It’s safe to say that Canadian cannabis legalization is working. With less than a year of legal sales under its belt, a new set of data from Statistics Canada reports that America’s northern neighbor has already racked up more than $375 million in weed sales.
According to the Motley Fool, Canada sold a monthly high of $65.5 million worth of weed in May alone, bringing the country’s eight month aggregate sales total to $376.71 million. Starting in February, Canada has seen four straight months of cannabis revenue increases, with May’s sales coming in $26 million higher than February’s $39.52 million total.
But even with bags of cash flooding into dispensaries and delivery services, Canadian experts had expected even more funds to pour in by this summer. Insiders now point to a series of factors that are impeding growth in the world’s largest nationwide marijuana market.
First, there’s been a licensing and supply shortage since the Great White North’s legalization law first went into effect. With a backlog of applicants still burdening Health Canada regulators, existing cultivators have struggled to keep up with demand. For some dispensaries, the supply issue has been bad enough that they frequently run out of product and have even had to cut store hours.
In addition to supply issues, the country’s strict packaging regulations for cannabis products has been a slow process to implement. Without enough compliant plastic to go around, businesses are waiting even longer to bring their products to market.
And finally — just like in the US — Canada’s legal weed industry has been severely hindered by black market competition. With significantly lower production costs and no oversight, underground growers and dispensaries are still thriving across Canada, offering a wider selection of products for a cheaper price than their fully licensed peers. The black market dispensary problem has gotten so bad in cities like Toronto that authorities have begun installing giant concrete barricades to block the entrances of illicit pot shops.
But even with those issues standing in the way of larger sales figures, Canada’s legal weed industry is already bringing in hundreds of millions of dollars. And with the product shortage predicted to turn into a surplus within the next year (which could help lower prices and knock out some black market competition), the country could see close to a billion dollars in sales before the first year of legalization is over.
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