Canadian Legal Recreational Cannabis Market 2018-2022

  • ID: 4457165
  • Report
  • Region: Canada
  • 38 Pages
  • GT Research LLC
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Revenues of $5 Billion CAD in FY2018, Increasing to $7 Billion CAD in FY2022 are Projected

FEATURED COMPANIES

  • ABcann
  • Aphria Inc.
  • Aurora Cannabis
  • CanniMed Therapeutics
  • Canopy Growth
  • Cronos Group Firm
  • MORE

In April 2017, the Canadian government announced its intention to legalize recreational cannabis. Sales may begin as early as the middle of 2018 - a moving target. We modeled the Canadian Recreational
Cannabis Market over a four-year time horizon, focusing on cross-price elasticity of demand of individual consumer cohorts. Second order model drivers include Canadian population dynamics, producer
efficiency gains, and spillover effects of recreational legalization.

In summary, the research finds:

  • Canadians will consume 473.7 metric tons of recreational cannabis in FY2018; consumption will increase to 860.8 metric tons by FY2022.
  • At the inception of legalization pretax prices will average $8.33 CAD per gram, falling 28.3% to $5.97 CAD by FY2022. As in any black-to-white market, legal producers must underprice illegal ones to maintain a sustainable market, and thus, Canadian Licensed Producers should seek to price competitively and pass on associated costs and other efficiency gains to end consumers.
  • Throughout the modeling period, heavy and regular users drive the lion’s share of demand (see graph above), 95% in FY2018 to 94.5% in FY2022.
  • Total revenues will increase over time, with higher sales volume offsetting downward pricing pressure. Revenues of $5 billion CAD are projected for FY2018, increasing to $7 billion CAD in FY2022.
  • Importantly, increasing revenues should not be conflated with overall market growth; it is instead a function of existing consumers moving from the black to the white market. Contrary to the consensus view, it is predicted that total market demand will contract by an average of 0.98% annually over the four-year period in the absence of population growth.
  • With expectations for overall market growth tempered, investors may wish to focus on Licensed Producers that emphasize cost efficiency.
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FEATURED COMPANIES

  • ABcann
  • Aphria Inc.
  • Aurora Cannabis
  • CanniMed Therapeutics
  • Canopy Growth
  • Cronos Group Firm
  • MORE
  1. Executive Summary
  2. Introduction
  3. Who Drives Recreational Sales?
  4. Consumer Profiles
  5. Puff, Puff, Pass: Sales to New Users Will Be a Flash in the Pan
  6. Legality Bump: Word of Mouth Effect
  7. Risks of Narcotic Abuse
  8. Will Edibles Take a Bite Out of Cannabis Flower Sales?
  9. Unpacking Cannabis Expenditure
  10. Link Between THC Yields and Prices Is Overwrought
  11. Bridging Perception and Reality: The Chemistry and Biology of Potency
  12. A Zero-Sum Game: Tug of War Between BMC and CRCM
  13. Segment Proclivity for Contraband Procurement
  14. Supply-Side Dynamics
  15. Death and Taxes
  16. The Dealer Next Door
  17. Cost Structures by Growing Operation
  18. End Game: Revenue Trajectory
  19. Dissecting Aggregate Demand
  20. End Game: Revenue Trajectory
  21. Licensed Producer Profiles
  22. Aphria (APH) Firm Profile
  23. Canopy (WEED) Firm Profile
  24. ABcann (ABCN) Firm Profile
  25. Aurora Cannabis (ACB) Firm Profile
  26. CanniMed (CMED) Therapeutics Firm Profile
  27. Cronos Group (MJN) Firm Profile
  28. Emblem Corp (EMC) Firm Profile
  29. Emerald Health Therapeutics (EMH) Firm Profile
  30. Newstrike Resources Ltd (HIP) Firm Profile
  31. Harvest One (HVT) Firm Profile
  32. Invictus MD Strategies Corp (IVITF) Firm Profile
  33. MedReleaf Corp (LEAF) Firm Profile
  34. OrganiGram Holdings Inc (OGI) Firm Profile
  35. Supreme Cannabis (FIRE) Firm Profile
  36. Hydropothecary (THCX) Firm Profile
  37. References

