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Canadian Cannabis Market Will Top $7 Billion In Year One Of Legalization

Whoa, Canada! A just-released report forecasts that Canadians will spend roughly $7 billion on cannabis products in 2019 and increase their overall consumption by up to 35 percent once recreational cannabis is legalized later this year.

The study, conducted by Deloitte, reveals that legal recreational cannabis sales could generate up to $4.34 billion in sales, accounting for more than half of total cannabis sales. National legalization is expected to pass later this summer.

Deloitte’s report also suggests that the illicit “black” market could still be worth more than $1 billion a year in Canada. The report, titled, A Society In Transition, An Industry Ready to Bloom, shows that two-thirds of today’s cannabis consumers will participate in the regulated market, leaving about 30 percent or the market continuing to shop underground.

“Most current and likely cannabis consumers want a variety of products offered at reasonable prices from suppliers who can vouch for the safety and origin of those products,” said Jennifer Lee, Partner, Cannabis National Leader, and Consumer Advisory and Analytics Practice National Leader. “Cannabis companies will need to have secure supply chains to protect the quality and integrity of their products, and retailers will need to meet consumer expectations, including providing a positive, engaging retailing experience and protecting the privacy of their customers, especially online.”

According to Deloitte:

Governments at all levels will need to establish a strategy to encourage the cannabis industry to develop in a safe, healthy, secure, well-regulated and professional manner, according to Deloitte, in part to reduce the stigma surrounding cannabis consumption so that people move their purchases away from the illegal market. It’s also to protect the consumer and public at large.

Deloitte says retail fundamentals will still apply: customer insight and data is critical. Cannabis retailers will have to execute modern retail fundamentals just as effectively as more traditional retailers to be successful. For retail stores, that means having staff with strong product knowledge, clearly and prominently displaying prices for all products, and offering convenient hours and locations. Online retailers should endeavor to provide free shipping, quick delivery and organized product groupings, and to ensure their customers’ privacy is protected and data is secure.

“Canada is in a unique position as the first G7 country on the cusp of legalizing recreational cannabis,” said Deloitte’s Mark Whitmore. “The move to legalize recreational cannabis has sparked a wave of innovation and entrepreneurship, similar to Canada’s technology sector, which will create jobs for Canadians, new opportunities for businesses and revenues for governments.”

Other notable findings in the Deloitte report include:

  • The legal recreational cannabis market is expected to generate sales of up to $4.34 billion in 2019, the medical cannabis market will account for between $770 million and $1.79 billion, and the illegal market will generate a further $510 million to $1.04 billion.
  • There is considerable interest in cannabis-based edible products, even though these will not be available for at least a year after legalization. Six out of 10 likely consumers are expected to choose edible products.
  • Current and likely cannabis consumers are expected to purchase the majority of their products through physical retail locations, while about one-third will also buy products online through approved retailers’ websites.
  • Legalization of recreational cannabis will create a new type of cannabis consumer who is older than today’s typical consumer (aged 35-54 versus 18-34), better educated (university or graduate school education versus high school or college education), less of a risk taker and likely to consume cannabis less frequently (less than once a month versus several times a week).



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