Tuesday, August 08, 2023 10:40:22 AM
Home / Canada
Canadian producers destroyed over 500 tons of cannabis since 2018
author profile pictureBy Matt Lamers, International Editor
July 13, 2021
Canadian cannabis destruction, Canadian producers destroyed over 500 tons of cannabis since 2018
(This is the first installment in a series examining Canada’s mountain of unsold cannabis.)
Canadian producers have destroyed millions of packaged cannabis products and hundreds of tons of unpackaged marijuana since adult use was legalized in late 2018, according to data acquired by Matt.
Industry experts suggest the large-scale destruction reflects a variety of factors, ranging from low-quality product to a lack of retail outlets and stockpiling ahead of the 2020 launch of Cannabis 2.0 products such as edibles and concentrates.
The destroyed production underscores the woes licensed producers have faced the past three years and sheds light on the sheer amount of cannabis that has gone unsold in Canada since the launch of recreational marijuana sales in the country in October 2018.
Roughly 447,118 kilograms – or nearly 500 tons – of unpackaged dried cannabis was destroyed by licensed producers between 2018 and 2020, according to the data provided to Matt by Health Canada, the federal body tasked with regulating cannabis production in the country.
However, the actual amount in tons of destroyed cannabis is believed to be much higher because the unpackaged figure doesn’t account for packaged cannabis – defined by Health Canada as marijuana held in stock and ready for sale.
In addition to the nearly 450,000 kilograms of destroyed unpackaged cannabis, almost 6 million packages were destroyed in 2019 and 2020.
Those destroyed packages consisted of:
3,783,397 packages of dried cannabis.
1,500,396 packages of extracts.
714,491 packages of edibles.
943 packages of topicals.
Health Canada did not say why the cannabis was destroyed by producers, but industry sources cite various reasons for regular destruction, including:
Clogged sales channels, as provinces opened stores slowly in the early years of legalization.
Cannabis was produced before appropriate licenses had been secured, such as a sales license.
Low-quality production.
Production for testing only.
Producers stockpiling cannabis in 2019 for the launch of 2.0 products, such as edibles and most extracts, in 2020.
Moreover, the overall amount of destroyed cannabis has been growing steadily since late 2018.
Reported destroyed unpackaged dried cannabis from October to December 2018 was 11,548 kilograms, or 10% of production.
A year later, that total rose to 155,780 kilograms, or 15% of production.
In 2020, Canadian licensed producers destroyed 279,837 kilograms of unpackaged cannabis, or almost 20% of the 1,473,767 kilograms of dried cannabis produced that year.
“In commercial horticulture, a 5%-8% annual loss can be expected due to insect infestations, plant disease, crop failures and bad weather. If companies are destroying 15% or more of their inventory, it should be very alarming to owners and shareholders,” said Ryan Douglas, owner of the Ryan Douglas Cultivation consultancy and master grower for Canopy Growth predecessor Tweed from 2013 to 2016.
“Massive waste and repeated crop failures in commercial horticulture are the exceptions, not the norm, and it’s no way to run a profitable business.”
Canadian cannabis destruction, Canadian producers destroyed over 500 tons of cannabis since 2018
Bursting inventories
As of the end of 2020, roughly 1,141,092 kilograms of dried cannabis were sitting in inventories of federal license holders, provincial wholesalers and retailers. Ninety-five percent was with federal license holders.
The inventoried cannabis combined with the destroyed products reveals that a minimum of 1,591,092 kilograms of cannabis went unsold as of the end of 2020.
Douglas noted that any new industry has its growing pains.
In this case, Canadian cannabis executives clearly were looking at overly rosy sales forecasts. That, in turn, led to large stockpiles of unsold product and excessive production capacity.
“I think the excitement and easy access to capital helped to exacerbate the issue in Canada,” Douglas told Matt.
If the product was destroyed because it was unsaleable, Douglas said, that would indicate producers were unable to grow quality cannabis as they scaled up their output.
He said that likely stemmed from a couple of factors.
