Canada’s cannabis industry is forecast to see healthy growth this year, more than double south of the border, but it is anticipated that growth will slow and come in line with that of the U.S. next year, suggests a new report released this week by Headset, a U.S.-based data and market intelligence firm.
“The smaller Canadian market is forecast to grow almost double the U.S. growth rate from 2020 to 2021,” notes the report. But the Canadian growth will slow in 2022 and likely be more in line with what happens in the U.S.
The forecast regarding the Canadian market appears in line with projections included in the Ontario Cannabis Store’s (OCS) latest annual report. In the province, which has surpassed Alberta and now has the most cannabis retail stores in the country, the number of outlets was expected to reach 1,000 by September.
But David Lobo, OCS’s interim president and CEO, cautioned industry players to gird themselves for some right-sizing. That could result in some stores closing down once faced with higher competition and a crowded marketplace.
According to BlogTO, some cannabis outlets in Toronto that just recently opened their doors appear to already be up for sale. A look at the OCS and Liquor Control Board of Ontario websites indicates there are four times more legal weed stores than dedicated liquor stores within Toronto, the website reported.
Industry-wide in Canada, the explosive growth followed by a moderating effect is to be expected for a new market that is maturing, Headset suggests. “The converging growth rates in 2022 are a result of the Canadian market maturing and large U.S. states (such as New York, New Jersey, Connecticut, New Mexico, Alabama and Arizona) being added to the U.S. cannabis market.”
With the newly legal states in the U.S., Headset is forecasting the U.S. weed market will surpass US$30 billion ($37.5 billion) in 2022. As for Canada, the projected market has not changed much over the last quarter — this is to be expected since the market is fully legalized — but could reach US$5.5 billion ($6.9 billion).
For 2021, the Canadian market is forecast at US$4 billion ($5 billion) while the U.S. is forecast to be US$24 billion ($30 billion).
Headset also envisions some changes when it comes to product categories. In Canada, flower’s share of the market is expected to fall and pre-rolls to rise in 2021-2022, the report notes. Other categories, however, are expected to remain fairly stable.
Overall in Canada and the U.S., “the cannabis industry is not only moving quickly, but there is no indication that the industry will slow down,” the report states. “Businesses can count on 2022 to be a year of positive growth.”
April figures from Statistics Canada show that adult-use weed sales continued their upward trend, following dips in both January and February before rebounding in March. Overall, $309.7 million in recreational cannabis was sold in April compared to approximately $298.3 million in March and $262.0 million in February.
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