The Canada Cannabis Spot Index was assessed at C$5.88 per gram this week, down 0.3% from last week’s C$5.89 per gram. This week’s price equates to US$2,082 per pound at the current exchange rate.
This week Cannabis Benchmark examines the growing number of cultivators in Canada’s legal cannabis market. There are two types of cultivation licenses: a standard license and a micro-cultivation license. Standard licenses have no limits on production capacity, while a micro-cultivator is limited to 200 square meters (about 2,150 square feet) of growing area.
Micro-cultivators are likely to focus on quality over quantity – much as craft brewers do in the beer industry. These smaller growers often focus on unique strains to differentiate their product and receive a premium price.
Health Canada has been working through the backlog of cultivation licenses and there are currently 513 active cultivation licenses split amongst standard and micro-cultivation grow operations. Approximately two-thirds of the licenses are standard licenses.
Cannabis Benchmarks notes that – at the moment – not all licensees are operational. However, if each license holder builds their cultivation facility and begins producing, it can be expected that Canada’s production capacity will continue to outstrip domestic demand.
Furthermore, if options to export significant amounts of product remain limited, as they are currently, the growing surplus inventory would likely need to be destroyed as the cost of carry outweighs the economic value of the product.