How the cannabis surplus is affecting the industry and the consumers

the cannabis surplus

The cannabis industry in Canada is facing a challenge of oversupply, as large producers have accumulated a huge amount of mid-grade flower that they cannot sell at a profitable price. This has led to a price war that is hurting the smaller growers who are trying to differentiate their products in a crowded market. It has also created opportunities for innovation in some product categories, such as infused cannabis, pre-rolls, and edibles. However, the consumer may not always benefit from the lower prices and the increased variety, as some products may be of questionable quality or potency.

The impact of price compression on producers

Price compression is the term used to describe the situation where the supply of a product exceeds the demand, resulting in a lower price. This has been the case for the cannabis industry in Canada, where the legal market has been flooded with mid-grade flower that is not appealing to the consumers who are looking for higher quality or more variety. According to Tanner Stewart, Co-Founder and CEO of Stewart Farms in Milltown, New Brunswick, “Every large producer is looking for a product that costs less to make or where they can regain the value they’re losing on a mid-quality flower.”

This has put pressure on the producers of all sizes, especially the smaller ones who are trying to carve out a niche in the market. Gord Nichol, president and co-owner of North 40 Cannabis in Nipawin, Saskatchewan, says that he has stopped making infused pre-rolls because the market has crashed. “All these big producers are selling their products at steep losses, and the only one who’s benefiting is the consumer – for now,” he says.

The opportunities for innovation in product categories

The surplus of biomass has also stimulated innovation in some product categories, such as milled, pre-roll, and extracts. These products require less input costs and can offer more variety and convenience to the consumers. Stewart says that “The massive flower surpluses have driven innovation in the infused category significantly, with low input costs on flower allowing for a lot of innovation in the infused category.”

the cannabis surplus

Infused cannabis, which is cannabis that has been mixed with other ingredients such as oils, honey, or sugar, has been a welcome category for outdoor growers, who can use their lower-grade flower to create value-added products. Colin Davison, president of McIntyre Creek Cannabis, an outdoor grow operation in the Okanagan, says that “This has been a huge success for us.”

Another product category that has seen a lot of growth is edibles, which are food products that contain cannabis. Edibles are subject to a 10 mg THC limit per package, according to Health Canada’s regulations. However, some companies are lobbying to increase this limit, arguing that it is too low for some consumers and that it creates more packaging waste. Kyp Rowe, president of Victoria Cannabis Company in Victoria, BC, says that “Companies like Organigram and Indiva are lobbying hard to have this increase in order to capitalize on all of the excess biomass that they can turn into distillate for edibles.”

The challenges for the consumer in a distorted market

While the consumer may enjoy the lower prices and the increased variety of products in the cannabis market, they may also face some challenges in terms of quality and potency. Some products may be made with lower-grade flower that has been processed or diluted to meet the regulatory requirements. Some products may also have inaccurate or misleading labels that do not reflect the actual content or effects of the product. Rowe says that “Brands are fond of making grand claims that their product is somehow superior to others. Sadly, the reality doesn’t always align with the pitch.”

The consumer may also have to deal with the issue of potency inflation, which is the phenomenon where the potency of a product is exaggerated or manipulated to attract more customers. This can create confusion and inconsistency in the market, as well as potential health risks for the consumers who may consume more than they intended or expected. Rowe says that “A deep dive into potency inflation, symptomatic of a lack of universal standards in an industry that is only 5 years old.”

The consumer may also have to be aware of the environmental and social impacts of the cannabis industry, which may not be transparent or sustainable. Some products may have a high carbon footprint or generate a lot of waste, while some producers may not follow ethical or fair trade practices. Rowe says that “Unless Health Canada crafts new regulations, it’s up to LPs and scientists to pioneer work in the area of emissions testing, which requires a major investment of time and money.”

By Benjamin Parker

Benjamin Parker is a seasoned senior content writer specializing in the CBD niche at CBD Strains Only. With a wealth of experience and expertise in the field, Benjamin is dedicated to providing readers with comprehensive and insightful content on all things CBD-related. His in-depth knowledge and passion for the benefits of CBD shine through in his articles, offering readers a deeper understanding of the industry and its potential for promoting health and wellness.

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