Legal cannabis spending in Canada is on the rise

Canadian legal cannabis market projected to reach $5.2 billion by 2024

Bethan Rose Jenkins, Cannabis News Writer/Editorial

A new report released by ArcView Market Research and BDS Analytics has revealed a very interesting insight into legal cannabis spending in Canada.

The report is titled “Canada Leads The Way on Global Cannabis Legalization” and it indicates that spending on cannabis consumer products in the Great White North will inflate at a Compound Annual Growth Rate (CAGR) of 44.4 percent from $569 million in 2018 – the first year of legal recreational cannabis – to almost $5.2 billion by 2024.

No other reports have ever spotlighted the Canadian cannabis market quite as this one does. It is the first provincial-level prediction of the market, indicating the possible repercussions caused by varying regulatory regimes adopted by Canadian provinces.

Canada is the largest country in the world to legalize cannabis and because of this, it has dramatically reshaped the cannabis investment landscape,” said the CEO of the ArcView Group, Troy Dayton. “What’s been missing is a realistic view of the current and forecasted size of the domestic market that operators and investors could use to plan their future moves in Canada. Now, with a solid grounding in newly released data from the Ottawa government, we can offer that forecast and, critically, a briefing on the regulatory and market issues driving the forecast at the provincial level.”

Alberta was well-prepared for cannabis legalization in Canada

Based on data published in the report, Alberta was one of the best-prepared provinces for the rollout of adult-use cannabis sales in Canada; a law that was imposed under the terms of Bill C-45, A.K.A the “Cannabis Act.”

Alberta accounted for 28 percent of national Canadian cannabis sales in 2018. Although a mere 11 percent of Canada’s population resides in Alberta, the province still managed to outperform other provinces following the enactment of cannabis legalization, which went into full effect on October 17, 2018.

“A number of factors caused 2018 sales to fall short of expectations: a delayed launch, few retail locations, supply shortages, limited selection of non-flower products,” said Tom Adams, Editor-in-Chief of ArcView Market Research and Managing Director of BDS Analytics Industry Intelligence. “These issues will also hinder the markets in 2019 and will have to be solved in order to reach the levels of growth we’re projecting, and thereby squeeze out the illicit trade.”

Key findings from the report tell us the following things:

  • Adult-use cannabis expenditure will climb from the $112.5 million reported in 2018 to $4.8 billion by the year 2024.
  • Medical cannabis spending has grown at a CAGR of 120 percent, but expenditure will drop to a CAGR of minus three percent, falling from $456.6 million in 2018 to $381.4 million in 2024.
  • Canada’s most successful licensed cannabis producers – Aurora, Aphria, Canopy Growth and Cronos – concluded 2018 with a combined market capitalization of $22.8 billion.
  • Restrictions on cannabis edibles and concentrates in Canada are expected to be lifted in some form by October. However, existing restrictions are hindering market growth for the two sectors that have dominated in the United States.