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As the novel coronavirus corroded through life as we knew it last year, a massive number of Canadians turned to the purchase of cannabis. By the time the year ended, Canada’s legal recreational pot market posted a total sale of over C$ 2.62 billion, which was up 120 per cent year-over-year (YoY) from 2019, Statistics Canada reported.
A number of factors fueled this spike. According to a study by consumer insights provider Brightfield Group, it was a combined impact of factors like business expansion to e-commerce platforms, increased access to physical stores in certain provinces when lockdown restrictions were relaxed, and lowered pricing amid competition with illicit pot markets.
Now that 2020 is behind us, how is the cannabis market projected to fare this year? Let’s find out.
©Kalkine Group 2021
Shift To Legal Pot Market
As licensed cannabis producers in Canada lowered their product prices last year, more consumers switched from illicit to legal markets, points the Brightfield Group report.
The report further adds that this surge in consumers did not just include seasoned and heavy users, but also triggered an influx of new and first-time pot consumers.
Along with the price factor, quality also played an important role in the spike as many licensed producers trained their focus on consumer experiences, diverse products, Cannabis 2.0, etc. As this fueled brand recognition and catered to more needs, consumers kept coming back for more.
After a bit of a sluggish November 2020, licensed pot retailers saw sales rocket by about 14.3 per cent in December to C$ 298.4 million, as per Statistics Canada. So if lowered prices and better quality continue, 2021 is also likely to enjoy heightened pot sales in Canada.
Increasing Mergers Between Pot Producers
As 2020 ended with pot producers Aphria (TSX:APHA) and Tilray (NASDAQ:TLRY) signing up for a merger, 2021 saw Canopy Growth (TSX:WEED) heading to acquire peer Supreme Cannabis (TSX:FIRE).
This trend of business combinations points to the possibility of more partnerships and consolidation among cannabis companies, which could mean more streamlined productions and stronger competitions.
©Kalkine Group 2021
Decriminalization of Recreational Pot in the US
US President Joe Biden’s promise to federally legalize the use of adult-use recreational marijuana in the United States has been keeping Canadian pot producers on their toes since late last year. If that happens this year, Canada’s big players will race to establish their markets in the US and this, in turn, will result in a significant surge in cannabis sales for 2021.
The Brightfield Group report points that with the Canadian cannabis market witnessing a significant growth, adult-use weed sales is projected to grow by another 60 per cent by the end of 2021. So, if all the pieces fall in plays, the pot market may just record another good year.
