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to much to drink..lmao
With just weeks to go before recreational pot becomes legal across Canada, a new report commissioned by Health Canada predicts the demand for it will be substantially higher than widely anticipated.
The report used a 2017 federal survey on cannabis use to estimate how much adult Canadians will consume in the first year of legalization.
It calculated the amount at 926,000 kilograms for both recreational and medical use. That’s a whopping 41 per cent higher than the estimate of 655,000 kilograms by the Parliamentary Budget Officer in 2016.
It’s also higher than estimates by many private investment companies. A recent report by CIBC World Markets Corp., for example, estimated demand would reach 850,000 kilograms by 2020.
If the new report is on the mark, Canadians could face shortages after recreational marijuana becomes legal across the country on Oct. 17.
Some industry experts have long predicted that Canadian cannabis growers would not be able to produce enough, at least initially. The new report suggests the problem might be worse than expected.
“We all know there is not going to be enough product on Day 1,” said Greg McLeish, a financial analyst with Mackie Research Capital Corp. who specializes in cannabis. “Not nearly enough.”
McLeish predicts that supply won’t match demand until 2020.
The president of Canadian grower Canntrust says growers will scramble to meet demand. His company has already received requests from provinces to supply more cannabis than the initial supply deals specified. Brad Rogers said he’s not sure if that’s because other growers were unable to meet their quotas or the provinces are banking on more demand.
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Rogers expects a “huge curiosity spike” of people wanting to buy legal cannabis in the early days. “I don’t think there will be empty shelves, but there might be shortages of some strains.”
It’s hard to predict. The demand for legal pot will also depend on how many people continue to get their supply from illicit sources — dealers, dispensaries and friends. How quickly people shift to the legal market depends on a host of factors, from price and convenience to the range of products on sale and whether police forces succeed in shutting down illegal dispensaries.
No one expects the huge black market to disappear overnight.
Even so, the numbers don’t look promising for a plentiful supply in the early days. If, for instance, only half of the estimated annual demand of 926,000 kilograms of cannabis is purchased legally, that would require a supply of 463,000 kilograms.
Cannabis growers now produce about 350,000 kilograms a year, according to an estimate from a CIBC World Markets report.
The big growers are expanding frantically and new companies are vying for licences. Billions of dollars are being invested as companies announce ambitious plans to become leaders in cannabis production. How much of that actually materializes remains to be seen. “Construction and production promises in this industry are a dime a dozen,” notes the CIBC report, published in May.
Getting a better picture of the demand for cannabis is important, says the Health Canada-commissioned report. Demand will not only dictate how much cannabis will be required to stock legal stores; it will determine the amount of tax revenue that will be collected from cannabis sales and what the potential economic spinoffs such as job creation will be, and it will influence how many regulatory services will be needed, from licensing to public education and policing.
The federal government also wants to establish a benchmark of demand before legalization so it can monitor what happens as Canada becomes the first major country to legalize recreational pot nationwide.
Health Canada commissioned the $90,000 study from Denver, Colorado, firm Marijuana Policy Group, which worked with another U.S. research firm, BOTEC Analysis, to provide a “comprehensive outline of the scope and scale of cannabis consumption in Canada.”
The report used data from a Health Canada cannabis use survey conducted in 2017, but researchers made several adjustments. They only included data on people over 18 because they wanted to estimate the size of the adult market. Statistical corrections were made for selection bias, because people who use cannabis are more likely to agree to answer a survey about it.
The previous federal report on cannabis demand from the Parliamentary Budget Officer relied on cannabis use data from 2012, the most recent available at the time.
Estimating cannabis use is difficult. While techniques have improved since 2012, “actual demand remains unknown and there is no statistically proven method to know demand with statistical certainty,” warns the new report.
Private companies have also made estimates, but they vary widely and no consensus has emerged, the report said.
It surveyed eight reports released in 2016 from private companies, whose demand estimates ranged from a low of 370,000 kilograms a year by 2020 to a high of 800,000 kilograms by 2024. None of the private studies was published in scholarly journals, said the Marijuana Policy Group report. Some of the private reports relied on conjecture or problematic extrapolation of data from U.S. states, it said.
Consumption patterns and preferences are different in Canada, it noted. For instance, the rate of marijuana use in Colorado, the first state to legalize recreational pot, is higher than the Canadian average.
There are also political differences that complicate comparisons. Canada will legalize recreational pot across the country. Data on cannabis sales in individual U.S. states where it’s legal are inflated by purchases made by tourists. And a “potentially large portion of legal sales” in those states is smuggled into neighbouring prohibition states and resold, said the report.
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Demand is driven by heavy users, says report
The demand for cannabis after legalization will be higher than widely predicted, but that’s not because more people are smoking pot, says a new report commissioned by Health Canada.
Most of the increased demand is from heavy users, the report by the Marijuana Policy Group found, and the proportion of people who smoke pot daily or almost daily is higher than earlier estimates indicated. Daily users also consume more each time they use than occasional cannabis consumers.
Overall, 17.9 per cent of Canadians over age 18 said they used marijuana at least once in the past year, the report found. That number is in line with other recent surveys conducted by both the Canadian government and private firms, says the report.
However, the number of users who said they consumed daily or almost daily was substantially higher high than in an older Canadian survey, the report said.
The newer survey found that 24.6 per cent of adults who consume cannabis use it daily or almost daily. That is nearly twice as large as the estimate of 14.8 per cent of that category of users contained in the 2012 Canadian Community Health Survey.
Are cannabis users consuming more? Maybe. The increase could also be due partly to the survey methodology, said the report. The more recent survey might paint a more accurate picture of users.
The 2012 survey was conducted live by telephone. Studies show that survey respondents tend to under-report “unwanted behaviour traits” when surveyed by people as opposed to taking a survey online.
The 2017 survey canvassed respondents randomly by phone, but those who agreed to take the survey filled it out privately online.
It’s also possible that respondents in 2017 were more likely to admit to daily use because the stigma against recreational pot has lessened and medical marijuana is more widely accepted.
Collecting data on cannabis use is challenging, said McLeish.
Smoking pot may be fairly widespread, but except for the minority of users who have obtained approval for medical marijuana, it’s still illegal.
“If it’s illegal, and someone calls you up and asks you about it, what are you going to say?” says McLeish. “Are you going to tell the truth?”
There is still a huge stigma around cannabis use, says John Fowler, chief executive of The Supreme Cannabis Company, a grower that specializes in premium products for experienced users.
He is skeptical about use surveys, saying he doubts that respondents are always honest. His company relies on its own market research, using techniques such as focus groups, to estimate demand.