As Canadians gear up for the commercial availability of cannabis concentrates and edibles, it has emerged that the stock outs that have plagued the recreational segment of the cannabis industry will not manifest in the CBD oil arena because the existing supplies outstrip the user demand for those products.
A report authored by Health Canada, the federal government agency overseeing the cannabis industry, indicates that the sales statistics show that demand for marijuana flower grew by 4.7 percent in June from the level it was a month earlier. However, there was a 2.1 percent drop in the sales of cannabis oils within that same period.
It should be noted that cannabis oil, especially CBD oil for medical use, has been widely available since there was no ban on those products. However, manufacturers in Canada seem to have overestimated the demand for CBD products and Health Canada says that the existing stock on retail shelves is nearly 15 times what has so far been sold.
This glut may not entirely be blamed on manufacturers. Retailers, who had gotten used to the supply shortages of other recreational marijuana products, went overboard and made large orders for CBD oil so that they could have the products in stock just in case demand was high and manufacturers couldn’t cope.
Those retailers are now stuck with inventory that isn’t moving as fast as they would like, and they have notified the manufacturers about this lukewarm response by consumers.
Retailers now seem to be gearing up for the possibility of having to reduce the retail prices of these products in December when the first lot of the “cannabis 2.0” products (marijuana concentrates and edibles) become legally available. The price reduction is inevitable because once clients have more options, then the costlier products will have to be priced at a comparative level with the new products if those existing products are to survive in the market.
Canada was originally scheduled to make edibles and concentrates (the so-called cannabis 2.0 products) available in October, but a regulatory requirement meant that while the legalization would happen in October as promised, the products will only reach retail shelves three months later once they are tested and approved for sale by the regulator.
One can only guess at what discussions are going on in the corridors of CBD companies like IONIC Brands Corp. (CSE: IONC) (OTC: IONKF) and Lexaria Bioscience Corp. (CSE: LXX) (OTCQX: LXRP) about the CBD glut in Canada and yet U.S. consumers can’t seem to have enough of those products.
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