Canadian licensed producers added a file 220,461 kilograms of marijuana to their inventories in October 2020, in line with new information providing a statistical glimpse of the nation’s first large-scale “croptober” – when many of the fall outside harvest is available in.

The 220,461 kilograms (221 metric tons) of latest cannabis is about 50% greater than the earlier month-to-month file, in October 2019, doubtless owing to the primary outside yields.

The ballooning inventory is anticipated to place extra strain on mass producers to chop manufacturing capability till provides of particular merchandise sought by shoppers extra intently meet demand.

The inventory overhang additionally might put added downward strain on cannabis costs, which have been falling steadily since legalization in late 2018.

Among particular merchandise, the Health Canada information reveals a sharply rising surplus of cannabis edibles and a smaller imbalance for extracts.

The further fall cannabis manufacturing brings complete dried cannabis inventory for federal licensed holders, wholesalers and retailers to a staggering 1.06 million kilograms.

But the overwhelming majority of that inventory, about 95%, stays with cultivators and processors, in line with the Health Canada information.

By distinction, wholesalers and retailers have been capable of higher handle inventory ranges to satisfy precise shopper demand.

That would possibly imply additional write-downs are forward for any large-scale producers whose warehouses stay filled with dried cannabis.

Three of the most important greenhouse producers, Aurora Cannabis, Canopy Growth and Tilray, already shuttered massive amenities in 2020 and wrote down billions of {dollars} of cannabis.

Canopy additionally deserted its outside marijuana cultivation.

However, whereas Canada’s largest producers have closed massive greenhouses, which value them as much as 250 million Canadian {dollars} ($196 million) apiece to construct, outside manufacturing has greater than made up the distinction.

In October 2019, Canadian licensed producers have been sitting on 2.32 million sq. meters (232 hectares) of licensed outside rising space. One yr later, that had greater than doubled to five.76 million sq. meters.

On the opposite hand, indoor rising space, together with greenhouses, grew simply 50% to 2.04 million sq. meters over the identical time period.

The Health Canada information reveals that indoor cultivation space doubtless peaked in mid-2020, earlier than falling within the ensuing months on common.

Michaela Freedman, a global marijuana enterprise guide and founding father of Toronto-based MF Cannabis Consulting, stated the brand new manufacturing will add strain on producers.

“They’re destroying a lot of their cannabis or paying a lot of extra fees to store it until they know what to do with it,” she stated.

Freedman expects to see extra rightsizing of manufacturing capability.

“A market like Canada just doesn’t necessitate that many licensed producers at such a large scale, and especially outside, when lower-THC products are not flying off the shelves like the higher-THC ones.”

The Health Canada information additionally reveals a worsening provide/demand imbalance for edibles and extracts.

Canada cannabis cultivation, Canada’s ‘croptober’ surge pushes cannabis inventory over 1 million kilograms

Packaged manufacturing of edibles, together with drinks, was a file 4.1 million models in October 2020, blowing previous the earlier file of two.9 million models established two months earlier.

That represents new inventory progress of 50%.

By comparability, gross sales elevated 13% in October over the earlier month.

Overall, Canada’s cannabis trade had 12.7 million models of edibles in inventory in October 2020 versus gross sales of 1.7 million models.

The provide/demand imbalance within the extracts class is much less dire.

Overall inventory of extracts with federal license holders, wholesalers and retailers really eased in October 2020 to 9.8 million models from 9.9 million models in September.

That was about six instances greater than gross sales.

Matt Lamers is Marijuana Business Daily’s worldwide editor, based mostly close to Toronto. He may be reached at [email protected].

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