How the growth of outdoor cannabis cultivation impacts Canadian cannabis

5 mins read

The CCSI was assessed at C$5.10 per gram this week, down -1.1% from last week’s C$5.15 per gram. This week’s price equates to US$1,844 per pound at the current exchange rate.

cannabis news from cannabis benchmarks for 2022

Each week, Business of Cannabis delivers a series of insights from our partners at Cannabis Benchmarks®.

As competition intensifies in the cannabis cultivation sector and a supply surplus continues to depress wholesale prices, some Licensed Producers (LPs) have shut down already-built indoor growing facilities and are questioning future development plans.

This is quite a change in direction from the first few years of legalization. More Canadian cannabis cultivators are shifting to outdoor operations and moving away from indoor growing.

Statistics Canada released licensed cultivation growing area data this past week after almost nine months. The latest data set gives us a view of the indoor and outdoor growing area up through September 2021.

There was 1.73M square meters of indoor growing capacity in September 2021, which was down from 2.0M square meters a year earlier. This represents a 13.5% drop in indoor growing area.

In contrast, there is a big push towards outdoor growing. Outdoor growing area increased substantially, reaching 894 hectares in September 2021. This is a massive jump relative to the same month in the previous year.  Over the 12 month period, outdoor cannabis cultivation capacity grew by 308 hectares or 53%.

With more farmland dedicated to cannabis, we can expect a larger jump in unpackaged supply with each autumn harvest.

In the 2019 and 2020 cannabis supply data, we have seen a large month-over-month jump in nationwide production due to the outdoor harvest from September to October.

Last year, with 894 hectares dedicated to outdoor cannabis growing, there was likely an even higher production jump in October, which will continue to fill federal and provincial inventories and put pressure on prices.

Source: Canada Cannabis Spot IndexCannabis Benchmarks

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