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How to view dry cannabis sales across Canada

The CCSI was assessed at C$5.10 per gram this week, down 1.4% from last week’s C$5.17 per gram. This week’s price equates to US$1,824 per pound at the current exchange rate.

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

This week, Cannabis Benchmarks reports the current estimate of the total dry cannabis sold in the legal Canadian marketplace, to give a better perspective of the growing gap between supply and demand.

Cannabis Benchmarks estimates that the total dry cannabis consumed in August 2021 was 31,314 kg. This modeled estimate takes into consideration the average size of a packaged unit sold, consumption seasonality, and the growing accessibility through retail stores opening to recreational cannabis. Last month’s figure represents an increase of 4,700 kg, or 17.6%, from August 2020.

As seen in the chart, cannabis usage has been following a steady growth trajectory since legalization, which is positive for the industry. There are concerns, however, that current monthly supply levels are well beyond these demand levels.

According to Statistics Canada, the last reported unpackaged dry cannabis production for March 2021 was 112,252 kg. We do not have a good estimate regarding how much of that unpackaged supply was produced for smokeable products, but we do know that a good portion of it ends up in inventory — with those reported levels expanding almost every month. From the Statistics Canada data, we can see that total inventory (unpackaged and packaged) grew by 445,870 kg from March 2020 to March 2021. Even though that level is likely higher today, if the total inventory was used to only supply the smokeable market there would be 35 months worth of supply available.

This is overall a growing concern for the Canadian cannabis industry. Cultivators are experiencing a severely oversupplied market, leading to a decline in wholesale selling prices. In addition, the inventory of products they house becomes a liability on their balance sheet that continuously drops in value, with the lower current wholesale prices and degradation of stored products.

Source: Canada Cannabis Spot IndexCannabis Benchmarks

See previous weekly updates from Cannabis Benchmarks:

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