Canadian cannabis shortages resolving more quickly than expected: BMO analyst

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The Canadian cannabis industry is beginning to solve the supply shortages that have plagued it since legalization came into force, according to an analyst at Bank of Montreal (BMO). Tamy Chen, an equity research analyst for BMO Capital Markets, says the chronic issues are being resolved more quickly than projected. “It appears that the industry supply is improving sooner than we had anticipated,” Chen wrote in a letter to clients on May 30.

Supply shortages in government-licensed dispensaries had many Canadians flocking to the illicit market within days of legalization.

There are still supply problems. An Ottawa dispensary complainedearlier this month of having to cut down on opening hours due to lack of stock, as did a shop in Hamilton, Ont. An Ontario Cannabis  Store (OCS) spokesperson attributed the lack of available cannabis to a “national shortage of market-ready cannabis,” according to CBC.

But there are also signs of improvement. The Société québecoise du cannabis (SQDC), Quebec’s provincial (and only) cannabis retailer, recently announced that it would return to full opening hoursafter inadequate stock forced the distributor to drastically cut backon hours–from seven days to just four–as well as the number of branch openings.

Things are also looking up in Alberta. Freeze on issuing cannabis retail licences attributed to supply shortages is slowly being removed by provincial regulators, as announced this week.

“We consider these developments to be a modest positive,” wroteChen, who said that the volumes of cannabis produced increased from 7,500 kg in February 2019 to 14,700 in March due to an increase in quantity purchased by Ontario.

“As a result, we believe new store openings in Alberta and longer store hours in Quebec should support incremental ordering from those provincial distributors,” Chen wrote.

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