Supply Challenges
Still, the rollout of legal cannabis sales isn’t expected to be totally smooth. Aphria Inc. CEO Vic Neufeld said he expects supply shortages in the early stages of adult use as licensed producers struggle to meet demand. Only a handful of retail locations were up and running on Oct. 17, including just one store in British Columbia and none in Ontario, Canada’s most populous province where only online sales will be allowed. And the black market is expected to stay in business, as the supply of legal pot will meet only 30 percent to 60 percent of demand after legalization, according to a study by researchers at the University of Waterloo and the C.D. Howe Institute.
Kennedy predicted that legalization in Canada will follow the same trajectory as in states like Colorado, Oregon and California, with inevitable supply shortages in the early days.
“We’ve seen that everywhere,” he said. “Most adult-use programs are supply constrained at the outset but ramp up and reach an equilibrium between supply and demand in the first 6 to 12 months.”
He also expects another country to follow suit with recreational legalization in the next year.
This article was provided by Bloomberg News.