“One, the quality wasn’t there in the first place,” he said.
“Second, many head growers didn’t have the experience to handle a massive jump in production capacity. Going from 20,000 square feet indoors to more than 100,000 square feet of greenhouse production is a giant leap.
“If a cultivation team doesn’t have experienced leadership to manage this change, the end product will suffer.”
‘Infested with aphids and mildew’
Mary Durocher, president of Fox D Consulting in southwestern Ontario, said the levels of destruction indicate an oversupply of poor-quality cannabis as well as a lack of diversity of cultivars coming to market – something upcoming markets in other countries could learn from.
She said some large-scale cannabis producers in Canada have been seeing crop losses of 30% annually.
Agricultural industries such as corn, soybeans and wheat typically see around 5% crop loss, she said.
“Publicly traded producers who have product that is unsaleable will store it and destroy small amounts quarterly so it doesn’t affect their financial statements,” she said.
“There are producers out there who have had product for four years sitting in their vaults. They’re waiting to destroy it so it doesn’t look bad and it doesn’t affect their books.
Durocher said the large amount of stored and destroyed cannabis is indicative of companies lacking experience growing cannabis at such a large scale.
“We have a lot of product infested with aphids and mildew,” she said.
“I haven’t seen a client have anything less than a 20%-30% crop loss annually. That’s pretty standard for the industry, but most people won’t tell you that.”
Canadian cannabis destruction, Canadian producers destroyed over 500 tons of cannabis since 2018
How destruction happens
Karina Lahnakoski, a partner of Deloitte’s risk advisory practice, said the actual federal regulation doesn’t prescribe the method of destruction.
Because there is no regulation behind how you must destroy the cannabis, companies can use one of several methods, she said.
“The kitty-litter method,” where cannabis waste is combined with kitty litter before disposal, is still a method license holders are using. “It’s not very efficient,” Lahnakoski said.
“A lot of companies have moved to incineration or a composting method,” she said. “The requirement is you break down the cannabis so it can’t propagate or can’t be consumed, so it’s not taken from the waste stream.
“It is completely up to the company, and we haven’t seen a standard.”
“Generally, if a company doesn’t have a lot of waste, they still tend towards that kitty-litter method, but larger companies are starting to move towards incineration.
“I’ve seen one company that has built-in their own incinerator because they anticipated having more waste.”
Recent TLRY News
- Tilray Brands, Inc. to Announce First Quarter Fiscal Year 2025 Financial Results on October 10, 2024 • GlobeNewswire Inc. • 09/30/2024 07:39:10 PM
- Form ARS - Annual Report to Security Holders • Edgar (US Regulatory) • 09/27/2024 08:20:36 PM
- Form DEFA14A - Additional definitive proxy soliciting materials and Rule 14(a)(12) material • Edgar (US Regulatory) • 09/27/2024 08:19:38 PM
- Form DEF 14A - Other definitive proxy statements • Edgar (US Regulatory) • 09/27/2024 08:17:34 PM
- Shock Top’s Bold New Hard Iced LiiT Tea is Here • GlobeNewswire Inc. • 09/26/2024 11:00:00 AM
- Tilray Brands Leverages Hemp and Beverage Scale to Launch Hemp-Derived Delta-9 THC Drinks in Key Markets Across the United States • GlobeNewswire Inc. • 09/24/2024 11:00:00 AM
