Canadian Cannabis Imports

Breaking down the pressure on Canada to allow cannabis imports…

Despite Canada consecutively posting record cannabis sales, the quantity of cannabis sitting in Canadian cannabis producers vaults continues to increase.

For certain Canadian cannabis producers, this is an existential problem that will likely cause many producers to go under, and with growing pressure to allow cannabis imports, this problem may be about to go from bad to worse.

This is bad in the short term, and good in the long term.

The numbers…

When Canada announced its plans to legalize cannabis many existing medical cannabis producers such as Aurora, Tilray & Canopy Growth all significantly increased the quantity of cannabis they were producing to meet this new unknown demand.

The problem, however, is that these producers were not alone.

Across Canada, many more cannabis producers were pitching investors on how they would become the #1 cannabis producer in Canada, and the world.

Fast forward until 2021 and Canada now has over 10x the quantity of cannabis needed to meet consumer demand.

Cannabis exports vs imports…

Having too much supply for the Canadian market isn’t a problem if there are other markets where you can export to.

From 2018 to 2020, Canadian cannabis producers were permitted to export more than 30,000 KG of dried cannabis & 35,500 liters of cannabis oil per Matt Lamers.

During this same period, Canada has effectively banned foreign companies from importing cannabis products into Canada, however, a growing list of nations are calling out Canada to change this policy.

Growing concerns…

In October of this year, the Colombian government raised concern about Canada’s cannabis import restrictions with the World Trade Organization.

Canadian cannabis producers with operations in Jamaica and Australia have also brought attention to this issue which prevents them from taking advantage of the lower cost of producing cannabis in these warmer climates.

Looking forward…

This subject raises a very fundamental question that both Canadian and U.S cannabis companies will have to contend with in the coming years — which regions should they be cultivating cannabis in?

In the United States, once interstate commerce is permitted it stands to reason that certain states such as California would produce significantly more cannabis than colder states such as North Dakota, Maine & Minnesota.

In the case of Canada, it seems likely that the government will continue to put protections in place which make it difficult for companies to import cannabis products into Canada, however, this seems foolish.

Our Take

We live in a world where the country that has the best climate to cultivate a specific crop produces a disproportionate quantity of the global supply.

For example, Brazil’s climate is perfectly suited to cultivate coffee plants — producing over 1/3 of the global supply of coffee beans.

When thinking about the future of cannabis, I think we can learn a great deal from the structure of these supply chains as opposed to masking the efficiencies of supply chains with government protections.

Cannabis Stores In New York

Breaking down the number of regions that don’t want legal cannabis stores…

One of the biggest success stories for cannabis in 2021 was New York’s decision to legalize cannabis for adult-use purposes.

With over 9 million people living in New York many cannabis insiders are very excited about the opportunity to sell legal cannabis products in the region.

That said, with a growing list of regions opting out of allowing cannabis retail stores — it’s unclear where consumers will be able to purchase cannabis from.

Legalization vs legal sales…

After several failed attempts to legalize cannabis — New York lawmakers finally received the required support to legalize cannabis earlier this year.

So far, 400+ towns and villages in New York have banned cannabis stores, and consumption lounges from opening.

Towns and villages have until the end of the year to inform the state if they are not permitting legal cannabis stores.

Per the Rockefeller Institute of Government, more than a quarter of New York’s towns and 31% of its villages have voted to not allow cannabis retail stores from opening when legal cannabis sales commence.

History repeats itself…

This is not the first time we have seen a very large percentage of regions opting to not allow cannabis retail stores to open.

In California, close to 68% of cities have banned cannabis retail stores.

Looking forward…

New York is one of the most exciting cannabis markets in the world, and I have high hopes that many of the most culturally significant cannabis brands a decade from now will have come from this market.

That said, in order to successfully displace the illicit market it needs to be as easy as possible for consumers to access legal cannabis products.

Our Take

Adults can grow their own cannabis at home in these regions, however, this isn’t an option for many adults who rent & it’s an inconvenience for many consumers who simply want to purchase & consume cannabis — not grow it.

Long term, as the stigma surrounding cannabis continues to be erased, I am confident all of these regions will come around to this same viewpoint.