Table of Figures
Exhibit 1: Heavy and Regular Consumer Demand Rules the Day
Exhibit 2: The Cost of Evasion Adds Up
Exhibit 3: Cannabis Spend Is Greater Than Spirits Spend
Exhibit 4: Survey Data Implies That Cohort Sizes are Static…
Exhibit 5: …They Are Dynamic and Fluctuate with Time
Exhibit 6: Sources of Reporting Biases
Exhibit 7: Cumulative Cannabis Habituation Risk
Exhibit 8: Incremental Cannabis Habituation Risk
Exhibit 9: Canadian Demographics Are a Headwind
Exhibit 10: Cumulative Alcohol Habituation Risk
Exhibit 11: Cumulative Cocaine Habituation Risk
Exhibit 12: Trial Rates are Driven by the Word of Mouth Effect
Exhibit 13: Potential Adopters Live Up to Their Name
Exhibit 14: Cannabis’ Overdose Risk Is Lower Than of Other Narcotics’
Exhibit 15: Cannabis Risk Factor Loads Are Different from Alcohol’s
Exhibit 16: Whose Got Time for That?
Exhibit 17: Prices Are Driven by Perceived THC Content…
Exhibit 18: …Not Actual THC Content
Exhibit 19: Legal Premium Will Funnel Demand into Illicit Market
Exhibit 20: The Most Lucrative Segments Are the Most Price Sensitive
Exhibit 21: Cannabis Spend is Highly Skewed
Exhibit 22: $1 Price Hike Can Dent Heavy Consumers’ Wallets
Exhibit 23: Occasional Consumers Face Raw Deal
Exhibit 24: It is Hard to Do Hard Time
Exhibit 25: Dissuading Contraband Purchases is No Mean Feat
Exhibit 26: Excise Tax = Cost Advantaged BMC
Exhibit 27: Coordinated Tax Regime Is Unlikely
Exhibit 28: Sin Taxes Will Likely Be Driven by Spillover Effects
Exhibit 29: Cannabis Is Usually Sourced from Friends and Family
Exhibit 30: Pound Per Pound Sin Taxes Offset Efficiency Gains
Exhibit 31: Legal Demand Gains Driven by Most Frequent Consumers
Exhibit 32: Heavy Consumer Contraband Purchases Will Ebb
Exhibit 33: Regular Consumer Demand Cascades Into CRCM
Exhibit 34: Price Volatility Is Pink Noise
Exhibit 35: APH Share Performance
Exhibit 36: APH Key Statistics and Ratings
Exhibit 37: APH Selected Fundamentals
Exhibit 38: WEED Share Performance
Exhibit 39: WEED Key Statistics and Ratings
Exhibit 40: WEED Selected Fundamentals
Exhibit 41: ABCN Share Performance
Exhibit 42: ABCN Key Statistics and Ratings
Exhibit 43: ABCN Selected Fundamentals
Exhibit 44: ACB Share Performance
Exhibit 45: ACB Key Statistics and Ratings
Exhibit 46: ACB Selected Fundamentals
Exhibit 47: CMED Share Performance
Exhibit 48: CMED Key Statistics and Ratings
Exhibit 49: CMED Selected Fundamentals
Exhibit 50: MJN Share Performance
Exhibit 51: MJN Key Statistics and Ratings
Exhibit 52: MJN Selected Fundamentals
Exhibit 53: EMC Share Performance
Exhibit 54: EMC Key Statistics and Ratings
Exhibit 55: EMC Selected Fundamentals
Exhibit 56: EMH Share Performance
Exhibit 57: EMH Key Statistics and Ratings
Exhibit 58: EMH Selected Fundamentals
Exhibit 59: HIP Share Performance
Exhibit 60: HIP Key Statistics and Ratings
Exhibit 61: HIP Selected Fundamentals
Exhibit 62: HVT Share Performance
Exhibit 63: HVT Key Statistics and Ratings
Exhibit 64: HVT Selected Fundamentals
Exhibit 65: IVITF Share Performance
Exhibit 66: IVITF Key Statistics and Ratings
Exhibit 67: IVITF Selected Fundamentals
Exhibit 68: LEAF Share Performance
Exhibit 69: LEAF Key Statistics and Ratings
Exhibit 70: LEAF Selected Fundamentals
Exhibit 71: OGI Share Performance
Exhibit 72: OGI Key Statistics and Ratings
Exhibit 73: OGI Selected Fundamentals
Exhibit 74: FIRE Share Performance
Exhibit 75: FIRE Key Statistics and Ratings
Exhibit 76: FIRE Selected Fundamentals
Exhibit 77: THCX Share Performance
Exhibit 78: THCX Key Statistics and Ratings
Exhibit 79: THCX Selected Fundamentals

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  • Aphria Inc.
  • Canopy Growth
  • ABcann
  • Aurora Cannabis
  • CanniMed Therapeutics
  • Cronos Group Firm
  • Emblem Corp Firm
  • Emerald Health Therapeutics
  • Newstrike Resources Ltd
  • Harvest One Cannabi Firm
  • Invictus MD Strategies Corp Firm
  • Medreleaf Corp. Firm
  • OrganiGram Holdings Inc. Firm
  • Supreme Cannabis Company Firm
  • Hydropothecary Corporation Firm
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown
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