Supply to take as much as 3 years to stabilize
Investors in the pot industry might need to hold off from celebrating just yet, amid new expert predictions estimating that product shortage will persist for as long as 3 years.
As of mid-December, about 50% of products for sale in as much as 5 provinces were out of stock, according to Cowen & Co. analyst Vivien Azer – and sellers might not see a silver lining until at least 2021.
“There’s a lot of execution risk, people are expanding by 10, 20 times,” Auxly Cannabis Group Inc. CEO Chuck Rifici told BNN Bloomberg. “Personally, I think we’re at least three years out from hitting real equilibrium.”
“Ultimately any manufacturing facility growing 20 times is likely to face delays,” he added.
Valens Groworks Corp. executive VP for strategy and investments Everett Knight agreed that the industry will take 2 to 3 years to stabilize.
“It’s harder to grow cannabis than most people think,” Knight explained, noting that a major problem among growers is the tendency to underestimate the impact of mould.
Read more: Canada’s commercial market promises an even stronger 2019
In late December, the Ontario government announced that it will limit the number of licences for retail cannabis outlets in the province to just 25 by April 2019.
The government admitted that due to the “severe supply shortages” nationwide, it was forced to take a “phased approach” to authorizing sellers.
“Taking into consideration the required investments for a prospective Ontario private legal retailer, we cannot in good conscience issue an unlimited number of licences,” according to a statement jointly made by Finance Minister Vic Fedeli and Attorney General Caroline Mulroney.
The Alcohol and Gaming Commission of Ontario is set to choose the eligible retailers this week.
