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Canadian Cannabis - Supply Chain Issues as Legalization Begins

Recreational use of cannabis became legal throughout Canada on October 17th. In the months leading up to the legalization, numerous licences for businesses were issued as the country prepared for the demand. However, manufacturers are facing a significant crunch as they transition for supplying the demand for medical marijuana to supplying both medical and recreational demands. Apharia, one of Canada's largest licensed cannabis producers, has been working to ship product orders but states that their full range of products may not be available until the spring.

One issue slowing the production and shipment of cannabis is the delay in excise stamps which are issued by the government and must be placed on all packaged cannabis products. Another major issue has been the slow process of licencing producers, resulting in less production than is necessary to meet demands. To date over 100 licences have been issued, but as they have been issued only recently the producers haven't had enough time to grow the plants. The medical market continues to place a significant demand on producers across Canada. More than 300,000 Canadians had prescriptions for medical marijuana as of June of 2018.

Over the next year, producers will have to focus on increasing production capacity in the long term to provide for the increased demand resulting from legalization. More licences for producers are expected to be issued, along with more retail licences in the coming year. The Canadian government will also need to find an efficient solution to distribute excise stamps to producers. Until these solutions are realized, Canadians may see a shortage of recreational cannabis throughout the country.

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