One of Canada’s top banks acknowledged the rocky start for the adult-use cannabis industry, but still expects to see “substantial growth” for the rest of the year as supply constraints are alleviated.
Scotiabank also warned that the cannabis market will become heavily oversupplied in the medium- to long-term.
“Producers we have spoken to are generally aware that the industry will eventually be oversupplied, but there is a degree of complacency since few think the market will become oversupplied any time soon or that they will be the ones unable to sell their product,” analyst Oliver Rowe wrote in the report.
“We understand why producers have overbuilt, but that doesn’t change the fact that not all this capacity will be needed.”
Export volumes are not expected to meaningfully offset oversupply.
“While several sources have indicated undersupply will