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Cannabis Glut in Canada |
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INTRODUCTION |
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| In May 2020, the Canadian Imperial Bank of Commerce (CIBC) slashed projections for Canada’s recreational cannabis market for 2020 by 26% to C$2.5 billion, down from the earlier estimation of C$3.4 billion due to the COVID-19 pandemic. Since Canada had legalized cannabis for recreational use in October 2018, the industry had been plagued by supply issues and high prices due to government regulations, tax burden, and a compilation of complex security requirements that made the black market more attractive to price-conscious consumers. While cannabis sales increased after legalization, the inventory continued to grow much faster, resulting in a supply glut. As of March 2019, around 80% of Canada’s cannabis inventory was unfinished – meaning that the raw cannabis product remained unprocessed, and so could not be packaged and made ready to sell. Only 4% of the cannabis products produced in Canada were sold in July 2019; the rest were stored in warehouses. Overproduction and competition with the illicit market impacted cannabis prices. ..
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