(This story has been updated from an earlier version)
Canada’s medical cannabis companies are bolstering their inventories ahead of adult-use legalization, even while signing up fewer new patients than ever, indicating an industrywide shift in focus to meeting demand in the upcoming recreational market.
As of the end of March, patient registrations with Canada’s licensed medical marijuana producers reached almost 300,000. That’s a 10% increase from the previous quarter – the slowest growth on record.
New data from Health Canada also shows that licensed producers continue to build up their inventories of dried cannabis and oil to head off any potential shortage.
The total amount of dried marijuana in licensed producers’ inventories reached 44,000 kilograms (97,000 pounds) at the end of March, a 13% increase from the previous quarter.
Cannabis oil inventories reached 14,600 kilograms at the end of March, up 31% from the previous quarter.
Together, companies have stockpiled 58,600 kilograms of cannabis.
A recent report by the Bank of Montreal estimated demand for medical and recreational cannabis in the first year of legalization at 337,400 kilograms.
Aaron Salz, founder of the Toronto-based Stoic Advisory consulting firm, said medical cannabis growth is stalling because licensed producers are reallocating efforts and capital.
“Companies are now intimately focused on building brands, inventory for the adult-use market, and even retail in some cases. That’s redirected past efforts of acquiring patients and medical market share,” he said.
“Whether or not this strategy is financially sound is yet to be determined, but its what investors are demanding. I think that’s all been the main driver of medical market slow down.”
Licensed producers are preparing for an impending wave of demand from the recreational market, said Alex Shiff, senior consultant for Navigator, a Vancouver, British Columbia, communications firm.
“There are forecasts for how much cannabis will be necessary to meet consumer demand, but these are simply estimates. As an industry, it is important to try and ensure that we do not have shelves sitting empty come Oct. 17.”
Matt Lamers can be reached at [email protected]
To sign up for our weekly Canada marijuana business newsletter, click here.