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Cannabis growers behind on shipments, provinces warn
MARK RENDELL AND CHRISTINA PELLEGRINI
PUBLISHED OCTOBER 4, 2018
UPDATED 3 HOURS AGO

Canada’s largest cannabis growers are behind on their first orders for recreational marijuana, a development that will leave consumers with less choice on Oct. 17, multiple provincial distributors and retailers are warning.

British Columbia says its four largest suppliers won’t meet shipping deadlines and are coming up short on their initial supply commitments. (The province declined to identify the growers by name). The B.C. Liquor Distribution Branch (BCLDB), the provincial distributor and retailer, initially planned to offer more than 150 strains of marijuana. But supply problems mean that it now expects to have only half that variety available in its online store and one government-run retail outlet in Kamloops later this month.

B.C. isn’t the only province facing shortages on the eve of legalization. Nova Scotia says there will be less inventory and variety than planned in its 12 stores. Quebec is also bracing for the possibility of lower supply for its dozen initial retail locations and online shop.

Lower than expected crop yields, a lack of packaging materials, issues with supply chains and product being sold elsewhere – such as to Canada’s medical market or exported to other countries – are all contributing to what could be a messy start to Canada’s much-anticipated recreational cannabis system. This dearth of cannabis has left provincial distributors scrambling to source more product and risks derailing the launch of Canada’s new legal program.

“The volume of product will be considerably lower than what licensed producers (LPs) originally committed to providing,” the B.C. Liquor Distribution Branch said this week in an e-mailed statement to The Globe and Mail. “B.C. isn’t alone in this situation; shortages are expected to impact all jurisdictions across Canada, as some LPs look to opportunities in overseas markets.”

Cannabis growers have told the Nova Scotia Liquor Corp. “to expect less than what we ordered,” said spokesperson Beverley Ware. “We anticipate there will be fewer SKUs and less inventory on hand,” she added.

In Quebec, meanwhile, the Société des alcools du Québec (SAQ) says it might be facing supply problems as the industry goes through inevitable growing pains over the coming months.

"There’s a lot of demand and not a lot of offerings, so we’re monitoring the situation closely,” said SAQ spokesperson Mathieu Gaudreault.

Still, the three provinces say they should have enough legal product available early on to satisfy consumer demand, even if selection is limited.

The Globe reached out to Ontario, Prince Edward Island and Manitoba, but had not received a reply at time of publication. A spokesperson for NB Liquor in New Brunswick said he couldn’t comment on LP supply issues. A Spokesperson for The Alberta Gaming, Liquor and Cannabis Commission was more upbeat in her assessment, saying Alberta does “not foresee any issues with our supply levels for retailers and the online platform.”

The problem would have been worse if more legal stores were opening this month. Ontario, for example, won’t have any storefronts open until next spring and will only be selling legal product online until then. As recently as August, the SAQ said it was planning to have 20 stores in October, eight more than it now expects to be open on Oct. 17.

No single issue is causing country-wide supply problems, says the BCLDB. It has been told by growers that crop yields have been lower than expected. Some producers are still waiting on sales licenses from Health Canada; others have partially licensed facilities, with only a handful of grow rooms producing product that can be legally sold.

There’s also “insufficient supply of packaging materials (including excise stamps) and processing delays due to manual packaging and labelling processes,” the BCLDB added in its e-mail. Excise stamps are stickers attached to products to show federal taxes have been paid, similar to what’s seen on cigarette cartons.

“At this point, it’s unknown how quickly LPs can resolve these issues,” the BCLDB said.

To make up for the shortage from its large suppliers, the BCLDB is reaching out to other LPs and doubling down on producers with available product.

Supply, however, is tight, with other provinces scouring for more cannabis.

“We’re being asked to supplement our orders. It’s bad news out there,” Eric Paul, chair of CannTrust Holdings Inc., said last week by phone. He added that CannTrust has already committed all of its available product. Logistical problems are making things worse.

“Part of the problem is getting those little excise stamps. We’re short of stickers and we can’t ship without them,” Mr. Paul added. A bottleneck is forming at the point where the adhesive is applied to the stamps, multiple sources say.

“That slows the industry down,” he said. “Everybody’s behind the eight ball.”

https://www.theglobeandmail.com/cannabis/article-pot-growers-behind-on-shipments-provinces-warn/