Cannabis commerce is an obvious revenue generator. Every place that has legalized cannabis has seen more jobs created and tax dollars for collected, usually outpacing previous predictions. The only question is how much revenue will a state or nation create by ending prohibition and regulating sales to adults. With apologies to Uruguay, Canada will be the first country to fully legalize cannabis commerce for adults within the next few months or so. How big will the cannabis market be in the Great White North? According to New Frontier Data, the market will surpass $9 billion by 2025.
From New Frontier Data’s press release:
“Canada is about to become the first G20 nation in the world to fully legalize cannabis and the implications are enormous. New Frontier Data projects the domestic Canadian cannabis market will reach (CAD)$9.2 billion by 2025. Combined, the Canadian medical and adult-use markets will rival that of California – which boasts the 6th largest overall economy internationally. Canadian usage rates in the medical market are higher on average than in the U.S. When the adult-use Canadian market opens the combined domestic and international opportunities will increase dramatically and create new momentum around the world,” New Frontier Data Founder & CEO Giadha Aguirre de Carcer.
“The adult-use market’s legislative and regulatory infrastructure is still being defined, but insights from Canada’s medical market will be invaluable to investors looking to make informed investment decisions about the still-evolving adult-use market. Data providers – like New Frontier Data - can provide pertinent details, including business opportunities by sub-sector, demographic preferences and market segmentation, as investors determine which companies and opportunities to reward with additional investment capital,” said Knalysis Technologies President Paul Methot.
Among the key findings from the report:
The total addressable market for annual consumer sales in Canada (i.e., the sum of illicit, medical, and adult-use demand in the country) is estimated to be CAD$8.6 billion in 2018, growing to CAD$9.2 billion by 2025.
The Canadian legal market (domestic only, not including exports) is projected to be CAD$1.7 billion (US$1.3 billion) in 2018, growing to CAD$7.7 billion (US$6.0 billion) by 2025. Between 2018 and 2022, total legal revenue is forecasted to increase CAD$5.2 billion (US$4.1 billion).
Canada is one of a few countries to allow for the importation and exportation of cannabis. Even with the export market still in its infancy, the U.S. is ceding the international market to Canada.
Of course, the success of any cannabis market is not a given, but it is easy to understand that bringing cannabis sales into a taxed and regulated system will generate revenue for Canada. Oftentimes cannabis market projections are exceeded after legalization because it is hard to gauge the actual number of cannabis consumers because many people are afraid to admit on government surveys that they use an illegal substance as well as the number of tourists that will purchase cannabis as well.
Whether the Canadian market reaches its full potential depends upon whether the government overregulates the industry or not, a typical overreaction that we have seen in the United States, where diversion to prohibition states is an issue. Canada shouldn’t have the same concerns about diversion as legal states in the U.S. have, but reviews of initial regulations in provinces are mixed at best. While we can be certain that legal cannabis will be a money maker for Canada, we can also be certain that the initial rules and regulations will change. Hopefully, the industry, consumers, patients and government officials will eventually find the right regulatory path forward to harness the massive potential of the cannabis market.
There has never been a better time to learn about the exciting opportunities the Canadian cannabis industry has to offer and there is no better place to learn and network with the top activists, entrepreneurs, and investors than the International Cannabis Business Conference. The ICBC returns to beautiful Vancouver, British Columbia, for a must-attend event on June 24-25. Be sure to get your tickets by June 3rd to save $200.