It’s been one year since the first legal cannabis retail store opened its doors in Canada. To provide an overview of the first year of legal cannabis, Statistics Canada has released a paper describing recent trends in the retail cannabis sector, highlighting the role that accessibility, online sales and wholesaler retail sales have played in the evolution of the cannabis market to date.
Upon legalization, each province and territory established its own unique regulatory framework to manage the distribution and sale of non-medical cannabis within their jurisdiction. As a result, each province and territory adopted either a government-run retail model, a privately-run model, or a hybrid of the two, engaging in cannabis retail through both brick-and-mortar and online stores.
The retail non-medical cannabis market has certainly grown over the past year, with each province/territory initially having only a handful of physical storefronts and eventually expanding to more than 400 brick-and-mortar stores and registering $908 million in online and retail store sales nationwide.
Early on, many provinces and territories placed caps on the number of retail store licences issued in an attempt to gain an understanding of consumer demand and waiting for cannabis supply to stabilize. Throughout the year, as the industry established itself and the market developed, Canadians’ access to cannabis retailers increased. While online cannabis retail ensured access to all Canadians regardless of proximity to a physical store, accessibility continues to improve as more stores open across the country.
Cannabis is available through online retail in every province and territory, with only Manitoba and Saskatchewan allowing online sales via the private retail model. The majority of private and hybrid retail models are in Western Canada, and Nunavut is the only jurisdiction without a physical retail store. The total number of cannabis retail stores in Canada rose from 217 in March 2019 to 407 in July 2019, an increase of 88%.
Cannabis retailers in Ontario sold the most cannabis of any province in the first year following legalization, despite there being only one online store and 24 brick-and-mortar stores in operation for most of that period. In contrast, in British Columbia – one of the four most populous provinces – reported relatively low total sales at cannabis stores and the lowest sales per capita values in the country at just $10 during the same period. Conversely the Yukon, one of the least populated regions in the country, reported the highest per capita sales at $103, with Prince Edward Island and Nova Scotia observing the next highest values at $97 and $68 average sales per person respectively.
A variety of factors, including Canadian’s access to cannabis stores, contribute to the differences between regions in total and per capita cannabis store sales. Some factors which effected access to cannabis in a given region included:
- the administrative and operational steps required to establish a cannabis retail store (which may affect the pace at which new outlets are able to open for business);
- the immediate or staggered entry of retail operations over the course of the year;
- competition from illegal markets;
- the density and distribution of the population and of stores in a given region;
- demographic and income factors;
- disruptions in the supply chain;
- differences in the regulatory approaches pursued by the regional governments.
While the first few months of legalization were characterized by a supply shortage, the production ramp-up in the latter half of 2019 has now created the opposite problem: oversupply. As a result, on December 12, 2019, the Ontario government announced its move to open the market for retail cannabis stores, beginning January 2020, which will lead to a sharp growth in the number of retail stores across Canada’s most populous province.
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