Shortage of cannabis
Since recreational cannabis became legal in Canada, the demand has outpaced supply, which has led to a shortage in the market. During its earnings call, Aphria (APHA) CFO Carl Merton stated, “Health Canada knows that bringing expanded production capacity online will have a meaningful impact on alleviating supply shortages that consumers have been experiencing since the legal market opened last October.”
Building capacity for demand
Aphria (APHA) updated investors on its capacity development projects during the earnings call. The company’s Part IV and Part V projects are now complete. These projects added about 800,000 square feet in greenhouse capacity as well as 150,000 square feet in infrastructure facility.
The company also has another 1.3 million square feet of greenhouse capacity and 200,000 square feet of infrastructure facility in the pipeline. The company stated that its annual harvest capacity should reach nearly 255,000 kilograms, which is a large increase from the company’s current 35,000 kilograms. These estimates underline the strong appetite for recreational cannabis (MJ) in the market.
Companies including Canopy Growth (WEED), Aurora Cannabis (ACB), and Cronos Group (CRON) are all expected to bring significant capacity online this year. Aphria sold nearly 3.4 million gram equivalents of product during its second quarter, a 92% increase from the previous quarter.
For more details, visit Market Realist’s company page for Aphria.