Canadian cannabis industry struggling amid oversupply challenges

cannabis industry

Canadian cannabis industry on Oversupply challenges

Experts claim that more than four years after legalization, Canada’s Cannabis industry is beginning to decelerate from its post-legalization high.

According to Michael Armstrong, an associate professor of operations research at Brock University in St. Catharines, Ontario, “producers have been cutting back, firing employees, and closing sites for truly more than three years.”

“The industry was furiously growing in the first six to nine months of legal sales, attempting to get stuff out the door. For the first six months, there were goods shortages, but by the summer of 2019, there was already a surplus.

“So they have been cutting back ever since. However, a lot of smaller businesses have since entered the market, thus there has been a lot of transition.

Cannabis industry

A reduction in growing capacity was reported by Delta 9 Cannabis on Monday, which led to the termination of 40 workers at its Winnipeg production plant.

John Arbuthnot, CEO of Delta 9 Cannabis, told Global News that the shortage of cannabis on the Canadian market is to blame for the industry’s weakness.

Our sales are still increasing, but not as quickly as they would if there were fewer stores, he claimed.

“I just wonder how the city would look with 150 stores and what will happen if the prices drop much further. If you’re merely an autonomous business, competition just gets harder and harder.

He added that he wanted the province to enact stricter rules regarding the vicinity of cannabis outlets. He claims that the social responsibility charge for Manitoba, which allows the province to keep 6% of total cannabis sales, is also detrimental to cannabis shops.