Canadian cannabis producers destroyed more than a quarter of all the legal weed that they grew in 2021, according to a recent report by Health Canada.
By the end of last year, the country's licensed cannabis growers destroyed a record 425,325,000 grams, or 468 tons, of unsold, unpackaged dried flower. This record total accounts for 26% of all the legal weed that was grown in Canada last year, and is a 50% increase over the 280 million grams of weed destroyed in 2020. Since 2018, the year that adult-use sales became legal, the country's adult-use industry has destroyed a mind-boggling 962 tons of legal weed.
Health Canada requires all legal producers to dispose of any products or raw flower that is ineligible for sale. Some of this weed is destroyed because it tested positive for mold or other contaminants or otherwise failed to pass quality control. Some healthy plants also end up getting trashed because they didn't turn out to be as high quality as the cultivators hoped.
A large percentage of this destroyed cannabis is perfectly good flower, though. Legal producers are also required to dispose of any product that they are unable to sell by the expiration date. And since Canada's legal weed market produces much more weed than the country's stoners can smoke, that amounts to quite a lot of unsold pot. Between 2018 and 2020, licensed businesses only managed to sell under 20% of all the weed that they produced.
Many businesses are deciding to store this excess product in warehouses instead of destroying it. Stewart Maxwell, a cannabis consultant from British Columbia, told MJBizDaily that these companies may be delaying destruction in order to make themselves appear to be more profitable. This product will have to be destroyed eventually, though, so the country's total rate of inventory destruction is likely to spike even higher over the next couple years.
“I think some of the larger producers just want cannabis in their inventories,” Maxwell explained. “Even if they never sell it, it still looks good on your books to have assets. A lot of producers aren’t destroying products when it’s ready to be destroyed, even though it’s no longer marketable.”
In addition to the hundreds of tons of unpackaged bud, legal weed producers also destroyed over 7 million packaged products last year. This total includes over 3.5 million packages of dried flower, 2.4 million packages of edibles or infused beverages, 1.1 million extracts and vape carts, and over 15,000 topical products. But unlike the unpackaged flower, Canada's legal weed shops sold way more packaged products than they destroyed.
Despite the growing rates of inventory destruction, the industry has yet to rein in its massive overproduction. Last December, legal dispensaries had 36 million packages of dried bud available for sale, but only managed to sell 9.6 million of them. That same month, pot shops only sold 4 million of the 19 million edibles they had in stock and only 3 million of the 14 million extract products on their shelves. Health Canada data suggests that most of this excess is being created by the licensed producers themselves, and not wholesalers or retailers.
Some companies have figured out ways to avoid excessive overproduction, though. New Brunswick-based Organigram saw a 60% boost in sales this year, while many of its competitors saw their sales shrink by up to 39%. CEO Beena Goldenberg told MJBizDaily that the company has taken great pains to avoid creating more products than its customers would actually buy.
“I think we’re performing very well because we have fresh products in the marketplace all the time. It’s not aged six months, nine months,” she explained. “We look at what we need, and we produce accordingly... Like anything else, it’s all about making sure you’re producing what a consumer wants. Quality is becoming the determining factor.”