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TORONTO, June 05, 2018 (GLOBE NEWSWIRE) — Canadians are expected to spend as much as $7.17 billion on cannabis products in 2019 and increase their overall consumption by up to 35 per cent once recreational cannabis is legalized later this year, according to a new report by Deloitte. Legal recreational cannabis sales could generate up to $4.34 billion in sales, accounting for more than half of total cannabis sales, but the illegal market could still be worth more than $1 billion a year.
The report, A society in transition, an industry ready to bloom, says current cannabis consumers are likely to move nearly two-thirds (63 per cent) of their purchases to legal channels, even though they expect to have to pay up to 10 per cent more per gram after legalization. Deloitte’s research suggests, however, that consumers could be persuaded to completely abandon their illegal suppliers through the right mix of quality, price and safety.
“Most current and likely cannabis consumers want a variety of products offered at reasonable prices from suppliers who can vouch for the safety and origin of those products,” said Jennifer Lee, Partner, Cannabis National Leader, and Consumer Advisory and Analytics Practice National Leader. “Cannabis companies will need to have secure supply chains to protect the quality and integrity of their products, and retailers will need to meet consumer expectations, including providing a positive, engaging retailing experience and protecting the privacy of their customers, especially online.”
Governments at all levels will need to establish a strategy to encourage the cannabis industry to develop in a safe, healthy, secure, well-regulated and professional manner, according to Deloitte, in part to reduce the stigma surrounding cannabis consumption so that people move their purchases away from the illegal market. It’s also to protect the consumer and public at large.
Deloitte says retail fundamentals will still apply: customer insight and data is critical. Cannabis retailers will have to execute modern retail fundamentals just as effectively as more traditional retailers to be successful. For retail stores, that means having staff with strong product knowledge, clearly and prominently displaying prices for all products, and offering convenient hours and locations. Online retailers should endeavour to provide free shipping, quick delivery and organized product groupings, and to ensure their customers’ privacy is protected and data is secure.
“Canada is in a unique position as the first G7 country on the cusp of legalizing recreational cannabis,” said Mark Whitmore, Vice Chair and Global Leader Deloitte Private. “The move to legalize recreational cannabis has sparked a wave of innovation and entrepreneurship, similar to Canada’s technology sector, which will create jobs for Canadians, new opportunities for businesses and revenues for governments.”
Other notable findings in the Deloitte report include:
- The legal recreational cannabis market is expected to generate sales of up to $4.34 billion in 2019, the medical cannabis market will account for between $770 million and $1.79 billion, and the illegal market will generate a further $510 million to $1.04 billion
- There is considerable interest in cannabis-based edible products, even though these will not be available for at least a year after legalization. Six out of 10 likely consumers are expected to choose edible products
- Current and likely cannabis consumers are expected to purchase the majority of their products through physical retail locations, while about one-third will also buy products online through approved retailers’ websites
- Legalization of recreational cannabis will create a new type of cannabis consumer who is older than today’s typical consumer (aged 35-54 versus 18-34), better educated (university or graduate school education versus high school or college education), less of a risk taker and likely to consume cannabis less frequently (less than once a month versus several times a week)
A society in transition, an industry ready to bloom is the second report by Deloitte on the opportunity that legalizing cannabis presents to the Canadian economy. Its inaugural report, Recreational Marijuana, insights and opportunities, evaluated the total industry potential with a view to understanding public opinion, consumption trends and retail opportunity. This most recent report examines how cannabis consumption levels may change after legalization, what kinds of products consumers would be interested in, and how and from where they’d be inclined to purchase—in short, what consumer demand means for the cannabis industry.
For more information and to read the full Deloitte 2018 cannabis report, please visit: www.deloitte.com/ca/Deloitte2018Cannabisreport
About the study
A sample size of 1,500 adult Canadians were surveyed online across the country between March 6 and March 20, 2018. The sample includes representation from every Canadian province.