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Provincial and territorial distributors and retailers reported having dried cannabis inventories equal to two months of legal recreational sales at the end of November, according to new data released by Health Canada. For cannabis oil, retailers and distributors reported inventories equal to four months of sales.

It’s hard to know how the supply situation has changed since Nov. 30 – provincial distributors from Nova Scotia to Alberta have scaled back their retail roll-out plans citing a lack of supply. But the data Health Canada collected through its online Cannabis Tracking System provides the first proper glimpse of the stockpiles being built up by producers, provincial wholesalers and retailers since Oct. 17.

Of particular note is how much finished product is being stockpiled by LPs, despite increasingly desperate calls from wholesalers and retailers for more product. That may suggest finished products are not moving smoothly into the wholesale and retail system. Conversely, LPs could be stockpiling product in anticipation of higher-margin product categories, such as concentrates and edibles, coming online later in the year – more likely the case for oils than dried cannabis.

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Another point of interest is the sizable amount of unfinished product being stockpiled by licensed producers. In November, LPs reported unfinished inventories nearly four times larger than the stockpiles of finished product (both in their own vaults and in the vaults of retailers and distributors). This suggests a large amount of cannabis could soon enter the market. For cannabis oil, by contrast, stockpiles of finished poduct exceeded stockpiles of unfinished product.

The data shows a month-over-month increase in both medical and non-medical sales between October and November – although the recreational system only went live on Oct. 17, making it difficult to compare months.

What is striking is the relatively small sales numbers for recreational cannabis. Only 4,511 kilograms of recreational dried cannabis was sold in October, and 5,146 kilograms of recreational dried cannabis was sold in November. At a price of $9.70 – the average price buyers paid for legal cannabis according to recent data crowd-sourced by Statistics Canada – that means recreational cannabis consumers spent around $50-million for legal dried flower in November. Annualized, that only amounts to $600-million, a fraction of the multi-billion dollar illegal cannabis market in Canada.

This calculation doesn’t include recreational oil sales or medical sales. Moreover, the small sales numbers are likely influenced by product shortages. But the sluggish early sales data shows how far the recreational side of the legal cannabis industry needs to go to take a serious chunk out of the illegal market.

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