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Canada Destroys a Record Amount of Cannabis

Heath Canada has reported that more than a quarter their cannabis crops were destroyed by 2021, the first time they have done so since legalization. More than 425 milliong, or 26%, of all unpackaged dried marijuana produced in the last year, was destroyed. This is a huge environmental disaster for what should be a green industry. 

A glut of unsellable products leads to an astronomical rate of product destruction

Unpackaged cannabis was also destroyed. More than 140mg of extracts, edibles, and topicals (4%) were also destroyed. If that wasn’t bad enough, more than 7 million packaged products were also destroyed (on average, 3% of the total). Health Canada data shows that the percentage of crop that was destroyed each year has increased. Last year saw a drastic increase in destruction from 19% up to 26%. Experts suspect this is an underestimate. “The 425 million grams destroyed is likely only a fraction of the cannabis that was grown but has no market, tons of product remains in inventory in various formats,” says Stewart Maxwell, a crop consultant and founder of Elevated Botanist, adding “I have seen fresh frozen product offered on the market that is several years old.”

Tammy Jarbeau Senior Media Relations advisor for Health Canada told Chronic News that the reasons for product destruction “include, but are not limited to: crop losses; post-harvest disposal of unusable plant material (e.g., stalks); recalled products; and elimination of unsold or returned products.” Maxwell noted that when it comes to packaged products, “any typo on a label can cause a recall,” which may be a contributing factor to the millions of packaged products destroyed. While, thankfully, “Producers must have recall insurance,” that costs tens of thousands of dollars per year. Unfortunately, Jarbeau was clear that, due to how they collect their data, Health Canada does not know “the amount or percent of cannabis destruction that can be attributed to recalled products.”

Quantities of Unpackaged Cannabis Destroyed (January – December 2021)

The cannabis class Quantity lost As a percent of the total unpacked production of this class of cannabis, quantity destroyed
Dried cannabis 425,325 kilograms 26%
Can you extract cannabis from your body? 40,454 kilograms 17%
Edible cannabis 97,959 kilograms 4%
Cannabis topicals 3,940 kilograms 4%

Quantities of Packaged Cannabis Destroyed (January – December 2021)

The cannabis class Quantity lost As a proportion of the total cannabis production, quantity destroyed is.
Dried cannabis 3,566,232 units 3%
Can you extract cannabis from your body? 1,118,148 units 3%
Edible cannabis 2,421,823 units 5%
Cannabis topicals 15,359 Units 1%

Source: Health Canada

The Root Cause Of Oversupply – Speculative Investment

This is why the crop damage was so high last year seems paradoxical. It happened at a time where Canada’s COVID-19 epidemic drove up marijuana sales. The market was experiencing a serious oversupply. So sales were quite good but not enough. Jarbeau called the destruction “a part of normal business practices” and attributed the escalating rate of destruction to “the increase in number of the federal license holders since 2018.” Maxwell had a more pointed view, “The glut of product on the market is entirely a factor of overproduction driven by investment hype.” At the onset of legalization, many large companies “were able to raise billions on promises to dominate a brand-new industry,” using square footage of cannabis canopy as a selling point, which Maxwell says led to “an exponential overbuilding of cultivation facilities.” Making matters worse, that cannabis was not very good and didn’t sell, which led to “many of these facilities were shuttered,” such as the Aurora Sky facility in Edmonton. 

A Environmental Catastrophe that has Incalculable Losses

Maxwell says that based on the typical cost of goods sold, “the cost of the product destroyed is in the billions,” but that doesn’t take into account the cost of the facilities themselves and other resources spent to grow the cannabis. “This overproduction is an environmental catastrophe and the energy required to cultivate this glut is incalculable,” says Maxwell, “When facilities costing tens of millions of dollars are built, then closed without ever producing product of any quality, the destruction of capital and energy resources is astounding.” 

