Output (production) for own use
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The values of domestic production represented by equations 10 and 11 include cannabis produced and sold on the market as well as cannabis produced and consumed by the grower for their own use. Within the context of the CEA this is referred to as output for own use. Estimates of output for own use are required since the prices of output for own use and cannabis sold on the market differ. For example, if an Ontario cannabis grower produced 32 kg of cannabis in a year while selling 30 kg on the market and consuming 2 kg him/herself, the 2 kg represents output for own final use. Assume that the price the grower could get on the market was $1000 per kg and the value of the cannabis for own final use is estimated to be $500 per kg. The supply of 32kg would therefore be valued at $31,000 (30*1000+2*500).
Estimates of own use were derived using data obtained from Health Canada, which records the number of plants and seeds sold to registered clients along with the maximum allowable cannabis these individuals are permitted to consume. It was assumed anyone growing their own cannabis would grow enough to satisfy their individual demand. The volume of output of own use of licensed cannabis was taken directly from Health Canada, which records the maximum allowable cannabis that can be consumed by registered clients who ordered plants or seeds (HRmax).
The volume of licensed output for own use (DPofulc) can be represented by the following equation:
(12) DPofulc=HRmax (5.6)
Estimates of output for own use of unlicensed cannabis were much more difficult to estimate. There were no data sources that provided an indication of unlicensed production for own use over time. A recent survey by Health Canada indicated that Canadians grow 3% of the cannabis they consume. This estimate of 3% was carried back to 1961.
The volume of unlicensed output for own use (DPofuulc) can be represented by the following equation:
(13) DPofuulc=DPulc*.03 (659.5*0.3=19.8)
This calculation provides one input into estimating the value of household expenditures, domestic production, sales abroad and purchases from abroad. The second component needed was a series of prices and margins that could be applied to the volume estimates to derive expenditures.
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