Data from Health Canada shows that Canadians purchased about 100 tonnes of legal adult-use marijuana within the first year of legalization and that the level of available stock continues to increase.
According to the monthly Marijuana Tracking System from Health Canada, the dried flower marijuana sold in Canada within its first year of legalization amounted to 88,676 kilograms. The overall sale of dried buds has tripled since October 2018.
Data from Health Canada further showed that at the end of September, the finished and unfinished dried marijuana inventory held by farmers, processors, distributors, and retailers amounted to 380,666 kilograms, which is about 32.5 times the quantity of total stock sold within the month of September. At the end of September, the data showed that there were about 64,151 kilograms of finished dried marijuana products in inventory, which has been going up by 5 percent every month. This suggests that a significant amount of legal pot inventory is yet to reach the retailers as the wholesalers hold it.
Within the same year, the recreational market sold a total of 46,056 liters of marijuana oil, which is an equivalent of 9,211 kilograms of dried bud. This brings up the total quantity of dried buds to about 97,887 kilograms sold to the legal recreational market.
The amount sold in the legal recreational markets is less than the quantity projected by Canadian analysts, and it is a sign that the black market demand still outpaces legal marijuana sales. In the Middle of 2018, John Zamparo, an analyst with CIBC World Markets, said that the recreational market in Canada would sell approximately 400,000kgs of legal weed annually while the Bank of Nova Scotia predicted that the total amount of marijuana to be sold this year in Canada would be 900,000kgs. These figures show that lega sales are still way below the potential of the legal recreational marijuana industry, and a possible indicator that the rest of the projected demand is being met by illicit sellers.
The data from Health Canada also showed that by the end of September, there was a total of 1,781,106 square meters of active marijuana cultivation area in Canada. This is an increase from the previous year’s 452,896 square meters of cannabis cultivation area. By the end of the first year of marijuana legalization in Canada, the farmers had planted about five million marijuana plants, and compared to last October, it is a four-fold increase.
On Tuesday last week, Statistics Canada showed that in the third quarter of the year, Canadian households spent a total of $1.27 billion on weed, with $860 million of the total sales were from the black market. The estimated sales from the legal marijuana market total were $417 million.
Experts wonder what recommendations weed companies like The Green Organic Dutchman Holdings Ltd. (TSX: TGOD) (OTCQX: TGODF) and SinglePoint Inc. (OTCQB: SING) have for wiping out the marijuana black market that is exposing consumers to the risks associated with untested products.
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