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Canadian sales of legal dried cannabis declined in January compared to December, the first such decrease since recreational use of marijuana was legalized last year, while inventory levels continued to rise, according to Health Canada.

The federal department said 7,115 kilograms of cannabis in the form of dried flower was sold in Canada in January, down 3.7% from December, according to the government agency’s monthly Cannabis Tracking System, which was updated late Wednesday. Overall sales of legal dried flower were up 10.9% since recreational cannabis was made legal in October.

While Health Canada didn’t disclose why sales of cannabis declined in January, the cannabis industry has been hit by a number of issues which have plagued the rollout of legal cannabis, including logistical issues, a mixed retail layout, and a robust illicit market.

Meanwhile, the total amount of inventory of finished and unfinished dried cannabis held by cultivators, processors, distributors and retailers stood at 134,148 kilograms in January, approximately 18.9 times the amount of total sales in the month, said Health Canada.

Total sales of cannabis oil in January was 7,856 litres increased by 4.3%, although the bulk of that product was sold into the medical market.

Earlier this month, Statistics Canada said annualized Canadian household spending on cannabis totalled $5.9 billion in the fourth quarter, with the black market accounting for $4.7 billion of that figure and the legal market estimated at $1.2 billion.

Overall cannabis demand continues to vary, with the Bank of Nova Scotia forecasting total cannabis demand in Canada to be 900 metric tonnes this year, rising to 1,100 metric tonnes in 2020. In October, CD Howe estimated Canadian cannabis demand would be about 610 metric tonnes in 2018.

CD Howe also estimated that supply shortages and ongoing impact from the black market would account for about $105 million in excise and sales tax losses in Canada in the first full year of legalization.

The black market is believed to account for about 71% of recreational cannabis sales this year, but should fall to 37% in 2020, said Scotiabank.

Source: https://www.bnnbloomberg.ca/sales-of-legal-dried-cannabis-declined-in-january-health-canada-1.1229016

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