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Stats Canada Reports Low Retail Sales Numbers For The First Full Year Of Cannabis Legalization

This month, Statistics Canada released its report, “The Retail Cannabis Market in Canada: A Portrait of the First Year” reviewing the last year of legal cannabis retail in Canada. The first year fell short of expectations and the main takeaway was the number of sales across Canada, totaling to $908 million dollars across 400 cannabis retailers throughout the country. 

When the country moved towards ratifying cannabis legalization, there was much speculation of what the actual cannabis retail market would yield. Analysts projected sales anywhere between $1.58 billion and $4.34 billion (Deloitte). Needless to say, the actual number, which was nearly $100 million, has disappointed expectations. 

The reason for this shortfall can be attributed to a myriad of issues, but despite the initial supply issues, Canadian cannabis retail sales increased at the end of the year. With the last two weeks of October and November 2018 starting an upward trend, and by the time August and September rolled around this year, sales were up to $124.58 million and $121.45 million respectively. The increase of sales can be attributed to new legislation around adult-use in Ontario and as other provinces grew their markets. 

According to the report, the majority of the sales were done in Ontario, where retailers contributed $217 million to the sector from October 2018 to September 2019. Ontario was closely followed by Alberta ($196 million) and Quebec ($195 million). 

Before the legislation of cannabis had been passed, many sales were done online, yet within the last year, online sales of cannabis across Canada decreased dramatically. Having said that, the report from Stats Canada reports that there is an issue with access. With only 45% of Canadians living within 10 kilometers of a cannabis retailer, access is being cited as one of the main factors contributing to the low number of sales. 

Other areas of friction noted by the report include the administrative/operational steps necessary to build and grow a cannabis storefront (which slows the pace of new outlets opening), competition coming from existing illegal and underground markets, and the density and distribution of the population and of stores in a given region. 

Thanks to the disparate structures across each province, finding a clear understanding to this year’s cannabis retail sales numbers is tough. Stats Canada concludes the report by saying, “Among the provinces and territories, a diverse array of retail models and regulatory frameworks have influenced the structure and pace of the emerging cannabis market… The cannabis retail market will continue to evolve as jurisdictions adapt their regulatory approaches, as supply chains develop, and as cannabis product offerings diversify.

We are hopeful that these numbers are just growing pains as the Canadian market takes its baby steps. Once each province has hit its stride, we are certain that the numbers will even out and that there will be less friction from not only the retailer side but also for those who are looking to procure cannabis and cannabis products, no matter which province they are in. 

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