Health Canada reported preliminary data on legal cannabis supply and demand for the month of December 2018. What does it tell us?
Legal cannabis sales are growing, slowly—and they are not yet near the level predicted for post-legalization. The widely reported reason is limited supply, as producers work hard to ramp up production levels, but still lag demand by a lot.
But what is less widely reported is that, with limited supply, many consumers must still purchase cannabis on the black market.
So how much of the total cannabis market has become legal, versus staying in the black market?
The answer is, surprisingly, only 15%. And here’s how we crunched the numbers.
Total legal sales of dried cannabis flower rose 1% to 7,252 kgs in December. Total legal sales of cannabis oil rose 1.6% to 7,127 liters. In dried flower equivalents (25ml of oil = 1 gr flower), that oil equals 285,080 grams, or 285 kgs.
Combining flower and oil, this puts total legal Canadian cannabis sales in December at 7,537 kgs of dried flower equivalents—a pace of 90,444 kgs per year.
Health Canada has previously estimated that total demand (including black market) in Canada is currently about 600,000 kgs per year, and will grow to nearly 1 million kgs in the coming years, post legalization. If this current estimate of 600,000 kgs is correct, this means that legal sales of 90,444 kgs per year is just 15% of the total—and the black market still captures 85% of the total market.
This data also suggests that despite predictions that the oil market is growing fast and may soon overtake flower, the legal dried flower market is still 25 times larger than legal oil sales.
Looking ahead, finished inventory of dried flower fell by 5% to 19,085., while for oil it rose 14% to 38,829 liters. Finished inventory for flower rose 12% to 109,236 kgs, and rose 13% to 26,038 liters for oil.
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Source Health Canada report