The amount of space licensed to grow cannabis in Canada is now heavily skewed toward outdoor cultivation instead of indoor for the first time, according to new data from Health Canada.
The federal regulator said it has licensed roughly 13 million square feet of indoor cannabis cultivation (including greenhouse), versus 19 million square feet approved for outdoor growing.
That might signal downward pressure on wholesale prices for inputs as soon as this year.
However, several factors challenging Canadian cannabis producers might limit the full effect that large-scale outdoor cultivation will have on the market, including a challenging capital environment and difficulties scaling production outdoors.
Mark Spear, founder and CEO of the Ottawa-area’s Wildfire Collective, expects it will be some time before the quantity of cannabis produced outdoors exceeds that of indoor.
“It’s a steep learning curve. If you struggled to produce cannabis indoors in a greenhouse environment, it’s not going to be drastically easier outdoors,” he said, adding that he expects outdoor production to be largely commodity grade.
Wildfire Collective, Canada’s first exclusively outdoor, multisite craft cannabis operation, hopes to be licensed for a partial crop this year.
Spear expects outdoor production will force down the price of low-quality flower, but the higher-quality, lower-cost outdoor producers will be able to easily complete with mediocre indoor production.
“Canada is known for some exceptional cannabis,” he said. “A lot of people think it’s all indoors, but people are going to find out over the next few years that some exceptional outdoor already comes out of Canada.
“When these (outdoor) producers can get into the legal system, it’ll really be a challenge for the indoor producers to justify their expenses versus the end results.”
Among other Health Canada data released Friday for the October 2019 period:
- 5.8 million packaged units of cannabis were sold in Canada.
- Dried cannabis represented 92% of total sales.
- Roughly 5.4 million packaged units of dried cannabis were sold.
- 490,000 units of cannabis extracts were sold.
- Nationally, 30 million packaged units of cannabis products were held in inventory by cultivators, processors, distributors and retailers.
- The inventory of finished packaged units of dried cannabis represented 4.2 times total sales.
- Federal license holders possessed 5.3 million unpackaged plants.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].