Southwestern Ontario pot producers expanding to meet demand

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Cannabis producers in Southwestern Ontario – one of the nation’s emerging marijuana belts – are going on an expansion spree, a move an industry official says will help reduce the nation’s cannabis shortage.

The combination of high demand for pot products and growing pains in the nascent cannabis industry has led to empty shelves at online stores and bricks-and-mortar retailers across the country since recreational marijuana became legal in Canada on Oct. 17.

Meanwhile, the country’s legion of licensed growers, including several in the London region, are working around the clock to expand their operations to meet the growing demand for their products.

Southwestern Ontario, one of the country’s richest farm belts, is home to 16 licensed marijuana producers, including industry leaders such as Aphria in Leamington and Tilray that has operations near Petrolia and in London.

WeedMD in Strathroy recently completed construction on its hybrid greenhouse facility that will bolster its growing capacity by another 5,600 square metres.

Down the road at Natural MedCo, also in Strathroy, an expansion is underway to bring the total growing space to 93,000 square metres, making it one of the 10 largest producers in the country.

In London, Indiva is quadrupling its south-end production site to 3,700 square metres.

These expansions, plus others across Canada, will help resolve the supply shortage within six months to a year,  the head of a cannabis industry association said.

“We’re seeing this transition towards . . . the full legal, regulated system much more quickly than even we in the industry anticipated, and I think we were very optimistic,” said Allan Rewak of the Cannabis Council of Canada, an industry group representing many of the country’s marijuana producers.

“And everyone is building up to meet this incredible demand for adult consumer use, as well as medicinal cannabis,” he said. “These expansions will be necessary.”

WeedMD chief executive Keith Merker said his company is waiting for the green light from Health Canada, the industry regulator, to begin planting in its half dozen new grow rooms west of London.

“That’s a massive win not only for WeedMD but for Canadian patients and consumers everywhere,” he said of the expansion, noting the increased capacity will help with the nationwide supply shortage.

WeedMD has thousands of clones – small cannabis plants grown from the cuttings of a mother plant – waiting to fill the new space, said Merker, whose company also has an indoor growing operation in Aylmer.

Industry insiders say the supply shortage isn’t just the result of not enough product being available. Other factors such as supply chain challenges, a shortage of excise tax stamps that must accompany all products and navigating new provincial regulations also are contributing to the problem.

“Any brand new industry created from scratch is going to go through its growing pains, especially when you have a brand new market that has just opened up on the recreational side here in Canada,” Merker said.

Sales of legal cannabis totalled $43 million in the first two weeks of legalization, according to data published Friday by Statistics Canada. Sales in Ontario, where adults can only legally buy marijuana though the OSC delivery service, were the highest in the country at $11.7 million.

Health Canada released its draft regulation for cannabis-infused edibles last week – public input will be sought until Feb. 20 – and announced sales of the products will begin no later than Oct. 17, 2019.

Rewak said the introduction of edibles will prompt more new users to try cannabis products, adding to the ever-growing demand for marijuana. He notes the sale of edibles makes up more than 40 per cent of the cannabis market in some American states where recreational pot is legal.

“We expect similar types of things in Canada.”

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