LETTER TO THE EDITOR
Never Break the (Global Supply) Chain By David Halpert
T
he fact that we had not one but two articles in our October issue on global cannabis supply chain (one by EY Canada, the latter written by the Global Cannabis Network Collection, both of which I’d highly recommend reading if you haven’t done so by now) was a combination of good timing and sheer luck. As we head into the holiday season two things become apparent: one, that costs are going up on everything leading to inflation and, two, is there’s a rampant shortage of everyday (and not-so-everyday) products. So why is this happening? Well, the simple answer is that after an 18-month hiatus as a result of COVID-19, which included persistent lockdowns worldwide and a general slowdown in brick-and-mortar retailing, global supply chains are ramping up the delivery of products with the rapid adoption of vaccines and things turning to a kind of normalcy. That said, the reason these shortages and products are far more nuanced and interconnected so why don’t we take a look at the reasons for this and how they may affect the cannabis industry, directly or indirectly. 1. The Cost of Energy Will Make it More Expensive to Produce Cannabis If the recent spike in gas prices has taught us anything it’s that the energy costs will make it more expensive to produce cannabis, whether that means the electricity and water needed for growing/cultivating dried cannabis flower, the energy required for extraction of cannabis concentrates, as well as the gas needed to deliver cannabis and derivative products to distributors and brick-and-mortar stores. Another aspect to consider is the amount of chemicals and energy needed to create fertilizer and other nutrient-based products. With the rising costs of raw chemical materials, it is likely that costs will only increase with respect to gorwing. 2. A Labour Shortage Could Lead to a Slowdown of Products Getting to their Destinations One of the byproducts of the pandemic has led people to rethink their career paths
and question whether there are better jobs out there. The Great Resignation, as it’s been called, has led to a shortage in every industry but has been particularly hard-hitting in the restaurant and hospitality sectors. That said, one of the biggest impacts leading to supply shortages has been in delivery service drivers, and a general slowdown in getting products to where they need to be. Potential labour strikes and a slowdown of imports on the West Coast only add fuel to the fire. 3. Globalization Has Made North America More Dependent on Exports and Less Self-Sufficient Somewhat related to my first point is the fact that Canada and the U.S. rely on so many other countries for raw materials as well as the parts required for many products. The recent semiconductor shortage, largely due to an over-reliance of cheap products and labour from China, over the past two decades has led to a shortage of everything including cars, computers, phones, televisions, etc. And while China can be used as an easy scapegoat, the problem is far more interconnected than just one country. True, while we produce all of our cannabis domestically and cannabis is one of the more recession-proof products out there, to grow it, you need land, fertilizer, machinery, labour and the knowledge to do so. While there isn’t an energy crisis here, there’s certainly one in Europe, and with the rising cost of natural gas over there, the cost of food has increased over here as a result of the rising cost of energy; also, natural gas is the key feedstock for the production of the most common artificial fertilizers such as urea and ammonium nitrate. While this is just one example, it’s clear that globalization will likely contribute to rising costs of products everywhere.
President / CEO, Straight Dope Media Inc. @cannabispromag
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Cannabis Prospect Magazine | December 2021
