The demand for cannabis has exploded in Canada following legalization this October—and so has the demand for real estate to grow sufficient crops. According to Bloomberg, new marijuana facilities—including greenhouses, indoor grow-ops and warehouses—are an added crunch on the country’s already tight supply of industrial real estate.
Even before legalization, Canada saw a six-fold surge in pot-growing facilities to 8.7 million square feet (808,256 square meters) from January through September.
Cannabis producers and market analysts have been warning for months about the possibility of shortages once legal sales got up and rolling, reports CBC. Growers are still scaling up their crops and production facilities, and likely aren’t ready to harvest the estimated 655,000 to 926,000 kilograms of marijuana Canadians are expected to consume in the coming year.
“There’s very few industries that flip the switch on one day,” says Jay Rosenthal, co-founder and president of Business of Cannabis, which produces content, research and events related to the global cannabis industry. “I think the idea that an industry that is really nascent can all of a sudden produce enough product for a fairly ravenous consumer audience—there’s going to be challenges along the way.”
One of the people poised to meet the demand is Deron Caplan, who recently finished his Ph.D. in cannabis horticulture at the University of Guelph. He explains that while underground growers have experimented for decades on ways to get higher yields and potency from traditional cannabis varieties, such experimentation hasn’t been validated by modern agricultural science.
According to federal guidelines, Canadians may cultivate up to four plants at home for personal use, and prepare various cannabis products (such as edibles) for personal use.
Since the practical details of implementing legalization have largely been left to the provinces and territories, residents of Manitoba and Quebec, for example, are not allowed to grow plants at home.
On the business end, industry leaders like Toronto’s Len Wong strives to keep up-to-date with new techniques of growing. A sixteen-year industry veteran in the area of genetics research and the development of medical marijuana, Len Wong says production needs to ramp up to ensure adequate supply for both medical and recreational consumers.
As the owner of The Grow Depot, Wong taps into his dedication to sustainability and his passion for the role organic gardening plays in the environment and with human health.
Hill + Knowlton Strategies conducted a poll in late 2017 that showed 57 percent of potential medical cannabis users, and 47 percent of potential adult-use consumers, thought it was important that the products they buy are grown organically.
“We develop products based on need, so, if I see a need for a product, then I’ll bring that to life,” says Wong. “There are a lot products that are coming from California and other areas where cannabis has been legal for a lot longer, so I look towards the larger markets in the United States, Holland and other countries that have been working with marijuana at the medical level for a lot longer than we have in Canada.”
Len Wong and other Canadians believe supply will soon meet demand. Based on corporate statements, the 10 largest cannabis producers in the country are planning to churn out 1.8 million kilograms worth of the plant by around 2020.
When the industry is fully up to scale, it should result in billions of dollars in added annual revenue, say Canadian experts. The marijuana space remains very fluid, with acquisitions, partnerships, joint ventures, and organic grow projects constantly reshuffling production expectations.
“Now, 3 million kilograms looks to be the annual floor by the turn of the decade,” according to Motley writer Sean Williams.
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