It will be interesting to see how the market evolves and how Canadians will (or won’t) embrace cannabis in a post-pandemic economy
In 2019, the cannabis sector in Canada had its bubble burst. But its comeback appears promising.
Players in the field are slowly getting their footing back and settling into a North American market that’s different from its pre-pandemic predecessor. More mergers and acquisitions are pointing to a more mature marketplace.
But with cannabis, Canada and the United States offer two different tales.
In Canada, the low point was likely in the spring of 2020, when the number of manufacturing jobs in the cannabis sector barely reached 2,000. But according to the career site Indeed, Canada now has more than 1,400 cannabis sector job openings, which is a remarkable number. Things are certainly looking up for the sector in this country.
Recent polling numbers in Canada also point to a brighter future. Canadians are apparently gradually becoming comfortable with the idea of living in an environment in which cannabis is legal. In a recent assessment by Dalhousie University, support for legalization has surged to over 78 per cent of respondents, up from 49 per cent in 2019. That puts Canadians’ cannabis approval levels above those in some American states.
Disagreement with legalization has decreased to 14 per cent from 30 per cent in a study in 2019.
And 56 per cent of Canadians polled say they don’t agree that municipalities should be able to ban cannabis outlets within their boundaries. That’s almost a complete reversal of opinion from 2017.
While 65 per cent of Canadians polled say they don’t mind if restaurants put edibles on their menus, the portion of “canna-curious” has dropped to 13 from 26 per cent. Self-stigmatization also declined in Canada, with fewer expressing concern about others knowing they consume cannabis.
We’re all calming down from when cannabis was legalized on Oct. 17, 2018. Edibles became legal a year later but that market segment has grown ever so slowly.
Even though cannabis is legal federally here, regulations and how edibles are recognized as a drug and not as food have made the Canadian edibles market more rigid and less attractive than in the United States.
Although cannabis isn’t legal federally in the United States, its cannabis industry is simply booming.
Understandably, many Canadian companies are eyeing the American market and see great potential. But pursuing that market isn’t going to be easy.
The legal American cannabis industry now employs over 321,000 full-time workers and added more than 77,000 jobs in 2020 alone.
New York State, one of the largest markets, just legalized recreational cannabis. Medical cannabis is legal in 36 states, while recreational consumers can use the drug legally in 17 states, including Connecticut, which just joined the group.
According to some estimates, the U.S. cannabis industry will be worth US$100 billion by 2030.
In just a few years, edibles and topicals could account for over 50 per cent of that market. That massive number is impossible to ignore. Under the current regulatory regime, the edible market in Canada can’t reach similar proportions. The market is simply too restricted and thus a missed opportunity for Canadian companies.
Although worry in many respects is declining, the federal government is fully aware that Canadians remain concerned about public safety related to cannabis and particularly edibles. More than 63 per cent of Canadians polled are concerned for the safety of children. And 60 per cent of those polled are concerned about pets accidentally consuming cannabis. Both are up from 2019 levels.
The pet economy in Canada is very different now than before the pandemic. According to estimates, Canada has at least four million more pet owners since March 2020. Consequently, it seems probable that tight regulations related to edibles are here for a while.
Nonetheless, it will be interesting to see how the market evolves and how Canadians will (or won’t) embrace cannabis in a more normalized, post-pandemic economy.
The Canadian legal cannabis market size increased by 120 per cent in 2020, reaching $2.6 billion. Those are modest numbers compared to the U.S. but still represent spectacular growth. We expect more growth in 2021 as the stigma continues to temper over time.
The cannabis market in Canada is nowhere near what professional services firm Deloitte predicted when it suggested retail sales would top $7 billion in 2019.
However, based on how consumers perceive cannabis in North America, it seems clear the only way for the industry to go is up.
By Sylvain Charlebois
Dr. Sylvain Charlebois is senior director of the agri-food analytics lab and a professor in food distribution and policy at Dalhousie University. Written with Brian Sterling, research associate at the Agri-Food Analytics Lab, Dalhousie University.
Courtesy of Troy Media