The last two weeks have proved to be quite eventful for this country. Canadians are learning the ins and outs of cannabis legalization and it hasn't all been smooth sailing. The industry has had a lot of hiccups leading up to and following October 17th, and it's taking a toll on Canada's biggest cannabis companies.
With marijuana legalization being one of Canada's biggest milestones, you'd expect pot companies to be raking in the dough right now. However, Martin Landry, an analyst for GMP Securities who spoke to Financial Post is quite certain of one thing - their 2018 sales are going to be a lot lower than they were expected to be and there are a lot of things to blame.
A number of issues have presented themselves in the wake of legalization. For example, due to supply shortages, Quebec's provincial cannabis retailer has been forced to close down all 12 of their stores for three days.
The SQDCs closed down yesterday and will reopen Thursday in hopes their product shortages will stabilize. Alberta and BC are also facing supply shortages, they only have 18 stores open across the provinces which are way less than what was expected for this time of year.
IT’S CONFIRMED!! Quebec SQDC Cannabis stores will be closed 3 days a week! Stores will be open for business, only from THURSDAY TO SUNDAY, until supply issues are addressed!!— weedmanstock (@weedmanstock) October 26, 2018
The Ontario Cannabis Store has had some serious problems supplying their customers as well. However, their problems stem mostly from the Canada Post strike which has resulted in major delivery delays.
Canopy Growth, who owns the Tweed brand, is one company being affected by distribution hiccups. GMP predicts their capture of the market share will drop from the expected 33 percent down to 20 percent. They say this is also the result of their choice to sell only one strain of product to the OCS.
The OCS has released the following update: pic.twitter.com/JL1V7ABO5C— Ontario Cannabis Store (@ONCannabisStore) October 26, 2018
CannTrust Holdings says provinces put in cannabis orders with them way later than expected. Therefore, they've only shipped a minimal amount of marijuana. Because of this, their sales expectations by GMP have dropped from 1,000 kg all the way down to 100 kg.
READ MORE: Canada Post Workers Are Prepared To Strike On Monday And Now People Are Freaking Out About Not Getting Their Weed
Dried flowers from Cronos Group are currently sold right out in Ontario but are still available in BC. They were only able to ship a small portion of their supply due to delays in receiving necessary excise stamp - a marker indicating appropriate tax has been paid for by the manufacturer. Because of this, GMP predicts they will only make $3.6 million in revenue, rather than the $11 million initially predicted.
Landry says the issues each of these companies are facing could potentially take months to figure out. Quarterly earnings reports are expected to be revealed in November. While they won't reflect post-legalization sales, they will reveal the recreational product shipments sent out by producers.
If their reports are anything like GMP is predicting, it'll be clear that legalization has been a huge flop for Canadian cannabis companies so far.
More from the Canadian Cannabis Legalization series:
- A Neighbourhood In Toronto Just Completely Banned Smoking Marijuana In Public
- We Bought 30 Grams Of Legal Weed Online In Ontario And We Learned Some Very Concerning Things
- The Toronto Neighbourhood With The Most Pot Smokers Was Just Revealed And It's Not At All Where You Thought It Would Be
- This Is What You Need To Know For Marijuana Use By Province In Canada After October 17th
- The Canadian Province With The Most Pot Smokers Was Just Revealed And It's Not At All Who You Thought It Would Be