Analyst Finds Line in Financial Statements That Shows 869 Per Cent Rise in Dumping Cannabis – LPC
Stephen McBride recently wrote in Forbes that Aurora Cannabis seems to be dumping cannabis supply. He noted in what he calls a “line buried deep in it Q4 financials” that Aurora got rid of $20 million worth of cannabis. That is an 869 per cent increase from the previous quarter. He compared the practice to American farmers dumping food after WWI to increase world prices. (Please see link below.)
“It is doing this because there’s not enough demand from consumers,” McBride said. “I expect this trend to grow as pot companies continue to ramp up production and flood the market with more pot.”
The graph at right shows the reason why Aurora is dumping cannabis. This year, inventories have risen while sales have remained relatively flat.
McBride said that the dumping cannabis trend is bound to continue since most licensed producers all talk about increasing production. Without a market to sell the cannabis, McBride argues, it will keep piling up in inventory.
McBride is not alone in his assessment. Earlier this year, Tom Adams of BDS Analytics predicted cannabis oversupply.
Isn’t There a Cannabis Shortage? – LPC
Almost from the beginning, we’ve heard about the cannabis shortage in Canada. It turned out it was more likely to be a cannabis supply chain issue. Cannabis shortages are the reason the Ford government in Ontario decided to roll out retail cannabis stores slowly.
So why are companies dumping cannabis? The culprit may still be supply chain, in a sense. The retail model in Alberta seems to be the gold standard in Canada. With almost 300 stores operating already, it’s clear that provinces like Ontario have a lot more growth available. In fact, if Ontario had the same number of cannabis retail outlets per capita as Alberta, it would have about 950 stores. Currently, it has 24 cannabis retail stores open. That would have a huge effect on sales given that Ontarians tend to prefer brick-and-mortar stores to the online Ontario Cannabis Store (OCS).
McBride might be underestimating the Canadian cannabis market in his assessment. But numbers alone, it’s clear that cannabis oversupply – and in turn, cannabis dumping – may be a present and future problem.
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