- Shock Top Announces its Official Craft Beer Sponsorship of University of Missouri Athletics • GlobeNewswire Inc. • 09/19/2024 11:12:39 AM
- Tilray Medical Launches Redecan Cannabis Brand in Australia • GlobeNewswire Inc. • 09/18/2024 11:00:00 AM
- Form PRE 14A - Other preliminary proxy statements • Edgar (US Regulatory) • 09/17/2024 08:08:50 PM
- Form 8-K - Current report • Edgar (US Regulatory) • 09/17/2024 12:27:26 PM
- Form 424B7 - Prospectus [Rule 424(b)(7)] • Edgar (US Regulatory) • 09/17/2024 12:22:43 PM
- Tilray Brands Completes Acquisition of Atwater Brewery From Molson Coors Beverage Company • GlobeNewswire Inc. • 09/12/2024 08:05:00 PM
- Breckenridge Brewery Unveils Oktoberfest Brew and Hosts 28th Annual Oktoberfest Festival: A Weekend of Live Music, Traditional German Cuisine, and Tasty Brews in Breckenridge, Colorado • GlobeNewswire Inc. • 09/12/2024 11:00:00 AM
- Tilray Medical Supports Scientific Study on Fibromyalgia With Positive Outcomes: Effectiveness of Cannabinoids Treatment in Pain Management and Other Fibromyalgia-Associated Symptoms • GlobeNewswire Inc. • 09/09/2024 11:00:00 AM
- Tilray Brands Completes Acquisition of Craft Beer Brands and Breweries from Molson Coors Beverage Company • GlobeNewswire Inc. • 09/03/2024 02:33:24 PM
- High Volatility Expected in Nvidia Report, Ambarella Soars 20%, Hertz Strengthens Board, Apple Cuts Jobs • IH Market News • 08/28/2024 09:50:36 AM
- Breckenridge Brewery Announces Latest Concert Series With Kaleo, Hippo Campus and Cassandra Lewis • GlobeNewswire Inc. • 08/26/2024 11:00:00 AM
- Craft Cannabis Brand, Broken Coast, Launches Latest Artisanal Strain, ‘Milk & Cookies’ for Avid Indica Enthusiasts • GlobeNewswire Inc. • 08/22/2024 11:00:00 AM
- Solei Launches New THC Infused Sparkling Beverages and Topicals • GlobeNewswire Inc. • 08/15/2024 11:00:00 AM
- Shock Top and Gator Athletics Partner to Introduce First-Ever Craft Beer Sponsorship of the Florida Athletic Department • GlobeNewswire Inc. • 08/14/2024 11:00:00 AM
- UBS Beats Earnings Forecasts, Intel Divests Arm Holdings, Flutter Surges 9% in Premarket Trading, and More • IH Market News • 08/14/2024 09:56:35 AM
- Tilray Brands to Acquire Four Craft Beer Breweries from Molson Coors Beverage Company • GlobeNewswire Inc. • 08/13/2024 06:15:00 PM
- Breckenridge Distillery Partners with Denver Broncos Legends to Release Fourth Edition Broncos Country Bourbon Blends • GlobeNewswire Inc. • 08/08/2024 12:00:00 PM
- Move Over Pumpkin Spice, Shock Top Reclaims Autumn With the Return of Twisted Pretzel • GlobeNewswire Inc. • 08/08/2024 11:00:00 AM
- Breckenridge Brewery Opens New Location in Fort Collins, Colorado • GlobeNewswire Inc. • 08/05/2024 11:00:00 AM
BARRON'S COVE to Premier at the Hamptons International Film Festival • APHP • Sep 30, 2024 2:56 PM
Lingerie Fighting Championships Signs Broadcast Deal With Maybacks Global Entertainment • BOTY • Sep 26, 2024 9:00 AM
Maybacks Global Entertainment and Lingerie Fighting Championships Enter Into Broadcast And Revenue Sharing Agreement • AHRO • Sep 26, 2024 8:30 AM
North Bay Resources Commences Operations at Bishop Gold Mill, Inyo County, California; Engages Sabean Group Management Consulting • NBRI • Sep 25, 2024 9:15 AM
CEO David B. Dorwart Anticipates a Bright Future at Good Gaming Inc. Through His Most Recent Shareholder Update • GMER • Sep 25, 2024 8:30 AM
Cannabix Technologies and Omega Laboratories Inc. Advance Marijuana Breathalyzer Technology - Dr. Bruce Goldberger to Present at Society of Forensic Toxicologists Conference • BLOZF • Sep 24, 2024 8:50 AM