More legal cannabis needed to break black market: province

Shutting down the marijuana black market will require more legal cannabis and more licensed producers, according to Michael Legary who works on the province’s cannabis strategy.

But Health Canada pushes back against notion of a national cannabis shortage

There is no shortage of cannabis in Canada according to Health Canada. (Tijana Martin/The Canadian Press)

Shutting down the marijuana black market will require more legal cannabis and more licensed producers, according to the provincial bureaucrat who works on Manitoba's cannabis strategy.

"Breaking the black market is a key aspect of legalization," said Michael Legary, a senior project manager with Manitoba's priorities and planning secretariat.

"You have to have a legal supply available to do that. And if we do not have legal supply, people will go to the previous channels they were using," he said.

John Arbuthnot, CEO of Delta 9 Cannabis, agrees there is not enough pot to go around. Both he and Legary were panelists at a cannabis industry event Wednesday organized by the Chartered Financial Analyst Society of Winnipeg.

"We are in a supply shortage environment right now. What we foresee for the industry is that supply shortage lasts for the next one to two years," said Arbuthnot. 

He says it takes a long time to ramp up pot production because of the money and labour required, and the introduction of edibles this fall could aggravate the supply situation. 

No national shortage: regulator

Health Canada disputes there is a lack of cannabis in the country.

"There is not — as some have suggested — a national shortage of supply of cannabis," said a spokesperson for Health Canada, which regulates both recreational and medicinal cannabis. "Total inventories of cannabis far exceed reported sales.

"The overall level of supply continues to grow month over month as licence holders expand the productivity of already approved production space and as Health Canada reviews and approves licence applications and expansions."

The variability in accounting for the amount of legal pot in the system is troubling to forensic accountant Al Rosen, who also spoke at the event.

"Don't set any long-term policy until it gets settled," said Rosen, who suggested short-term licences could deal with short-term shortages. 

According to Legary, Canada's pot supply is limited because of the amount of time it takes for Health Canada to license growers.

"We know there are hundreds of businesses that have requested to become licensed producers for cannabis in Canada … but the federal government is taking time in licensing them," Legary said. 

Health Canada is opposed to relaxing its licensing rules to get more growers in the system. It says federally licensed facilities have the capacity to produce about 800,000 kilograms of cannabis per year, which is close to the amount Canadians consume in that time period.

"The Government of Canada has no intention of taking action that could compromise the health and safety of Canadians or the integrity of the legal system of production."