Canadian Cannabis Industry Facing Supply Issues As Companies Continue To Grapple With Regulatory Challenges

The cannabis industry has grown rapidly in Canada and the last year it has seen tremendous changes. Last year the country legalized recreational use marijuana and in October this year, it legalized cannabis derivatives. With the launch of “Cannabis 2.0” there are a lot of prospects in the Canadian cannabis industry.

Regulatory challenges from Health Canada derailing market supply

The past few months have been hard on cannabis companies. Although expectations were high with the launch of cannabis 2.0 the industry still continues to grapple with supply constraints that affecting most cannabis companies. Cannabis sales in Canada are creeping when in fact they should be up. Most of the companies have cited regulatory and procedural issues for the unconvincing performance of the market.

Since the beginning of the year, the regulatory agency Health Canada has been handling a backlog of license applications. The regulator has implemented new regulations that require an applicant to complete their growing facilities before applying for licenses. However, even with the changes, it will still take the agency quite some time to complete work through the backlog of applications. This is one f the factors that are impacting market supply.

Sluggish provincial approval of dispensaries

Equally there process of approving cannabis retail dispensaries in some provinces has been quite sluggish. For instance, in Ontario whose population of around 14.5 million people, there are only 24 retail dispensaries where consumers can purchase pot. This is a ratio of 604, 200 per dispensary compared to a state like Oregon where for every 5,600 people there is a dispensary. With limited retail dispensaries, there is a proliferation of black-market suppliers.

Canada offers low excise tax on licensed cannabis products but this can turn out to be an obstacle to the legal market. As a result, black market sales that do not have to wait for licensing approval are undercutting legal sales. Currently, it is becoming hard for cannabis companies to compete on price because of supply issues.

BevCanna signs partnership with Capna

The cannabis stocks continue to have mixed reactions as the sector continues to soften. However, one stock has managed to show some signs of budding. Last week BevCanna Enterprises Inc. (OTCMKTS: BBVNNF) saw its shares gain 1.3% on the OTC markets to $0.40. This was at the back of the company announcing a partnership with Capna Intellectual Inc. the deal will bring their vape brand Bloom to Canada.

BevCanna will manufacture and sell the Bloom products in Canada including extracts and concentrates. The company will equally acquire licensing as well as manufacturing rights to the technology, branding assets as well as product formats of Bloom.

According to BevCanna Chief Commercial Officer Emma Andrews, this is an amazing opportunity for the company to partner with a reputable company in the vape category. Andrews said that the agreement will leverage their expertise in the development of cannabis-infused products as well as Bloom’s reputation for safe and attractive vaping cartridges.

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This article by Money News National is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Money News National has no position in the stocks mentioned. Thank you for reading.

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