Canadian cannabis companies have been preparing for a huge flux of consumers flocking to the legal market when recreational goes live later this year. With medical and recreational sales in Canada and the robust export deals being made with countries like Germany, companies have been building out bigger, better, and even more automated cannabis cultivations from province to province.
Recent studies by Grizzle, however, show that the projected supply will greatly outweigh the demand in the country, potentially bringing prices down as low as $2.50 per gram. These estimates are based on medical use rates in the country, government surveys, and legal producer construction plans.
One Canadian market research group, the Brightfield group, foresee cannabis sales grow to $31 billion worldwide by 2021. The US will make up for a large portion of these sales, but unfortunately for them, their industry won’t be open to export at all. That leaves a large portion of export sales on the table for the Canadian cannabis market.
Europe and Australia are proving to be the most lucrative export markets for the plant, but their restrictions are much more rigid than those being set in Canada. That being said, the adoption of their medical cannabis programs will most likely develop much more slowly than those presented in Canada and the States. This is why experts are in agreement that supply could end up outweighing demand despite Canada being the main cannabis exporter in the world.
The final word? International cannabis will eventually be a huge drive in world economics, but Canada might be a bit ahead of the rush. Commodity markets cannot be oversupplied by more than 10% without around 50% declines in price. This could mean life or death for some newer companies entering cannabis in Canada.