It is just a matter of hours before recreational marijuana is legalized in Canada but researchers are suggesting that the country may not have enough marijuana on the shelves to meet the demand for it.
Researchers based at the University of Waterloo and their counterparts at C.D. Howe Institute warned that many people who may want to celebrate legalization with a joint may be unable to do so due to the limited capacity of cannabis suppliers to meet the expected demand.
The researchers revealed that the current suppliers may only be in position to meet between 30 percent and 60 percent of the demand for recreational cannabis come legalization day (October 17).
According to the researchers, the supply of cannabis from the licensed sources could be approximately 210 tons. This is a small amount when compared to the existing demand estimated to be in excess of 610 tons.
Part of the reason for this supply gap falls squarely on the government since it has been “unnecessarily” slow in vetting and licensing applicants who want to grow and supply cannabis to the retail outlets.
It should be remembered that Canada is just the second country to decriminalize adult use of marijuana after Uruguay. The “slow” rate at which producers are being licensed may be a result of the precautionary approach being used to avoid making needless mistakes so early in the development of the industry.
Government statistics show that approximately 16 percent (4.6 million) of all Canadians have used marijuana at least once this year. The number of people using cannabis is unlikely to rise according to the statistics of the federal government.
However, the insufficient supply of marijuana once adult use becomes legal is likely to hurt at different levels beyond the disappointment of Canadians who may miss out when the retail shelves run out of cannabis. The government will lose tax revenue amounting to about $774 million until the supply gaps are filled.
Legalization at the federal level in Canada also doesn’t mean that citizens will be free to use marijuana as they wish. Reports are already emerging that schools, apartment buildings and other public places may prohibit smoking marijuana within their spaces.
Such prohibitions may be modeled upon the restrictions on smoking tobacco cigarettes in order to protect non-smokers from the hazards associated with secondhand smoking. Pot enthusiasts may therefore have to be careful where they choose to indulge.
All the same, Youngevity International, Inc. (NASDAQ: YGYI) and American Premium Water Corp. (OTC: HIPH) would relish the chance to operate in a market where the demand for products far exceeds the supply available.
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