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Pot Shortage Could Last Up to 3 Years in Canada, Executives Say

Canada’s pot shortage could last as long as three years, according to industry executives who say production estimates are too rosy.

Shortages have plagued the country since recreational marijuana was legalized in October. In response, Quebec’s government-controlled stores have closed three days a week, Alberta has temporarily stopped issuing retail licenses and Ontario has said it will initially open just 25 stores across Canada’s most populous province.

As of mid-December, about 50 percent of products for sale in five provinces were out of stock, according to Cowen & Co. analyst Vivien Azer.

This situation could continue for as long as three years, said Chuck Rifici, chief executive officer of Toronto-based Auxly Cannabis Group Inc.

“There’s a lot of execution risk, people are expanding by 10, 20 times,” Rifici said in an interview at an AltaCorp Capital conference in Toronto Tuesday. “Personally, I think we’re at least three years out from hitting real equilibrium.”

Facing Delays

While smaller producers will face hurdles including access to capital and expertise, even the larger companies are likely to face delays as they open new facilities and refine their production methods, Rifici said.

“Ultimately any manufacturing facility growing 20 times is likely to face delays,” he said.

Greg Engel, CEO of Organigram Holdings Inc., predicted it will be “a couple years” before the supply shortages are solved, while Everett Knight, executive vice president for strategy and investments at Valens Groworks Corp., said it will take two to three years.

“It’s harder to grow cannabis than most people think,” Knight said, adding that producers tend to underestimate how many plants they’ll lose to problems like mold.

‘They’re Overthinking’

Some executives are more optimistic. Raj Grover, CEO of cannabis retailer High Tide Inc., told the conference that the shortages are getting better “on a monthly and weekly basis.”

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