Record Amount of Destroyed Cannabis
It was recently reported by Health Canada that a record amount of dried cannabis was destroyed in Canada in 2021, causing many licensed producers operating across the country to rethink their production models and recalibrate their anticipated yields.
According to Health Canada data, the product that was destroyed by federally-licensed cannabis producers in the country was unsold, unpackaged, and amounted to an astonishing 425 million grams. It’s a total that represents a massive increase of more than 50%, up from an estimated 279 million grams of destroyed cannabis in 2020 and 155 million grams in 2019.
Similar to processes and protocols that need to be abided by within other industries, the practice of destroying cannabis product has been mandated by Health Canada. Introduced as a measure within overarching cannabis retail regulations upon legalization of the sale and purchase of the product, provinces require licensed producers to destroy or render unusable cannabis products that are ineligible to be sold and ineligible for return to provincial regulatory bodies.
Licensed cannabis producers, in most cases, must destroy product that is ineligible to be sold on a minimum monthly basis. In addition, records of all cannabis products destroyed are required to be kept for a minimum of three years.
Reasons for Ineligibility
Cannabis that is deemed ineligible for sale can be the result of a number of different factors, including simply low-quality product. However, it’s been suggested by many observers within the industry that the primary drivers of destroyed product is overproduction on the heels of overly ambitious predictions around consumption.
In short, many producers across the country have found themselves with much more product than they can sell. It’s an overestimation of the potential market that’s contributed to in excess of a mind-boggling 872 million grams of destroyed dried cannabis since legalization came into effect in 2018.
Increasing Percentage of Destroyed Product
What’s most worrisome is the fact that the quantity of destroyed cannabis, as well as the percentage of produced cannabis that it represents, continues to increase year-over-year.
Unpackaged cannabis destroyed during legalization by licensed producers (with percentage of annual production):
2018 – 11,501,000 grams (11%)
2019 – 155,780,000 grams (15%)
2020 – 279,837,000 grams (19%)
2021 – 425,325,000 grams (26%)
Destroying Packaged Product, Too
Exacerbating problems around the current rate of cannabis destruction is the fact that, in addition to the unpackaged dried cannabis that’s being destroyed on a monthly basis, packaged product is also meeting the same fate. According to Health Canada data, last year alone saw more than 7 million packaged cannabis products destroyed, including 3,576,232 packages of dried cannabis, 1,118,148 packages of extracts including vapes, 2,421,823 packages of edibles including beverages, and 15,359 packages of topicals.
True Market Potential?
It’s a trend that’s reflective of a maturing industry that’s still yet to celebrate its first half decade, and one that indicates a requirement of cannabis producers to better understand and anticipate demand within the market. In fact, according to Health Canada data, an estimated 14 million packaged units of extracts and 19 million units of cannabis edibles were available on the market for sale in December, yet only 3 million and 4 million units respectively were moved during the month.
Further destruction of cannabis product, both packaged and unpackaged, is expected to continue increasing, at least in the near-term, before enough data and analysis around usage and the true potential of the cannabis market in Canada is generated and disseminated.