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CAN: Production cuts in the Canadian cannabis industry

At this time last year, investor hopes for the cannabis industry were pretty high. Canada had just become the first industrialized country in the modern era to legalize recreational cannabis in October 2018, derivative pot products looked to be less than a year from hitting dispensary shelves in Canada, and multiple U.S. states were in the process of greenlighting medical cannabis or recreational pot.

However, over the past year, cannabis companies and investors alike have seen their hopes and dreams for the pot industry go up in smoke.

A combination of regulatory and procedural issues in our neighbor to the north has ensured that legal-channel cannabis has been kept off dispensary shelves. For instance, regulatory agency Health Canada entered 2019 with a reported backlog of more than 800 cultivation, processing, and sales license applications waiting to be reviewed. Given the arduous procedure needed to vet each company and facility, this multiple-month review process has significantly grown in length. In fact, Aphria's joint venture Aphria Diamond facility recently took at least 18 months to gain licensing approval to grow cannabis. It'll be some time before the agency is anywhere close to eliminating this licensing application backlog.

There have also been serious issues with the rollout of physical dispensaries in certain Canadian provinces -- especially Ontario. Canada's most populous province had a mere two dozen open dispensaries a full year after recreational cannabis was legalized, which equates to one retail store for every 604,200 residents in the province. That's nowhere near enough dispensaries to adequately meet consumer demand, and it's having an adverse impact on the industry.

Read more at fool.com

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