Nearly 425 million grams of unpackaged dried cannabis were destroyed last year by licensed cannabis producers, suggesting the industry is producing more than it can sell, the Financial Post reported.
• Read also: Cannabis: billions of dollars in smoke
• Read also: Cannabis-containing edibles: A claimed analysis
This amount destroyed in 2021 represents 26% of the total dried cannabis produced, according to Health Canada data.
During the same period, more than 7 million units of packaged cannabis, including extracts, edibles and topicals, were also destroyed.
“This threatens the survival of a number of cannabis companies in this country. There’s no question regarding it,” David Hyde, co-founder of CannaNavigators Inc, a cannabis regulatory consultancy, told the media.
This inability to sell inventory might be financially difficult for some licensees, some of whom are already in the red, according to Mr. Hyde.
The quantity of unpackaged products destroyed has also been on the rise since the legalization of cannabis consumption in Canada in 2018. Thus, approximately 280 million grams ended up in the trash in 2020 and 156 million in 2019.
This situation would demonstrate that the cannabis industry was “in a hurry” to deploy massive quantities of cannabis when the market became legal, according to Brad Poulos, a professor at Metropolitan University of Toronto who teaches a course on the cannabis business.
“They built way too much [de stock]and has been for three or four years,” he said.
More and more products are also being returned since they are not sold in stores, a major reason for the extensive destruction, Hyde pointed out. The slow rollout of retail stores would be another factor.
“Each kilogram of cannabis destroyed has great value. It costs a lot of money […] to get this product in its final form, and now it’s being destroyed,” Hyde added.
