Lack of supply hurt early legal cannabis sales in Saskatchewan, professor says
Province sold less pot in first three months of legalized sales than P.E.I.
Lack of supplies and higher prices are the key reasons why legal sales of cannabis in Saskatchewan are lagging behind other provinces, according to a University of Regina professor.
"We're not seeing product come through from the suppliers and the license producers to the retailers here yet," said Jason Childs, an associate professor of economics at the U of R.
According to the latest figures from Statistics Canada, sales of cannabis during the first few months of legalization were lower in Saskatchewan than any other province.
The province's cannabis stores sold slightly less than $2.5 million of product in that time.
That's well below the next lowest province, Prince Edward Island, which sold just less than $3.4 million. P.E.I.'s population is about 150,000 people, compared with Saskatchewan's population of just under 1.2 million.
Across Canada, $151.5 million in cannabis was sold from the date of legalization on Oct.17, 2018, to the end of December.
Quebec and Alberta had the highest sales with $33 million apiece.
For comparison, people in Saskatchewan spent $227.7 million at beer, wine and liquor stores in the months from October to December.
John Thomas is a co-owner of four Jimmy's Cannabis Shops in the province (Martensville, Battleford, Estevan and Moosomin).
Thomas agreed that getting supplies into his stores was a problem in the beginning.
"We had our Martensville store closed for three weeks," Thomas said. "We had Estevan delayed by two months and we had our online delayed by three and a half months."
He said more and more producers are popping up.
"Especially in the last couple of weeks we've seen noticeable improvements to the point where we were comfortable turning our online store on."
Childs said there have been many cases where there isn't any product in the shops.
"As a result when there is product the prices can be really really high," Childs said. "That's going to keep people out of the legal market and keep them in the illicit market."
Childs said P.E.I. is doing exceptionally well converting people who would otherwise use the illicit market.
"That's an indicator that something is going wrong in Saskatchewan and something is going right in Prince Edward Island."
He said there needs to be more competition in the distribution market and more producers that are able to deliver product to Saskatchewan.
"That's the big choke point that we can see right now is the product isn't flowing through in the way it should or needs to," Childs said.
He said cannabis is a profitable business, so he expects more entries into the market which will in turn mean more product flowing through the supply chain.
"But it's going to take time for people to navigate the regulatory environment," he said.
"Until that gets resolved we're going to see high prices and very low legal market penetration in the cannabis market."
Thomas said he doesn't think it will take too long for supply to catch up to demand. He expects sales in the province to rise significantly when the next set of numbers come out from Statistics Canada.
"There's more producers now and there's more coming all the time," Thomas said.
Cannabis sales from October to December, according to Statistics Canada:
- Quebec - $33 million.
- Alberta - $33 million.
- Ontario - $29 million.
- Nova Scotia - $17.2 million.
- New Brunswick - $8.5 million.
- Newfoundland and Labrador - $7.2 million.
- British Columbia - $4.6 million.
- Manitoba - $4.3 million (only includes data from December).
- Prince Edward Island - $3.4 million.
- Saskatchewan - $2.5 million.
- Yukon - $403,000 (only includes data from December).
- Northwest Territories - $205,000 (only includes data from December).
with files from Zarqa Nawaz