Jarbeau answered the question, “Do they gather information about water, fertilizer and other resources when cannabis is grown?” Chronic News that “Health Canada does not collect this information from license holders.” That means there is no way to accurately know exactly how much of and which resources were destroyed along with those 425 million grams of cannabis. To better understand the best way to grow cannabis, this is an area that data collection could be enhanced in both Canada and the USA.

Is Remediation Salvationable?

With billions of pounds of cannabis destroyed each year, you may wonder who is the winner. Maxwell says that “Cannabis producers, and their investors are the losers here, and consumers are the winners.” Costs have dropped consistently both in Canada and around the US, where “it is now possible to purchase an ounce of decent weed for just over a hundred bucks.” According to Maxwell, that plummeting price has “almost entirely disrupted the legacy market,” and even growers using artisanal methods to produce premium flower “struggle to achieve profitability due to the glut of product on the market, excise tax issues, and the regulatory cost burden.” 

Anyone familiar with the cannabis industry has likely heard the term “remediation” before, meaning, to remedy something, which can range from methods of reducing contaminants in a product (pesticides, heavy metals) or reducing the THC content of a hemp product to ensure it legally can be sold as hemp. A way to help cannabis producers salvage products they otherwise wouldn’t be able to sell. This would also be an enormous waste of time and money. 

It does not seem that remediation will be an option. “To my knowledge, there is no avenue to direct excess cannabis flower to other product streams,” says Maxwell, “The product must be destroyed as per Health Canada guidelines,” which include incineration, composting, or mixing with kitty litter. “It may be possible for cannabis to be used in other applications,” says Jarbeau, “however, depending on the activity, it could still be subject to the requirements under the Cannabis Act and its regulations as well as requirements under other Acts and regulations.” Those regulations and requirements can be pretty burdensome, to the point where attempts to remediate products might not even be worth it. One bright spot Jarbeau mentioned was that “Certain cannabis plant parts (e.g. mature stalks stripped of their leaves, flowers, seeds, and branches) … are exempted from the application of the Cannabis Act,” and could be remediated into other uses without a license.

Canada is bigger than Canada and Cannabis is even larger

Canada and the cannabis industry are not the only ones facing the issue of large-scale product destruction. While Canada destroyed 26% of their unsold or unsellable cannabis flower last year, the US destroyed nearly 11% of our hemp crop because it tested “hot,” above the 0.3% THC limit. While 11% is the average, it is much worse in some states, like Tennessee, where the Department of Agriculture reports “42% of crops are being found non-compliant.”

The reasons may differ, but the result is the exact same: millions upon millions of marijuana and hemp plants destroyed and not used to produce products. Farmers, investors and others are left with nothing. And remember, it isn’t just the cannabis being destroyed here, but all the water, fertilizer, and other resources that went into growing it. On a deeper level, in many cases it is someone’s dream being destroyed as well, with legacy farmers being forced out of the industry they created while being offered insultingly low prices for artisanal quality flower. 

Health Canada is closing 2022. They will compile their data starting in this year. Current trends suggest that Canadian cannabis business will have to destroy approximately 1/3 of its unpackaged crop by next year. 

Following a Health Canada response, follow-up

“I didn’t realize that that number represented total cannabis waste destroyed,” says Maxwell. “Cannabis waste is regularly destroyed during the growing process and at harvest. Based on the water content, this waste can have a dramatic effect on its weight. Some waste can be destroyed immediately, while others are stored until they reach a large volume. Sometimes, waste is stored and weighed until it is large enough to be weighed again. The discrepancy can then be documented as a result of water loss. Finally, dry waste is destroyed. It is impossible to predict which percentage of total waste will be soldable or not-sold flowers, given all the variables. For every gram worth of flower that is saleable, I estimate 2 to 3 grams would go into the trash as an unusable byproduct.

“It would be much more interesting to know the ratio of finished saleable product produced, relative to the annual consumption in Canada,” Maxwell adds. “This would give a much better insight into the scale of overproduction. My estimate is that most of the product being destroyed after it is finished is recalled. I hope this helps.”