US Set to Outpace Canada’s Cannabis Market
Despite legalizing cannabis nationwide, Canada’s marijuana market will still pale in comparison to its US neighbor’s, according to a new report.
The study from Prohibition Partners, a cannabis market intelligence firm, claims that the United States’ legal cannabis market will be worth around $43.9 US billion by 2024 – nearly 13 times the size of Canada’s estimated $3.4 US billion market for the same year.
Across the border
While the projected difference can be partly attributed to Canada’s smaller population, the country’s strict cannabis regulations have also shut down many market growth opportunities; edibles, for example, will only become legal to buy in Canada this October, despite the country legalizing cannabis in October 2018.
The report points out that the true value of both markets will likely be much higher, as cannabis black markets continue to thrive.
“Contrary to the hopes of regulators, legalization is unlikely to eradicate black market sales, particularly in Canada,” wrote Daragh Anglim, Prohibition Partners’ managing director, in a press statement.
Illegal cannabis was estimated to be responsible for 65 percent of all cannabis related expenditures in Canada in the fourth quarter of 2018.
Support for cannabis may have even waned in the country. A survey from earlier this year showed that general support of legalization in Canada had dropped from 68 percent in 2017 to 49 percent, while legalization uncertainty had increased by 7 percent.
The report also claims that cannabis concentrates and vapes will become key growth categories in the North American markets, as traditional flower declines as a share of total spending.
Big tobacco and drinks businesses are also set to invest heavily in the cannabis sector, as commercial interest in cigarettes and alcohol stagnates. Many companies have already taken steps to incorporate cannabis into their products. Last year Altria, the world’s largest tobacco company, made a $1.8 billion investment in the Canadian cannabis producer Cronos for 45 percent of the company.
Although an imperfect model, the US is still the most profitable cannabis market in the world.
The Prohibition Partners report also predicts that, in the short term, US sales of medicinal cannabis will dwarf the recreational market, before falling to just over half of value sales by 2024. This growth can partly be attributed to the superior number of states where medical cannabis is legal (33) compared to states that also allow recreational sales (11), but the report also credits the growing awareness of marijuana’s benefits for pain management.
As more countries, such as Luxembourg, look to legalize cannabis, the report claims that the US market will be seen as a workable model.
“In many ways the regulatory frameworks across Europe mirror the patchwork of legislation across the US,” wrote Daragh Anglim. “Europe, and indeed the world, will continue to monitor developments in North America closely.”