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Why in Canada of medical crisis cannabis crisis


Most of the constructed production facilities (greenhouses, various production facilities for processing) are inappropriate, despite the short-term shortage in the market. That is why the largest Canadian players at this stage are already forced to significantly cut costs and reduce production, lay off thousands of employees, and write off billions of dollars in losses. 

The pages of the profile electronic publication of Ukrainian hemp breeders have already described the iridescent investment picture of the medical hemp sector in Israel, emphasized that government agencies in Canada have several times more requests for export of leaves and inflorescences or cannabinoid oil than actually exported. A minimal analysis of officially published government data from the “Maple Leaf Country” indicates an impending crisis in the overproduction of legal psychoactive hemp. The traditional ways to get out of it are the expansion of manufactured products to foreign markets (involving severe dumping in order to gain a dominant position), a significant reduction in the cost of raw materials and manufactured products, as well as the volume of their production, which implies the departure from the market of a number of recent successful companies burdened with significant credit obligations. Some touches of a significant restructuring of the Canadian hemp medical market are already visible, however, how deeply the palette of companies working in the field of legal psychoactive hemp in the “maple leaf country” will be judged by the results of 2020.

As the data from the Canadian government demonstrate, cannabis growers legally growing continue to accumulate significant reserves of plant leaves and inflorescences, which they are currently unable to sell both on the domestic and foreign markets. Even a superficial analysis of the table below demonstrates the crisis of the overproduction of "green mass". Therefore, it is possible to predict significant industry reductions that large companies will have to make, which will sharply curtail excess production capacities even despite the fact that retail sales are still growing in Canada.

The dynamics of the increase in the number of dried leaves and inflorescences of medical hemp for 2019-2020. In Canada

As of April 2020, agricultural producers and processors in Canada have accumulated about 620144 kg of legal unpacked “green mass” of hemp, which is determined by enterprises as “marijuana in stock” (raw materials are not properly packaged for sale in the interests of wholesale and retail consumers). In addition, in April, licensed manufacturing companies, retailers and wholesalers kept about 85,014 kg of cannabis leaves and inflorescences packed for sale in their warehouses, which, according to the documents, is like legal psychoactive hemp in stocks that are ready for sale to consumers.

According to specialists from Canadian consulting companies, “If hemp companies cannot sell what they produce, they are forced to ship the grown produce to a warehouse, and ultimately if the consumer cannot find it, after a very short time, the produced raw materials and unclaimed products will need to be destroyed. Despite the fact that the market is growing, its increase is not enough to absorb all manufactured products. That is why in the near future the adjustment of the legal psychoactive hemp market in Canada will begin. ”

A similar dynamics is observed in the market of extracts of individual elements of hemp plants with significant therapeutic properties. For example, Canadian Department of Health data show more than 9 million packaged units of hemp extract in April 2020, compared with sales of just over 1 million packaged units.

Cultivation "on the ground"

Michael Armstrong, a professor at Brock University, argues that “the 2020 outdoor crop will already have a significant impact on both the amount of green mass of the hemp plant and the cost of raw materials with significant therapeutic potential. . The volume of “green mass” grown in 2020 will be significantly larger than in 2019, so companies growing raw materials in greenhouses or premises need to keep in mind that the market is gradually reorienting to growing medical hemp “on the ground.”

Commentary by the Ukrainian Technical Hemp Association

According to an official report from the Canadian Federal Regulatory Authority, in 2020 about 121 hectares were licensed for indoor hemp cultivation (including greenhouses), compared to more than 185 hectares permitted for outdoor cultivation.

In anticipation of changes to the regulatory framework of Canada in October 2018, the largest Canadian manufacturers invested huge financial resources to increase production capacities, as well as the acquisition / absorption of competitors in the domestic and foreign markets. This was done, first of all, not in order to expand the business to realize real consumer demand, but in the interests of investors who invest huge resources in specific enterprises through the stock market. We have repeatedly raised the question that most of the constructed production facilities (greenhouses, various production facilities for processing) are inappropriate, despite the short-term shortage in the market. That is why the largest Canadian players at this stage are already forced to significantly cut costs and reduce production, lay off thousands of employees, as well as write off billions of dollars in losses. Already now in Canada they sell ready-to-use “hemp” greenhouses for a fraction of their initial cost.

Attention is paid to the question - where will the raw materials produced in Canada or the final products made from leaves and inflorescences of legal psychoactive hemp pour in at a dumping price, if the relevant regulatory framework is created in any country in the world, including Ukraine. Is the government of our country able to create conditions for national producers so that they can compete on equal terms with Canadian international hemp corporations, capable of substantially dumping and imposing their conditions on the Ukrainian market at the initial stage of market development.

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