Canadian cannabis sales projected to double to $8.8B over next five years
Canadian cannabis sales projected to double to $8.8B over next five years
The pace of sales in Canada’s cannabis market may be slowing down, but it is still expected to double over the next five years, according to a new report.
That’s the big takeaway from the latest market insights by Chicago-based industry consultancy Brightfield Group, which noted that doubling will come as more retail stores come online and regulations loosen.
Brightfield said it expects Canada’s cannabis market to grow at an annual rate of 10 per cent over the next five years to $8.8 billion, driven by increased sales in edibles and vape products.
“While we saw strong growth in the market in 2021, there’s still a great deal of additional potential for the market through the forecast period, especially with additional access to retail,” said Bethany Gomez, managing director of Brightfield Group, in an interview.
While sales of edibles and drinks are projected to continue dwarfing the dried flower segment, both will have sizeable annual growth rates that are poised to benefit from regulatory changes that should come online sometime in 2024, the report said. Those changes would likely see potency limits raised from 10 milligrams of THC, which would help drive more illicit users to legal retail channels, Gomez said.
“With edibles right now, that market has really been artificially constructed, because of those dosage restrictions,” she said. “In Canada, that it makes it very difficult for that to be a scalable or attractive market.”
Gomez also believes there will be a greater emphasis on premium products going forward as cannabis producers look toward the segment to help stand out from their peers. That trend has begun in earnest over the past year with companies like Canopy Growth Corp. snapping up Supreme Cannabis Inc. and Aurora Cannabis announcing it’s buying Thrive Cannabis earlier this week, deals that were emphasized by the acquiree’s premium portfolio.
Those niche craft companies have quickly outpaced their larger and more capitalized counterparts by developing a reputation for strong quality which has yielded a near-cult following for some consumers, Gozes added.
“They’re now looking to scale beyond their small corners of the market where they started out,” she said. “Where there’s competition from these kind of craft segments, they gain attention at the larger scale and those bigger companies try to emulate that or just acquire into that.”
Going forward, Canada’s cannabis market is on pace to mirror similar growth trajectories seen in U.S. states that previously legalized cannabis, such as Colorado, where rapid growth in the first few years were followed by a levelling off period, Gomez said.
