Big news came out of Canada recently as the country decided to unanimously legalize the use of recreational cannabis nationwide. This effort is the first time that a G7 nation has done this on a national level, and many are excited to see how it will play out. With this new legalization will likely come with some challenges, but there are many things to look forward to.
The market on cannabis is set to increase the revenue of the entity of the market by as much as $5 billion. This is a major increase considering where the market was only a few years. One of the factors that has remained important to the growth of the market is the large and growing supply chain. Because of the new industry, there has been a much larger increase in demand than anyone has anticipated. This means that there have been predicted shortages for the beginning of the markets rollout, but this is expected to be solved in the near future. Health Canada, the regulatory agency for the whole of the cannabis industry domestically has stated that demand could potentially hit as much as 1 million kilograms annually by as soon as October 17th, when the market is subject to rollout nationwide. One of the main reasons behind the predicted shortage has been the production capacity of some of the largest companies in the industry. These companies have been working to build out their supply chains as much as possible in anticipation of this new and growing market.
After the predicted shortage, many have stated that there may end up being an oversupply for the market. Health Canada has stated that they are currently working on approving new permits for more growing throughout the nation, which could end up leading to this oversupply issue. The figures have shown that if the production amount is able to continue, companies could be producing as much as 2.5 million kilograms annually by the year 2020. There is a major answer to this issue, and this answer has been worked on over the course of the pastier or so. One of the large solutions to this has been through the use of exporting products to other countries. Markets like those in Germany and other abroad markets that have legalized the use of cannabis are able to import marijuana for sale domestically as well. This however has remained slightly limited as the exportation of what many countries see as an illegal drug, has been very difficult.
Many have stated that the foreign markets may or may not be able to absorb this high amount of oversupply, but only time will tell. This oversupply may end up being quite good for the consumer however, as oversupply usually leads to lower prices. Many have stated that this may in turn end up helping to grow the market to a larger amount.
The market on cannabis has been extremely lucrative for those involved, but there are still a large amount of issues that need to be ironed out before the market can continue to grow to its full potential in the near future. The hopes are high that over the next few years, the combination of the changing public sentiment as well as changing legislation will help to make the market more widely available to those involved. Only time will tell how these effects change the whole of the cannabis industry, but things do look good for the Canadian market post legislation. As we move toward the future, things continue to be positive for the marijuana industry.
MJShareholders.com is the largest dedicated financial network and leading corporate communications firm serving the legal cannabis industry. Our network aims to connect public marijuana companies with these focused cannabis audiences across the US and Canada that are critical for growth: Short and long term cannabis investors Active funding sources Mainstream media Business leaders Cannabis consumers