Canadian Cannabis Market Forecast
The total cannabis market in Canada, including medical and recreational cannabis products, generated approximately $7 billion in sales in 2020. Medical cannabis generated an additional $0.7 billion to $1.7 billion in sales, with the illegal market bringing in a further $0.5 billion to $1.3 billion.
The cannabis market is poised to have a significant effect overall on Canada’s economy. One study measured the potential economic impact of legalized recreational marijuana in Canada at more than $22 billion, including transportation, licensing fees, and security.
As per the CIBC analysts forecast, the investment banking subsidiary of the Canadian Imperial Bank of Commerce, the cannabis adult-use market, will have a retail value of $4.1 billion in 2021.
2020 brought triple-digit growth to Canada’s legal cannabis market. According to a study done on the Canadian Cannabis Market, this growth was driven mainly by:
- Added brick-and-mortar retail access – particularly in Ontario, British Columbia, and Quebec;
- A growth in e-commerce and click-and-collect offerings;
- Pricing that was more reasonable with the illicit market;
- Retailers are adjusting to the pandemic, supporting comprehensive growth despite the unprecedented conditions of lockdowns and store closures.
The Rise of Value Brands
Many value brands surfaced with the rise in product selection and implementation of more reasonable prices in the Canadian cannabis market.
Due to lower prices, there was an increased customer conversion from illegal to legal markets.
This got valuable traffic from customers, spurred an influx of completely new consumers making a foray into regulated markets as prices got lower and less intimidating.
The Canadian market is observing remarkable growth, with adult-use cannabis growing 118% in 2020 and in line to grow another 60% in 2021. That growth has steered in a new era of adult-use cannabis – that has brought an ever-evolving set of product offerings and got sophisticated and strategic competitors across the supply chain and more distinct and demanding consumers.
By The Numbers
Key findings of Canada’s cannabis market survey:
- Adult-use cannabis sales to increase by 60% by the end of 2021.
- Retail openings and price drops were significant channels for growth in 2020, particularly in Ontario and British Columbia.
- Partnerships are picking up the heat — especially, partnerships between Canadian LPs and U.S. brands.
- Value brands (specifically in the flower category) continue to perform well as competitive prices have helped convert legacy users to the legal market and increase growth in demand.
- The distribution of THC drinks rose towards the end of the year, in spite of an overall dull year in sales. Reports suggest that the market stake of beverages in Canada will increase to 7% by 2026.
As surveyed by Statista, the market size of the legal adult-use cannabis market in Canada stood at 2.6 billion Canadian dollars in 2020. As per predictions, this market should reach CA$8.62 billion by 2026.
The Canadian medical cannabis market is rising progressively. The country has seen an average of a 10 percent increase each month in the number of Canadian patients opting for medical cannabis. In addition, the sale of dried cannabis has grown gradually at 6 percent a month. And the sale of cannabis oil is increasing by 16 percent a month. Moreover, year-over-year, recreational cannabis sales in Canada increased by 58.5%.
Market Opportunities for Businesses
The Canadian marijuana market highlights many product and marketing opportunities for businesses. New businesses should contemplate how to build their brands so they will be positioned to lead post-legalization. Additionally, understanding the expected consumer base – both seasoned and inexperienced – will help, as solid customer service is sure to be a significant differentiator in this promising market.
Preparing to retail cannabis?
After legalizing recreational cannabis in Canada, those concerned with the product’s retail and distribution must work to find the right balance between public health, public safety, and being consumer-centric. Therefore, to achieve success and help erode the unlawful market, businesses must deliver engaging customer experiences online and in-store and offer suitable products.
Genesis Cannabis Solutions’ relevant experience and experts help businesses prepare for cannabis retailing with customer-centricity in mind across Canada. Contact us to get started on your Cannabis business plan in Canada.
