Canada: Cannabis sales down for the second month in a row

What if Canada had reached its peak? In February, sales of Cannabis sales were down 5.9 % on January... while sales in January were also down 5.6 % on December. In absolute terms, the Canadian cannabis market has therefore lost $16 million over one month. It fell from 279 to 263 million Canadian dollars, between January and February 2021, according to latest figures from Statistics Canada.

This second consecutive decline can be observed in (almost) all Canadian provinces. In Quebec, cannabis store sales fell by 10 % in one month. In British Columbia, the province of Vancouver, sales are down 8.7 %. A percentage almost equal to that of Alberta, the wealthy province of Edmonton and Calgary, where the curve is down by 8.5 %.

The only bright spot in this grey sky is Ontario. In the country's most populous province, sales of flowers, resin and edible products are stabilizing, with growth of just 0.7 %. But in Toronto, the province's capital and Canada's largest city, cannabis sales are down slightly, by 1.6 %.

The black market attracts, regulation pushes back

It's hard to explain why the Canadian cannabis market is in decline. First of all, we can assume that the market has gone into a panic with the various confinements, In the wake of the covid-19 pandemic, Canadians stayed at home and tended to roll more joints than normal. As a result, sales doubled between 2019 and 2020. A year later, the market is now back on track. But that's not a sufficient explanation.

Different regulations can also play a role. In Canada, each province organizes its sales as it sees fit. In Quebec and New Brunswick, the sales monopoly is public. In Ontario, the private stores lead the way. And the private model seems to attract more than the public model. The proof: Quebec (-10 %) and New Brunswick (-9 %) are suffering more than Ontario (+0.7 %).

Regulations may also explain the decline: in the province of Montreal, cannabis is banned for those under 21, compared with 18 at federal level. What's more, Quebec bans vaporizers and most edible products, which may discourage some users.

Last but not least, this decline can be explained by a still-competitive black market. In February, almost three years after legalization, legal sales of exceeded illegal sales for the first time. But the market is still very strong. The main attraction of illicit drugs is their lower price: $25 for three grams in a store, $10 from a dealer, explains a Quebec woman to The Conversation website.