Marijuana shortage could be Canada's biggest pot legislation problem

A woman smokes marijuana during the annual 4/20 marijuana rally on Parliament Hill in Ottawa, Ontario, Canada, April 20, 2017. (Reuters)

At a meeting of the provincial finance ministers this week, Ontario’s Minister of Finance Charles Sousa said running out of pot is his main concern in the recreational marijuana rollout.

“Ultimately the biggest problem that appears after today’s discussion is one of supply,” Sousa said, according to Bloomberg.

Other issues like taxes and program start date were also discussed, but the issue of meeting the demand for recreational marijuana remains a chief issue that will need to be addressed before July 2018.

A November report from Canaccord Genuity Group Inc. suggests that recreational sales of marijuana could reach $6 billion by 2021, with a combined demand for recreational and medical marijuana reaching 575,000 kilograms by that same year.

“There will be a shortage initially,” PI Financial analyst Jason Zandberg told Bloomberg. “My concerns are that if that is used as an excuse to push the date of recreational legalization back, there’s a danger that it slips into the next election cycle and doesn’t actually happen.”

An adjusted date for rollout was already requested by Manitoba finance minister Cameron Friesen, who said he fears that a year is not significant enough time to put all the pieces in place.

“This is a very significant shift in how we’ll operate, and we need to have that adequate time to develop the tools that we will need as a province to be able to implement this the correct way,” said Friesen.

It’s also time that could be used to increase supply.

Greg Engel of Organigram Holdings Inc. told Bloomberg that they have a current supply of 6,000kg they produce for the medical marijuana market, and plans to scale that to 26,000kg by the end of 2018, but he still anticipates the overwhelming demand will mean Canada is in short supply at the launch of the program.

The only way to address the looming shortage would be to grow more plants, but like recent lettuce and cauliflower shortages, the only way to increase supply is through time.

“I don’t know what anyone can do about it — you can’t force the plants to grow faster,” Cam Mingay, a senior partner at Cassels Brock , told Bloomberg.

“You could approve 50 more tomorrow, and realistically they could probably be in production by the end of 2018 in any meaningful capacity.”