”) has hobbled the legal guys by only allowing them to offer “smoking bud” and low-potency, non-vapeable oils are allowed. These restrictions were put in place despite the strong trend toward extract-based vape pens which are one of the fastest growing products – and demand continues to grow because the customer wants an ingestion method that provides high-potency, high-purity, no smell, easy dosing, and no harsh cough. And what the customer wants, the customer will usually get – one way or another.

Two thoughts spring to mind:

1. What happens when you dump >2mm lbs. of cannabis on an already-adequately-supplied market?

Oversupply typically results in lower prices. This is going to squeeze those growers that rely solely on bud sales. Those that don’t value-add their crops are going to have problems.

2. What happens when you put restrictions on potency and prevent the offering of one of the fastest-growing product types?

The product restrictions mean the black market gets richer. And by the way, the black market doesn’t pay taxes, doesn’t care if 12 year-olds have access, doesn’t care what the government says about potency, isn’t concerned with advertising and branding restrictions, and isn’t concerned with purity.

Hopefully the powers-that-be will see the light and lift the restrictions sooner rather than later – but then there are the follow-on issues….