Canadian cannabis market has been steadily growing. The country has seen an average of a 10 percent increase each month in the number of Canadian patients signed up to receive medical cannabis. The sale of dried cannabis has grown steadily at 6 percent a month, and the sale of cannabis oil has been growing by 16 percent a month.
In 2017, about 4.9 million Canadians aged 15 to 64 spent an estimated $5.7 billion on cannabis for medical and non-medical purposes. This was equivalent to around $1,200 per cannabis consumer.
Canadian Cannabis Market Forecast
The current expectation for a launch of recreational cannabis sales in Canada in October 2018 is that the initial market demand would be 100,000 kg.
The Canadian government projects that 450,000 customers a day would participate in Canadians cannabis market, making recreational cannabis in Canada a $900 million industry. The Canadian marijuana market also is expected to see rapid growth, with the number of cannabis users growing by more than a half million people within the first three years of legal cannabis sales in the country. It’s expected that 98 percent of all cannabis sales would come from Canadians who would consumer cannabis at least once per week, if not daily.
Leading cannabis industry researchers, ArcView Market Research expect Canada’s thriving medical market to peak in 2018 and start to descend in 2019 once the adult-use market is fully operational. Growth is forecast to be strong, with adult-use spending estimated to reach over $3 billion in 2021, driving a CAGR of 77.9% from 2018-2021.
Cannabis industry analysts predict that Canada’s cannabis industry ultimately would total between $4.9 and $8.7 billion Canadian. If the market meets prediction, Canada’s legal cannabis market would be comparable in size to its hard liquor or wine market.
The cannabis market is poised to have a major effect overall on Canada’s economy. One study from Deloitte Private pegged the potential economic impact of legalized recreational marijuana in Canada at more than $22 billion, including transportation, licensing fees and security.
The market for cannabis extracts
The demand for cannabis oil in Canada’s medical marijuana market is so high that suppliers report a shortage and are having a difficult time establishing a regular supply of cannabis oils.
Until a court ruling intervened, Canada’s licensed medical cannabis producers were able to sell only dried or fresh cannabis flowers. That changed in 2015, when licensed medical cannabis producers were legally permitted to begin producing and selling cannabis extracts. However, the sales of cannabis extras remain limited: Cannabis extracts must be in liquid form only, and they have a THC potency cap of 30 mg per ml. That means the laws prohibit the vaporization products that have been extremely popular — and fueled strong growth in recent quarters — in the U.S. cannabis market.
Despite their limited forms and supply, Health Canada’s most recent data showed that the sales of cannabis extracts grew 961 percent in the second quarter of 2017. That compares to an 89 percent increase in growth of dried cannabis during the same period. Within the same timeframe, the number of Canadians eligible to purchase medical cannabis grew by 233 percent, to 201,398.
In all, only 18 total companies are licensed to produce cannabis extract, and of those, only 16 are licensed to sell those extras. Registered producers and/or sellers of cannabis oils include Aphria; Aurora Cannabis; Broken Coast Cannabis; Canna Farms, CanniMed; CannTrust; Canopy Growth, which holds five licenses, including three for Mettrum, one for Tweed and one for Bedrocan Canada; Emblem, which holds a license for production only; Emerald Health; Hydropothecary; Maricann; MedReleaf; Organigram; Peace Naturals; THC BioMed; Tilray; WeedMD, which holds a production license only; and Whistler Medical Marijuana.
The market for cannabis edibles
A parliamentary committee amended legislation legalizing recreational cannabis to allow edibles one year after the new law takes effect. Allowing edibles is expected to be a gift for licensed producers – some of which have positioned themselves for the eventual inclusion of edibles – as well as extraction businesses, makers of concentrates and, potentially, owners of cannabis consumption lounges.
The poll by researchers at Dalhousie University in Halifax found that about 68 per cent of people across the country favour the impending legalization of pot, with the bulk of that support in B.C. and Ontario.
Just over 45 per cent said they would buy food containing marijuana, with 46 per cent saying they would purchase pot-laced baked goods like brownies and muffins if they were legal. That points to a potential market of 17 million consumers.
The Government of Canada believes that the total of federal and provincial-territorial taxes on cannabis products should not exceed $1.00 per gram, or 10 per cent of the producer’s sale price of a product, and that this tax room should be shared equally between the two orders of government. The proposed federal excise duty rate would be 50 cents per gram of cannabis, or 5 per cent of the producer’s sale price of that product. An additional rate would apply for an agreeing province or territory.
The proposed duty would apply to all cannabis products available for legal sale, including fresh and dried cannabis, cannabis oils, as well as seeds and seedlings for home cultivation. The rate will also apply to the sale of medical cannabis.
It is important to note that excise duties are not paid directly by consumers. Rather, they are paid by manufacturers.
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