Product shortages continue to frustrate many medical cannabis consumers, despite claims from Health Canada that there is a sufficient supply to meet patient demands.
As interest in Canada’s medical cannabis program continues to increase, concerns with supply have also been increasing. In January of this year, Lift first tackled the issue of product shortages, showing that many producers didn’t have specific products like high CBD varieties, oils, low THC options, and more.
While many producers at the time did still have a variety of products for sale, the inability of patients to effectively shop around between producers meant that if the producer or producers a patient was signed up with were out of a specific product, the person might just be out of luck until it came back into supply.
This supply issue continues to today, even as Health Canada has significantly increased its ability to process new applications and onboard new producers and production spaces; however, Health Canada claims that there are no shortages and that the issue is simply one of ‘preference’ for consumers between varieties.
“Health Canada is aware of reports of individuals who were not able to get their preferred product from their licensed producer,” wrote a Health Canada spokesperson to Lift. “However, based on market data, there is sufficient supply of cannabis for medical purposes to meet the current needs of registered clients.
“Health Canada recognizes that the demand for cannabis for medical purposes has been steadily increasing, with the number of clients registered with licensed producers growing at a rate of about 10% per month. Health Canada recently implemented operational changes to streamline licensing and enable increased production of cannabis for medical purposes. These changes will help ensure reasonable access for individuals who require cannabis for medical purposes. Health Canada will continue to regularly evaluate the medical cannabis program and make future adjustments where necessary.”
Market data scans, however, show that these shortages are not simply about ‘preference,’ as many producers still lack specific products like CBD-only options in dried flowers and cannabis oils, in addition to the various cannabis strains and the unique cannabinoid and terpene profiles they each offer. While most producers with a sales license may be offering some kind of product, not every medical cannabis user’s needs are necessarily served by these limited options.
While high THC options remain the most popular among patients, and therefore the most available from licensed producers, patients who require a high CBD strain are not always able to find what they need.
Enrollment in Health Canada’s medical cannabis program has almost doubled since the end of June 2016, from about 75,000 to almost 170,000 as of March 31 of this year. This means an increased demand on the 20-30 licensed producers currently able to sell cannabis.
A scan of available dried cannabis strains and cannabis oils from licensed producers between February and May of 2017 shows, for example, fewer than half of the producers carrying high CBD options in either dried flower or oils. The breakdown for 1:1 strains is similar. A 1:1 ratio strain is one with approximately the same percentage of THC and CBD, for example, 8% THC and 8% CBD.
Because patients cannot ‘shop around’ between multiple licensed producers without an individual doctors authorization for each producer, those who require a high CBD option in dried flower or oil, for example, are forced to either go without their medication, or to source from the under/unregulated black market.
These product shortfalls have lead some patients to speculate that licensed producers are ‘stockpiling‘ products in preparation for non-medical, recreational cannabis sales, largely because market data released by Health Canada shows product in storage
In the last fiscal year, licensed producers sold more than 19,700 kilograms of dried cannabis and more than 13,700 kilograms of cannabis oil to clients. Licensed producers also had more than 18,000 kilograms of dried cannabis and more than 5,000 kilograms of cannabis oil available for sale at the end of the last fiscal year.
Online, Health Canada notes that such discrepancies may be due to product that is still awaiting testing results or is being retained as samples. LP’s must retain sample product of each batch released for sale to allow for future testing. In addition, dried cannabis may be kept in storage as producers await processing the product into cannabis oil.
In the past, Health Canada rules prevented the storage of ‘excess materials’ in producers’ vaults, although recent rule changes have allowed these producers to store more product.
Collette Rivet, the executive director at Cannabis Canada Association, which includes 18 LP members, says their organization is committed to patient supply, and that these recent rule changes will only help with this goal. She also says that while some producers are building out capacity to meet an expected recreational demand, many producers intend to stay entirely medical.
“These new regulations will help LPs to plan better and be better prepared for the increasing amounts of medical cannabis required monthly,” said Rivet. “In addition, they are also building additional capacity for post-legalization; however, some LPs intend to remain very small and some will only focus on medical cannabis. Everyone is committed to their patients’ needs.”
Philippe Lucas, the interim executive director of the Canadian Medical Cannabis Council, an industry association started by BC-based producer Tilray in 2015, says their five members are committed to patient supply. He also denies any ‘stockpiling’ for recreational sales.
“At the Canadian Medical Cannabis Council, patients come first,” says Lucas. “Licensed producers with the CMCC are all fully committed to meeting the needs of critically and chronically ill Canadians, and all CMCC members are currently involved in expanding their production footprints to ensure patients can get what they need, when they need it.”
The CMCC is made up of and represents four licensed producers: The Peace Naturals Project, Delta 9 Biotech, Tilray, Delshen, and Redecan Pharm, as well as various patients and patient advocacy groups.
Lucas, speaking in reference to Tilray specifically, says the producer will “always will be a medical brand” and that their online store has ‘ample supply.’
Jordan Sinclair, director of communications & media with Canopy Growth, which owns Tweed, Bedrocan and Mettrum, also says Tweed is not stockpiling product for future sales.
“We're not stockpiling for recreational sales,” says Sinclair. “We're focused on getting as much product to market as possible, as quickly as possible. At our facility, there's a constant rotation of product in the vault at all stages of readiness. Some lots are awaiting test results, some are being held for extraction purposes, and some lots are approved inventory listed for sale on tweedmainstreet.com.
Sinclair says Tweed is not hiding their interest in supplying a future non-medical market, but this will not impact patient supply now or in the future.
“Looking after our medical customers is still our top priority. We recently made a public announcement committing that patients registered with us by July 1, 2018 will have priority access to our products. We have made no secret of our intentions to pursue adult-use markets, but ensuring medical patients have access is a commitment we have made.“
Despite some producers claims of there being no supply issues, Health Canada and the Office of Cannabis, for their part, appear (at least behind the scenes) to be painfully aware of both current supply problems and what this could mean for an even larger non-medical market expected to begin by July 1, 2018.
The recent regulatory change as to how much LPs can store, as well as how Health Canada approves producers, is expected to increase the amount of licensed producers, possibly by as much as double in the next year, depending on who you talk to. There are currently 50 Licensed Producers with a cultivation license and 30 with a sales license. Not all 30 of these are currently selling to patients, however.
Many of these producers are also undergoing massive expansions that will increase their capacity to produce cannabis and cannabis oil at a faster rate, and many are projected to be completed prior to the projected July 1, 2018 start date for legalization.
Total immediate and future demand for recreational cannabis is difficult to project, but a Forum Poll from 2015 showed about 30% of Canadians said they would use or at least try cannabis once legal, which is, very roughly, about ten million Canadians buying a few grams of cannabis a week, on average.
Even assuming that many current cannabis consumers may continue to use Canada’s well-established and under-enforced black market, the demand will likely strain Canada’s existing medical supply. Politics and company policies may prevent the industry and its regulator from admitting these supply issues are a concern, but today, both the numbers and the experiences of patients clearly tell a different story.