Canada destroyed 425 million grams of Weed in 2021

The latest data signals that some Canadian mass producers might need to reduce their output to be more aligned with forecasted sales. This comes after years of trying to rightsize capacity, so they’re not growing more than they can sell.

According to Health Canada, Canada’s federally licensed cannabis cultivators destroyed a record 425 million grams (468 tons) of unsold, unpackaged dried cannabis in 2021.

Last year’s total was more than 50% of the 279 million grams of dried cannabis destroyed in 2020 and the 155 million grams in the previous year.

Analytics firm Headset has estimated that sales of dried cannabis and pre-rolls amounted to 293 million grams last year in four key provinces. This indicates that destroyed inventory once again surpassed sold products.

In addition, more than 7 million packaged cannabis products were sent to be destroyed in 2021.

Quantities include:

3,576,232 packs of dried cannabis.

1,118,148 packs of extracts like vapes.

2,421,823 packs of edibles and beverages.

15,359 packages of topicals.

Product destruction has been growing in Canada after the most prominent commercial producers overestimated how much weed the industry needed following the launch of recreational sales in October 2018.

Legal producers sold less than 20% of their production between legalisation in 2018 and 2020.

Since 2018, nearly 900 million grams of unpackaged dried cannabis have been destroyed by licensed producers because of overproduction and quality issues. This equates to a weight of approximately 650 Toyota Prius cars. That figure would easily pass the one billion-gram mark when destroyed packaged marijuana is accounted for.

Stewart Maxwell, a cannabis crop consultant, said some large producers might avoid destroying stock to make their balance sheets look healthier.

“I think some of the larger producers want cannabis in their inventories. Even if they never sell it, it still looks good on your books to have assets,”

The amount of packaged products sitting in corporate inventories across all product categories far exceeds the amount of packaged merchandise sold. An imbalance such as this indicates that high levels of inventory destruction could continue for some time.

For example, 14 million packaged units of extracts were stockpiled in inventories of producers, wholesalers and retailers in December.

That same month, sales totalled less than 3 million in recreational and medicinal channels. Approximately 19 million units of edibles were ready for sale in December but only around4 million units were sold. Cannabis topicals inventory sat at 550,000 units, compared to sales of just 65,000 units.

Similarly around 36 million packs of dried cannabis were in inventory that month, with sales reaching 9.6 million units. The imbalance lies primarily with licensed producers, not wholesalers or retailers, the Health Canada data suggests. Experts have warned that the overproduction will make life difficult for most new entrants into the industry.

“A majority of the time, I’m telling people, ‘I’m sorry, but you’re going to fail.’ that’s the reality if you’re getting into this industry now".- Stewart Maxwell, Cannabis Consultant.

He continued, “the odds are, even if you have substantial financial assets behind you, the numbers are not suitable for anyone. Because of these issues – oversupply. Cannabis can’t find its real price point".