Canada Cannabis Legalization Is Happening—But What Will It Look Like?

(Marc Bruxelle/iStock)

Earlier this month, the international consultancy group Deloitte released a new report about the future of the legal cannabis market in Canada. Entitled “Recreational Marijuana: Insights and Opportunities,” the report draws on Deloitte’s deep 2016 study of the Canadian recreational marijuana market, which surveyed 5,000 Canadians aged 19 and up from across the nation. The new report focuses on “key insights on consumption frequency, methods and motivators, the interplay between alcohol and marijuana consumption, and perspectives on retail preference.” Here are six takeaways.

1. The Canadian cannabis market is going to be big—over $7 billion dollars annually. This exceeds Canada’s distilled-spirits market and comes close to what we spend on wine. The alcohol industry is already starting to show signs of adaptation as infusions, partnerships, mergers and acquisitions have begun to make industry headlines.

2. Driven by concerns over quality, price, and safety, Canadians are going to buy from legal sources. The illicit market may be able to compete with the legal marketplace in the price department, but it’ll never achieve a similar level of transparency. Unless cannabis consumers are growing their own, most users have only vague guesses about where their cannabis originates from. In the new legal paradigm, the appeal of knowing where cannabis is grown and who’s doing the growing will offset the added costs of the legal marketplace, according to the survey. Since marketing is likely to be limited, brand loyalty might be based on designations such as “organic,” “sungrown,” and “locally produced.”

3. Privacy is paramount for consumers. Not the kind of privacy where you have to hide your cannabis use from your parents and neighbours. This is more about identity privacy on the retail end. Purchases made in-store and online will involve sharing personal information, from ID scanning to security cameras. In some cases, the government will be the retailers, which means that consumers should expect their privacy will be protected and ensured. Canadians are typically attuned to cybersecurity, as our privacy laws are much more strict than the United States’. (Pay attention to this, future retailers, as security breaches could make or break your business.)

4. There is definitely gold in them hills. According to the survey, the majority of Canada’s new cannabis consumers will be middle-aged and infrequent users. And while current consumers are not going to increase their expenditures, the less frequent users are going to increase their spending by over 100%. The availability of reliable, safe and reasonably priced cannabis will be new to the majority of Canadians. After legalization, purchase frequency among cannabis novices is poised to rise 121%, with the average total spend rising nearly 68% roughly every three months.

5. It appears as if cannabis will be used as a replacement for alcohol consumption. This is incredibly exciting from a public-health perspective, as not only will it impact the health of Canadians, but will also impact the amount of money spent annually on alcohol-related illness. Canada has universal healthcare unlike our American neighbours and when our population is healthier we are all happier. There is no question lives will be saved in years to come.

6. Convenience is king for the average cannabis consumer. Of course, “convenience” means different things to different people, involving everything from personal gardens to local retail outlets with a knowledgeable staff to home delivery. According to Deloitte, most Canadians want to shop at privately owned cannabis stores, followed closely by government run outlets. The third-preferred option: purchasing directly from the producers. This bodes well for the future of smaller, artisanal micro farms, which could increase their profit margins if allowed to sell directly to their consumer base.

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