Tue | Nov 12, 2019

Marijuana shortage hits Canada

Published:Friday | November 2, 2018 | 12:00 AM
In this September 25, 2018 photo, Devin Melnyk, consultant with Pure Sunfarms, holds trimmed marijuana as it comes out of a high-volume cannabis trimming machine at a tomato greenhouse being renovated to grow pot in Delta, British Columbia.
In this September 25, 2018 photo, a massive tomato greenhouse being renovated to grow marijuana is shown in Delta, British Columbia. The market has been plagued with shortages since marijuana was legalised in Canada on October 17, 2018. AP
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The name of the store is High North, but it might as well be named high and dry because for all but about four hours of the first two weeks since marijuana was legalised in Canada, there was none to sell.

Trevor Tobin, one of the owners of the Labrador City shop in Newfoundland and Labrador, said they went 10 straight days without supply.

"The producers keep saying there will be some bumps in the road, but right now it's not a bump in the road. It's a big pothole," he said.

His mother, Brenda Tobin, is a part-owner and said that after she tells customers there's nothing to buy, "a lot of them are saying, 'Oh well, I guess it's back to the black market.'"

Legalisation arrived on October 17, and Canada became the world's largest national marketplace for so-called recreational marijuana. But for now, it's a superlative in name only.

The first weeks have felt more like a soft opening, with few retail outlets operating and rampant supply shortages. It's not because Canada can't produce enough cannabis products - licensing those producers has been slow, and the federal government is taking steps to speed up the process.

The provinces are handling the sales and most of the regulations. Reports from around the country are similarly discouraging when it comes to supply.

Quebec closed its government-run shops for three days this week because of a lack of pot, and will continue to keep them shut Mondays through Wednesdays until availability is stabilised. Manitoba Liquor & Lotteries said it expects product shortages in both brick-and-mortar and online stores could last six months.

Online store flooded

Ontario, Canada's most populous province, won't have any stores open until April at the earliest as the new conservative government writes regulations. Meantime, police have shut down at least 11 illegal dispensaries in the province.

Ontario residents who want to make legal purchases are flooding the online government store. At least 150,000 orders arrived in the first week, more than all other provinces combined, and the store can't keep up.

Contributing to the delivery problem is a strike by workers at Canada Post, the nation's postal service that handles online marijuana orders that are legal countrywide.

British Columbia, the third-largest province by population and a place that historically supplied much of the country's illegal weed, still has just one retail store.

Across Canada, people are returning to the black market. And some never left.

Corey Stone, a 32-year-old bar-restaurant manager in Montreal, and his friend were first in line at Quebec's government-run cannabis store on October 17, but he hasn't been back because of the supply problems and has been getting his pot illegally.

In the capital of Ottawa, Ontario Capital Buds is one of the last holdouts after most of the illegal dispensaries in town closed on October 16 so they could file for legal operating licences. Business is booming at 11 a.m. on a recent chilly, grey day; the waiting room was packed.

Blake Murchison, 62, was among the customers. He didn't try visiting the government's online store.

"Why? There's a postal strike!" he laughed. "I'm not patient. It's a matter of convenience, really. Or inconvenience."

Devyn Stackhouse, a 30-year-old student at Ottawa's Algonquin College, did go to the government website on October 17 and placed two orders for five pre-rolled joints and a gramme each of four cannabis strains. After waiting more than a week to get a delivery, Stackhouse went to an illegal dispensary.

"If (the government) were serious about access, serious about smothering the black market, then more resources would have been allocated to the OCS," Stackhouse said, referring to the Ontario Cannabis Store website.

In Newfoundland, 25-year-old technician Elwood White has been to three legal shops and found little selection. He said the marijuana is more expensive but of better quality.

"It definitely has better buzz," he said.

A lot of red tape

Private and government retailers are dependent on licensed producers to send them products. But so far, of 132 marijuana producers approved by Health Canada, only 78 have sales licences.

FSD Pharma Inc, an Ontario-based producer, received a cultivation licence a year ago, but still is waiting for a sales licence.

"There is a lot of red tape," said Dr Raza Bokhari, co-chairman and interim chief executive of FSD Pharma. "Some of the obstacles are unnecessary. It is quite burdensome."

Many that did get sales licences are smaller operations, said Cam Battley, a top executive at Aurora Cannabis Inc, one of Canada's large-scale producers.

Health Canada has hired 300 additional staff to evaluate applications for producers. Thierry Belair, a spokesman for Canada's health minister, said the government has streamlined the licensing process and production is increasing.

"The implementation of the new legal regime that will better protect Canadians is not an event, it's a process," Belair said in an email. "The demand for some strains might be more important than for others but ... we are confident the industry is well-positioned to supply product as consumers transition to the legal market."

The rollout problems have been felt in Canada's financial markets. Cannabis company stocks that soared as legalisation arrived have been hammered since.

Aurora's stock price lost about half its value since peaking at CDN$15.16 per share (US$11.68), but Battley remains optimistic.

He acknowledged some companies with sales licences stumbled getting their products to the provinces amid demand that topped expectations. But Battley said high demand is a good thing, and customers who have got what they wanted are satisfied.

"A lot of people have been purchasing nondescript cannabis in a baggy, and who knows how that was cultivated." he said. "Once they get ahold of professionally cultivated cannabis and value-added products like the pre-rolls and capsules, they are pretty darned pleased."

- AP