Canada Update, Part 2: Producers Gear Up Ahead Of Legalization 2.0August 13, 2019
With edible and drinkable forms of cannabis going legal in Canada later this year, along with vapes and concentrates, producers are ramping up their output and racing to secure their positions in the rapidly evolving market. The supply problems that have hampered sales since cannabis flower and oil were legalized last year appear to be easing as more growing space becomes available.
Canopy Growth has steadily invested in greenhouse space and now holds more than 5 million square feet of grow space. It anticipates producing 34,000 kg of cannabis this quarter alone. Aphria’s flagship Aphria One greenhouse in Leamington, Ontario, which has an annual capacity of 110,000 kg, was fully licensed only this March. Aphria estimates that it is “on track for annual production capacity of 255,000 kg when all facilities are fully licensed.” Meanwhile, Aurora’s main greenhouse, Aurora Sky, became fully licensed in late February. Built on a C$150 million ($113m) investment, the facility has annual capacity of over 100,000 kg. Aurora also has a new manufacturing hub for edibles, Aurora Air, that it says is in the final stages of the licensing process.
Increased production has led to a corresponding uptick in inventory across the market. According to Health Canada’s statistics, in January of this year Canadian companies held 117,500 kg of dried but unfinished inventory—that is, “cannabis held by a cultivator that is not packaged, labeled, and ready for sale”—followed by 120,700 kg in February. In March, inventory jumped to 143,800 kg, then to 184,000 kg in April, and then to 224,000 kg in May, the last month for which data is available.
While a host of companies are developing cannabis edibles and beverages—among them Canopy, the Molson Coors/Hexo joint venture Truss, and the Moosehead partnership with infusion company Sproutly—some see vaporizer pens as having the biggest impact during the second phase of adult-use legalization. Citing U.S. state sales data, Organigram recently pegged vapes at nearly one-quarter of the total cannabis market, with edibles and beverages at about 13%. The New Brunswick-based company plans to launch vapes in December and follow with infused chocolates and “dried powder formulation beverage products” early next year.
“Why do I want an edible or a drink when I can have a vape?” Irwin Simon, interim CEO of Aphria Inc., said in an interview with Bloomberg in June. “I see the margins and the opportunities there.” Enthusiasm for the vape market was also a key to the recent alliance between Imperial Tobacco and cannabis producer Auxly. Still, edibles and drinkables will no doubt garner a significant audience as well, catering to those interested in cannabis but hesitant to smoke or vape.—Danny SullivanSubscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning. You will also receive the Cannabis edition as part of your subscription.