Canadian Cannabis Price Cuts As Oversupply Issues Surface

October 26, 2019

Under-pressure Canadian producer Hexo has launched a new budget range of cannabis flower products as prices look set to crash.

Hexo, which recently downgraded its revenue projections and laid off 200 staff, says its  value brand – Original Stash – will retail at around $3.40 per gram – around half the average Canadian selling price.

This will allow the company to compete with the illegal market which is still thriving, over one year since the country legalized recreational cannabis on October 17, 2018. Analysts at Scotiabank estimated in early February that the black market would account for 71% of total cannabis sales in Canada in 2019.

Is There Too Much Cannabis?

The Original Stash launch may also help explain what some analysts have identified as a ‘worrying oversupply issue’ in the Canadian market. It was not so long ago concerns were mainly about shortages with the second wave of cannabis consumer products set to hit the market.


However, market analyst Stephen McBride, writing in Forbes magazine, says “pot producers built up a massive surplus of pot. In fact, only 4% of pot produced in Canada in July has been sold!” He goes on to say that Aurora Cannabis has been dumping part of its harvest into ‘wholesale’, which means it is selling it for cheap’…due to sluggish demand.

And, he says this trend will continue ‘as pot companies continue to ramp up production and flood the market with more pot’.

Prices Crash By 50%

In the last six months the North American cannabis companies have lost their luster for investors with average stock prices down by 50%. Sean Williams ,writing on The Motley Fool website,  believes the oversupply problem may be niggling away in the minds of savvy investors and company executives.

He highlighted recent results from The Green Organic Dutchman (TGOD) which earlier this month said it was its ‘idling production’ at its flagship 820,000 sq-ft Canadian grow facility. David Jagielski, also writing for the Motley Fool website,  believes others will follow suite.

He said: “Although Aurora Cannabis and Canopy Growth have given no indication that they intend to slow-step their capacity expansion projects, it wouldn’t be in any way surprising if they eventually followed TGOD’s lead and tightened their belts to reduce their cash burn.”

A number of issues are troubling cannabis investors with sluggish revenue performances amongst the leading companies featuring prominently. Many cannabis firms are burning through cash at a rapid rate and market observers now question whether the oversupply issue will prompt further price – and cost  – cutting moves, such as that by Hexo.

For more stories like this one, subscribe to the CBD Business Weekly Newsletter.

The post Canadian Cannabis Price Cuts As Oversupply Issues Surface appeared first on Cannadelics.





Also in Education

Owning Guns is a Constitutional Right, Unless You’re a Cannabis User

September 28, 2022

Take two of the most hot-button, tendentious issues of our time – cannabis use and gun rights – combine them, and now we really have a debate. As the law currently stands, medical cannabis patients are not afforded their 2nd amendment right to bear arms. Technically, all cannabis consumers are banned from buying guns, but only medical […]

The post Owning Guns is a Constitutional Right, Unless You’re a Cannabis User appeared first on Cannadelics.

Continue Reading

Cannabis policy changes in Africa are welcome. But small producers are the losers

September 28, 2022

TESTSTSARDSAR

Cannabis policy changes in Africa are welcome. But small producers are the losers by Clemence Rusenga

Cannabis is a drug crop with a long history in Africa. Alongside coca and opium poppy, it has been subjected to international control for nearly a century. The International Opium Convention of 1925 institutionalised the international control system and extended the scope of control to cannabis. In 1961 a new international convention was adopted to […]

A link to your site, with your site's name and description as anchor text.

Continue Reading

University of Sydney to Offer Free Cannabis Testing

September 27, 2022

TESTSTSARDSAR

University of Sydney to Offer Free Cannabis Testing by Johnny Green

The University of Sydney is launching a fairly robust study in an attempt to, as the university describes it, “investigate cannabis consumption, behaviours, and attitudes among users.” Part of the study involves offering free, anonymous cannabis testing for people that cultivate their own cannabis in the Australian Capital Territory (ACT). Cannabis was decriminalized in 2020 in the […]

A link to your site, with your site's name and description as anchor text.

Continue Reading