Canada’s Cannabis Retail Features 50% YoY Growth in 2021

As December figures come in, Canada’s 2021 sales approach CA$3.9 billion, but retail prices have declined across all product categories.

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The world’s second-largest cannabis market shows early indications that its retail industry experienced a 50% year-over-year (YoY) growth in 2021.

Although December figures have yet to be tallied, Canada’s cannabis sales are on pace to eclipse CA$3.9 billion in 2021, casting a monster shadow on its CA$2.6 billion in sales from 2020, according to federal data agency Statistics Canada.

The record year was backboned by eight straight months of market growth, from March through October, before a slight dip in November. The momentum came during the third full year of Canada’s adult-use cannabis market, which launched in Oct. 2018.

Despite the overall sales growth, Canadian cannabis retail prices declined across all product categories throughout 2021, including as much as 35% for some categories, according to market data from Seattle-based cannabis analytics firm Headset.

While sales growth portrayed an inverse relationship with retail prices in 2021, consumer demand grew faster than prices fell, said Cooper Ashley, senior data analyst at Headset.

“For example, when comparing November and December 2020 to 2021, total retail cannabis transaction volume increased by about 58% across the Canadian markets Headset tracks,” he told Cannabis Business Times. “In fact, the large increase in total purchasing volume itself may have helped drive increased competition and price compression in the Canadian market.”

Through the first 11 months of 2021, Canada’s cannabis retail peaked at CA$364.2 million in October (a 35.7% increase from October 2020), before the eight-month growth streak was snapped with CA$354.7 million in November sales, a 2.9% decline.

Here are the sales figures through November 2021 for the nine Canadian providences that regularly report their retail figures, as well as their correlating percent change from 2020 sales figures through the same 11-month time period:

  • Ontario: $1.3 billion (111.3% growth)
  • Alberta: $651 million (27.4% growth)
  • Quebec: $545 million (22.6% growth)
  • British Columbia: $504 million (54.2% growth)
  • Saskatchewan: $144 million (15.9% growth)
  • Manitoba: $135 million (54.1% growth)
  • Nova Scotia: $87 million (19.8% growth)
  • New Brunswick: $73 million (19.4% growth)
  • Newfoundland: $55 million (44.1% growth)

*Prince Edward Island and Canada’s three territories (Yukon, Nunavut and Northwest Territories) did not regularly report monthly sales figures in 2021.

Canada’s largest cannabis market, Ontario reported a record CA$148.4 million in cannabis sales in November and, with December figures yet to be tallied, was on pace for CA$1.5 billion in overall sales for 2021, representing a 104% YoY growth from 2020.

Canada’s other major players all reported record retail months in October 2021, including Alberta (CA$63.2 million), Quebec (CA$52.5 million) and British Columbia (CA$50.5 million), before slight dips in November.  

The record retail year for Canada cannabis comes on the heels of 61% YoY growth in 2020, which was catapulted by the late-2019 introduction of a host of new product options under the government’s new “Cannabis 2.0” rules, which authorized sales of derivative products, such as edibles, extracts and topicals.

RELATED: Cannabis 2.0: Canadian Cannabis Companies Prepare for Legal Edibles, Extracts and Topicals

While the Cannabis 2.0 sales boost from 2020 continued in 2021, product pricing did not.

Product Prices Decline

According to Headset data based on product prices from Ontario, Alberta, British Columbia and Saskatchewan, Canadian cannabis retail prices declined across all product categories throughout 2021.

Price compression is most often driven by competitive pressures within a market, Ashley said.

“Competition is still fierce in the Canadian cannabis market, and therefore we expect to see some level of continued price decreases market wide [in 2022],” he said. “However, it is unlikely that the relative price decreases seen in 2021 will be matched this year. There is more likely to be expanded diversification within the market.

“For example, in ‘middle-aged’ cannabis markets we often see producers starting to focus in on creating a product or brand for every customer, e.g., a ‘value’ or low-price brand, a mid-tier brand, and a premium or luxury focused brand, all within the same category.”

Without that expanded diversification in the 2021 Canadian market, cannabis concentrates and vape pens experienced the largest price declines: They both fell by 35% from January to December in the provinces Headset tracks, according to data complied by Ashley.

Vape pens fell from an average price per gram of CA$73.27 in January to CA$47.29 in December, while concentrates fell from CA$42.98 to CA$27.86.

Meanwhile, topicals (-30%), capsules (-20%), pre-rolls (-19%), dried flower (-16%), tinctures and sublingual products (-16%), beverages (-12%), edibles (-11%) and oils (-11%) all declined in equivalized price from January to December.

Ashley said the most interesting pricing trends of 2021 are those for the pre-roll category.

While the average equivalized price (the price per gram) of a Canadian pre-roll decreased by 19%, from CA$10.27 to CA$8.33, between January and December, the average item price of products in the pre-roll category actually increased by 6%, from CA$17.04 to CA$18.05, over the same time period, he said.

“This indicates a significant shift towards larger package sizes (more grams per package) within the pre-roll category,” Ashley said. “We are definitely witnessing a broad shift towards multipack pre-rolls in the Canadian market. This is something we’ve been watching in U.S. markets as well.”

Capsules (4%), edibles (1%) and beverages (1%) also experienced average item price increases (indicating larger package sizes) from January to December 2021, while topicals (-25%) tinctures and sublingual products (-21%), concentrates (-20%), vape pens (-12%), oil (-8%) and flower (-2%) all experienced average item price decreases.

Although Headset anticipates some level of equivalized price decreases for retail products market wide in 2022, the cannabis analytics firm does not have a 2022 forecast for overall retail sales figures at this time.

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