Canadian producers report 2,200 kilograms of lost or stolen cannabis since 2018

March 7, 2023 · MJ Biz Daily

An increasing amount of cannabis grown by licensed Canadian producers has been lost or stolen over the past five years, new data shared with MJBizDaily shows.

Separate data provided by Health Canada, the department responsible for federal health policy, also revealed that thousands of instances of theft have been reported to various levels of police.

However, the sum of the missing products – including 2,219 kilograms (4,870 pounds) of dried cannabis – is a small fraction relative to the amount of marijuana produced in Canada since recreational sales begin in 2018, which is more than 4.5 million kilograms.

In addition to the missing cannabis measured in kilograms, Health Canada also said more than 1,300 “units” and almost 200 “liters” of cannabis are unaccounted for.

A growing overall amount of lost or stolen cannabis could partly stem from an increasing amount of products being shipped around the country, according to one expert in the area of marijuana industry security.

“These incidents are becoming greater (in volume) but not more frequent,” said David Hyde, CEO of Hyde Advisory & Investments in Toronto.

Hyde noted that the number of federally licensed producers has risen “exponentially” since 2020, but the number of reported loss and theft incidents has actually declined substantially over the same time period.

“So the frequency, if anything, is probably down or maybe flat,” he said. “But the volume, the amount of cannabis that’s going missing, in my view, most of it is going missing in transit.

“I believe a lot of the sources of these losses, not all, but probably more than half, has a nexus to transit, whether it’s from the loading dock of the LP, whether it’s after the cannabis gets moving from A to B, whether it’s on the receiving end of the other party’s loading dock.”

A Health Canada spokesperson told MJBizDaily via email that the agency is aware of 4,398 instances of lost or stolen cannabis that were reported to police services between 2018 and 2022.

Federal regulations require license holders to report loss or theft of cannabis to police within 24 hours.

The Health Canada spokesperson said the agency is not notified of the outcome of any subsequent police investigations.

A spokesperson for the Royal Canadian Mounted Police (RCMP) said via email the federal police service could not answer MJBizDaily questions about the 4,000-plus instances of missing cannabis. The RCMP suggested contacting each police jurisdiction in the country.

What the data says

Health Canada said it categorizes the lost and stolen cannabis in a unit of measure most appropriate to the respective product’s class and form, listing the missing product either as units, kilograms or liters.

Dried cannabis, for instance, is measured in kilograms.

Aside from the 2,219 kilograms of dried cannabis, roughly 1,352 units of marijuana were reported as lost or stolen since 2018.

Packages of edibles are an example of what would be included in the units category.

Also, according to the aggregated Health Canada data, about 195 liters of cannabis products went missing, which might be anything from a beverage to an oil product.

Since 2018, 4,421 loss or theft reports for cannabis have been submitted by federal license holders to Health Canada.

Those submissions include the original report and any subsequent updates from the licensed producer, which indicates that the overall number of reports contains some double-counting of specific incidents.

In 2018, the first year of adult-use sales – but a period covering only 2½ months – LPs filed 199 reports of missing or stolen cannabis.

In the first full year, 2019, that jumped to 889 reports.

The number of reports has been falling since peaking in 2020 at 1,313 reports by licensed producers regarding lost or stolen cannabis.

There were 1,084 and 936 such reports in 2021 and 2022, respectively.

New classes of cannabis entered the regulated industry in 2020, including cannabis edibles, extracts and topicals.

Despite the number of missing-product reports decreasing between 2020 and 2022, the amount of missing cannabis generally increased over the two-year period. It’s unclear why that happened.

In kilograms, the amount of cannabis missing rose from 10.55 in 2020 to 79.55 in 2021 and 2,127.47 in 2022.

In liters, the amount of cannabis missing rose from 23.01 in 2020 to 66.38 in 2021 and 100.31 in 2022.

The number of cannabis units to go missing, however, fell from 670 in 2020 to 506 in 2022.

More scrutiny on transit?

Hyde, the CEO of Hyde Advisory & Investments, suggested there might be a link between the missing cannabis in transit and the industry’s struggles in recent years.

He said industry difficulties are, to a degree, a cause of an uptick in transfers of cannabis from one LP to another, as companies find ways to be more cost-effective and utilize co-manufacturing deals.

“So that’s kind of the narrative that I see here. More LPs, more movements, ergo more thefts,” Hyde said.

To Hyde’s point, in late 2019, an entire shipment of cannabis produced by Concord, Ontario-based Aleafia Health was stolen from a third-party carrier’s facility while it was being transported to the provincial wholesaler.

That incident was reported to police, but the value of the stolen cannabis was not disclosed.

In a subsequent regulatory filing, the company said that “security of the product during transportation to and from the Company’s facilities is critical due to the nature of the product.

“A breach of security during transport could have material adverse effects on the Company’s business, financial condition and operating results of the Company.”

Hyde said there’s no requirement to have anyone from the respective LP travel with the cannabis, and it’s up to the producer to do due diligence on the transportation partner.

“And that’s a bit of a weak link,” he said.

“So, if you ask me, what could be improved, and what might be a solution here, when Health Canada is doing their audits and different things, (they) should be probing a bit more into transit, into the distribution of cannabis before it hits the provincial distributor, when it becomes a provincial issue.

“There should be more prescription around (transit), even if it’s a guidance document, even if there’s some guidelines or expectations made clear to the LPs they can’t take their eye off the ball just because they partnered with a contract provider.” (Full Story)

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