The information removal that most recently got our attention was the sudden change in Health Canada’s reporting of cannabis market data. The Dive has been pointing out for quite some time that ever-growing cannabis inventories were a problem in the context of an effectively flat sales curve, and that it was unlikely that the October 2019 advent of edibles and extract sales would pick up the slack, but it’s hardly an original idea; plain to anyone who can read a chart. 
Classic chart of inventories through September 2019. Note the flat blue sales line.
Health Canada changed their reporting beginning in the October period to reflect the new product categories, and made a change to the way they report cannabis sales while they were at it. Kilograms of dried flower and litres of oil – standard metric units of mass and volume – have been replaced by “packaged units,” which, taken literally, come in all different sizes and hold all different volumes.
Take away the unfinished inventory, and the flat sales really stick out.
The inventory is still reported in kilos for dried flower, but publishing the accompanying sales numbers in an effectively meaningless unit robs it of all relevant context.
Health Canada added a “packaged production” metric in kilograms, and applied it retroactively to the data from October, 2018 through September, 2019, but did not provide it for October and November of 2019.
Sales and production of dried flower no longer published in kilograms
When we emailed Health Canada to ask them what gives, they replied that:
“Given the wide variety of products now authorized for legal sale (e.g., tinctures, capsules, beverages, mints) and their different package sizes and weights, “packaged units” is a consistent and comparable unit of measure for reporting on the categories of production, inventory and sale.”
Despite the fact that
a) packages of different denominations are not consistent or comparable, either to each other or to the kilogram-denominated sales data from months prior to October, and that
b) the agency does not report production of dried cannabis, the largest product category, at all.
The metrics formerly known as “unfinished inventory” and “finished inventory” are now “unpackaged inventory” and… gone.
Doesn’t look quite as bad without that flat sales line.
Since reporting requirements haven’t changed, one can only guess that Health Canada are trying to make our analysis easier. They might not understand that switching up the units without a way to backward-normalize makes analysts question the integrity of this data, and no longer wish to collect it. Or… maybe they do understand, and that’s the whole point.
The author has no securities or affiliations related to any organization mentioned. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
Classic chart of inventories through September 2019. Note the flat blue sales line.
Health Canada changed their reporting beginning in the October period to reflect the new product categories, and made a change to the way they report cannabis sales while they were at it. Kilograms of dried flower and litres of oil – standard metric units of mass and volume – have been replaced by “packaged units,” which, taken literally, come in all different sizes and hold all different volumes.
Take away the unfinished inventory, and the flat sales really stick out.
The inventory is still reported in kilos for dried flower, but publishing the accompanying sales numbers in an effectively meaningless unit robs it of all relevant context.
Health Canada added a “packaged production” metric in kilograms, and applied it retroactively to the data from October, 2018 through September, 2019, but did not provide it for October and November of 2019.
When we emailed Health Canada to ask them what gives, they replied that:
“Given the wide variety of products now authorized for legal sale (e.g., tinctures, capsules, beverages, mints) and their different package sizes and weights, “packaged units” is a consistent and comparable unit of measure for reporting on the categories of production, inventory and sale.”
Despite the fact that
a) packages of different denominations are not consistent or comparable, either to each other or to the kilogram-denominated sales data from months prior to October, and that
b) the agency does not report production of dried cannabis, the largest product category, at all.
Doesn’t look quite as bad without that flat sales line.
Since reporting requirements haven’t changed, one can only guess that Health Canada are trying to make our analysis easier. They might not understand that switching up the units without a way to backward-normalize makes analysts question the integrity of this data, and no longer wish to collect it. Or… maybe they do understand, and that’s the whole point.
The author has no securities or affiliations related to any organization mentioned. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
