Canada: Legal cannabis sales exceed illicit purchases for the first time

According to the latest data from Statistics Canada, legal sales of cannabis overtook illegal purchases in the 3rd quarter of 2020, 2 years after legalization.

Spending on non-medical cannabis and derivatives in the third quarter of last year have reached 824 million $CA (€534 million) compared with an estimated 754 million $CA for the same illicit market.

In the third quarter of 2018, the last full quarter without legal competition, illegal operators had achieved an estimated 1.3 billion $CA in sales.

However, the legal market has not been a complete success for legal producers. Companies such as Aurora Cannabis, Canopy Growth or Hexo Corp. have collectively lost billions of dollars in recent quarters after spending large sums of money on unnecessary production infrastructure and mergers and acquisitions at home and abroad.

A driver important: the price

According to local reports, the steady growth of the legal sector has been achieved by as access to legal cannabis has improved, We're proud to be able to offer a wide range of products, both in terms of number of stores and, above all, at a price that's affordable and able to compete with the illegal market.

«It's really important to emphasize that the price cuts on the major dry flower verticals have been critical to the transition of many of these consumers,» a declared George Smitherman, CEO of the Canadian Cannabis Council, an association of cannabis producers.

In future, Smitherman would like the government to examine how the federal excise tax is applied, or more precisely where it is applied in the production chain.

«Imagine the progress we could make if the government looked at how its policies could be obstacles to making further progress in eliminating the illicit sector,» he said.

«To continue, we need to expand the options for consumers: more retail stores, for example, but we also need to be aware of the price of the end product. It's a big job we're doing with the government to make them aware of some of the constraints that current policy brings.»

Medical cannabis sales, recorded separately by Statistics Canada, grew by nearly 10% between Q3 2018 and Q3 2020 to 146 million $CA in Q3 2020, making Canada by far the largest federally regulated medical market in the world.