The effects of the longstanding cannabis shortages in Canada are being felt far beyond the empty shelves in retail outlets. When recreational marijuana was legalized on October 17, 2018, a promise was made that marijuana edibles, vapes, CBD and beverages (so-called cannabis 2.0 products) would be available for purchase exactly one year later. Now the regulator has delayed the start of retail sales of those products citing a procedural requirement for the producers.
Health Canada, the regulator of the marijuana industry in Canada, held a briefing on Friday, June 14 in which the regulator informed the public that there would be a delay in rolling out the “cannabis 2.0” products for another two months.
Health Canada mentioned that while its rules would start being operational on October 17, it wouldn’t be possible for any edibles or other “2.0 products” to be sold until at least two months later. This is because the manufacturers of those products will start filing notices with the regulator of the products being brought to market and those manufacturers must then wait for a minimum of 60 days before starting to ship the products to the retail outlets.
It is believed that the 60-day window will allow the regulator to scrutinize those products and approve those which meet all the requirements in the law. In effect, retail sales will begin on Dec. 17 or thereafter.
The revenue generated from cannabis edibles and other second-generation marijuana products will not be reflected in the earnings of the fourth quarter (Q4) of this year. Instead, those figures will only become meaningful at the end of Q1 of 2020.
Canadian companies like Aurora Cannabis and Canopy Growth had been looking forward to launching the sale of these products because those products have performed excellently in the U.S. states which permit their sale.
These Canadian companies are therefore going to have no choice but to revise their revenue projections for Q4 of 2019 to reflect this delay to bring edibles, beverages and other “second-wave” marijuana products to the market.
On the other hand, marijuana companies shouldn’t be too concerned by the delay unless the cannabis 2.0 products were going to carry a bigger profit margin than the smokable flower which is chronically sold out at retail outlets.
Analysts are eager to know what marijuana industry players like VIVO Cannabis Inc. (TSX.V: VIVO) (OTCQX: VVCIF) and TransCanna Holdings Inc. (CSE: TCAN) (FRA: TH8) have to say about this latest announcement by Health Canada.
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