Canada Cannabis Spot Index (CCSI) 

Published August 23, 2019

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$7.00 per gram this week, up 2.0% from last week’s C$6.86 per gram. This week’s price equates to US$2,390 per pound at current exchange rates.

This week we examine the growing number of cultivators in Canada’s market. As the country prepared to legalize the cannabis industry, Health Canada observed massive interest in obtaining a cultivation license. 

Last year at this time, it is estimated that there were over 500 applications for such permits waiting to be reviewed. Since then, Health Canada has been working through the pile and has licensed a total of 184 producers. That is a growth of 70 licenses over the last year, an increase of over 60%.

Source: Cannabis Benchmarks, Health Canada

At the moment, not all licensees are operational. However, if each license holder builds their cultivation facility and begins producing, then we can expect that Canada’s production capacity will surpass domestic demand by a large margin. Furthermore, if options to export significant amounts of product remain limited, as they are currently, a surplus of inventory could overwhelm the Canadian market. 

The chart below shows the growth in number of licensed cultivators under the Cannabis Regulations. The increase in licenses accelerated quickly ahead of the legalization of cannabis on October 17, 2018. Ontario and British Columbia have seen the largest expansions in the number of licensed cultivators, with continued growth occurring this summer.

Source: Cannabis Benchmarks, Health Canada

The potentially lucrative nature of Canada’s newly-legal cannabis industry generated significant interest, but only the strong survived in fully completing their applications, which proved to be an immense undertaking in both length and detail. 

Health Canada took a very cautious approach to eliminate applicants who could not fulfill the strong standards mandated of industry participants. The completed form required municipal permits, property details and layouts, executive team security clearances, approvals from local fire and police associations, and much more before submission. The average time to receive a license took anywhere from three to nine months depending on the completeness of the application. Our estimates indicate there are still 400 applications in Health Canada’s queue, but it is likely that some have been withdrawn.

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..