August Posts 10% Month Over Month Cannabis Sales Increase

Health Canada has released its latest data on cannabis demand and supply this week, with the figures reported indicating a slow and steady increase in cannabis adoption across Canada. The latest data, which is for month of August, shows that 12,917 kilograms of cannabis, and 11,705 litres of oil were sold during the month.

While sales of cannabis increased 10.5% month over month, the story of inventory build, at least in terms of dried cannabis, remains unchanged with finished inventory levels increasing 5.8%. Unfinished inventory levels grew as well, at a rate of 12.3% month over month. Total finished and unfinished cannabis inventories now total 389,059 kilograms – or approximately 30 months worth of current demand levels.

The benefit for producers and retailers in terms of cannabis sales, is that medical sales has continued its downtrend. With medical sales typically generating a lower cost per gram, this is good news for those that sell product. Medical cannabis sales hit a new low in August, with 1,210 kilos being sold, a 26.2% month over month decline. Medical cannabis sales represented just 9.4% of all cannabis sales in August.

Source: Health Canada

With respect to cannabis oils, it seems to be on a path to buck the trend. While sales grew 14.0% month over month, finished inventory levels actually decreased 2.4%. Likewise, unfinished inventory levels also decreased 5.4%. However, despite the decreases in inventory levels, there is still 155,128 litres of product in inventories across licensed producers and provincial distributors, or approximately 13 months worth of supply at current demand levels.

Recreational cannabis oil sales have picked up during the last several months, with August being the third consecutive month in which recreational oil sales have outpaced medical sales, if only just barely. Recreational oil sales account for 5,966 litres sold during the month, or 51.0% of all oil sold.

While overall cannabis sales data suggests consistent growth month over month, concerns still exist for industry followers. Inventory levels, at least in terms of dried cannabis, continue to build and will likely begin to see a significant uptick with the months of September and October seeing the start of outdoor cannabis harvests. The strong focus on cannabis 2.0 products among producers will also likely result in inventory level build over the next several months as they ready for products to hit the shelves beginning in mid-December.

Information for this briefing was found via StatsCan. The author has no securities or affiliations related to any organization discussed. Not a recommendation to buy or sell securities. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.