The Saskatchewan cannabis market: Canada's first private market

Introduction

Insights Premium data is now available in Saskatchewan. In addition to coverage in Alberta, British Columbia, and Ontario, Headset data now covers 61% of the total Canadian cannabis market. This report explores the differences in cannabis sales trends in these four provinces, with a focus on Saskatchewan. Saskatchewan has the smallest population of the four provinces, and is the first province covered by Insights with an entirely private market. There are no provincially-run cannabis retailers, neither online or brick-and-mortar, and unlike other provinces, there is no government-run distributor. This means that limited partnerships (LPs) are more free to negotiate with private distributors or directly with retailers, making it a great province for smaller brands to test their ideas and establish traction with consumers before scaling up and expanding into other areas.

Executive Summary

Even though Saskatchewan has lower monthly cannabis sales compared to Alberta, British Columbia, and Ontario, the SK market is growing at the same rate as the three other provinces. From August 2019 through August 2020, total Saskatchewan sales increased 47% to $12.9M. The fully private nature of the market has resulted in the presence of more products and brands available to consumers in Saskatchewan than the other three provinces. Saskatchewan also has the highest market share in Vapor Pens compared to the other three provinces, and the lowest market share in Edibles and Beverages. This report compares all four markets to help uncover what makes the Saskatchewan market unique to legal cannabis. Request a demo today to see how you can leverage data covering market growth from province to province, product category sales, basket size, and more, or sign up for a free Insights Pulse account to test-drive the industry's leading data set in Canada.

Methodology

Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked with Headset’s business analytics software. Sales data is cross-referenced with our catalog of over 500,000 products to provide detailed information on market trends. Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

This report covers sales data from January through August of 2020. Data for Ontario is forecasted for only the private portion of the market, not including online OCS.ca sales.

Cannabis sales by province

To determine Saskatchewan’s (SK) general market standing compared to other provinces, we can look at total cannabis sales from January through August of 2020 this year. Here we see that SK is significantly smaller than other provinces in total sales this year with the next smallest market, British Columbia (BC), bringing in 2.6x more sales than SK.

Monthly cannabis sales

Digging deeper into monthly sales by province allows us to view the long-term performance of each province and see how SK’s sales changed compared to others. It’s clear that cannabis sales in Canada have been steadily growing across all provinces over the previous 13 months. We also notice a considerable drop in sales in Ontario (ON) from April 2020 to June 2020 when retailers were closed due to the COVID-19 pandemic.

Month over month growth

Focusing on MoM growth, we can see that SK’s overall MoM growth in total sales is quite similar to the other provinces. In other words, Saskatchewan’s market is growing at a rate similar to the others. There are some anomalies, such as BC’s massive growth in November 2019, SK’s surge in January 2020, and ON’s rollercoaster of sales from April to July 2020. On average, each market has grown at similar rates in most months so although SK is the smallest market, it’s keeping pace with the others.

Category market share by province

Brands can reference this graph to help determine which provinces are better suited for certain products. For example, SK has the second lowest share in Flower, beating Alberta (AB) by a small percentage. SK also has the highest share of Vapor pens by a considerable margin, surpassing the next largest, ON, by 2.8%. We can also see that SK has the lowest share of Edibles (2.6%) and Beverages (0.7%) of these provinces.

From this, we know SK would be the a great province to debut a new Vapor Pen product because Vapor Pens hold the highest market share in SK than in any other province. On the other hand, newly-introduced Edibles and Beverages would most likely perform better in a province other than SK.

Category market share in Saskatchewan

This graph focuses on Saskatchewan’s product category market share month over month. We can see that the share of Vapor Pens quickly increased early in the year and has held steady around 17% since March, with August showing the lowest share in six months. Pre-Rolls first decreased in March and April before rebounding to now hold its highest market share ever in Saskatchewan. Flower’s market share has slowly and steadily eroded since March but still makes up a majority of total sales.

Average basket size by province

This graph looks at the average basket size of all four provinces between January and August 2020. SK has the second-largest average basket, only behind ON. We also see that SK’s average transaction size has been 14% larger than that of Alberta throughout 2020 so far.

Product and brand assortment by province

Saskatchewan is the only province without a provincially-run distributor, meaning LPs can sell directly to retail operators. Therefore, it isn’t surprising to see that stores in SK have a wider assortment of products and brands than the other provinces. For example, ON and SK stores have both sold a median of 85 distinct brands so far this year while AB and BC have sold a bit fewer. The biggest difference, however, is in the distinct products where the median SK store has sold considerably more discrete products than the median store in any other province. To put this into perspective, a customer walking into the average SK store will have 33% more product selection than a customer walking into the average AB store. This is likely a direct result of the fully-private market in SK.

Provincial market share by brand rank

This graph shows the total market share of brand rank groups within each province so far this year and is useful to see how each market is consolidated. ON stands out as the most consolidated market with over one-third of sales going to the top five brands and over half of sales going to the top ten.

In SK, the top 10 brands contribute less to market share (40%) than in any other province. The effect of the fully-private model is further demonstrated by SK’s market share of brands ranked 1-20, which is 7.4% less than in ON at 63.6%. The biggest difference is in the market share of the lowest ranked brands on the market, those ranked 51 or higher. These brands contribute 15.5% to total market share, nearly double that of the next closest province, BC. This illustrates that SK may be the best opportunity in Canada for smaller brands to get in front of customers and build brand awareness.

Conclusion

Although Saskatchewan is the smallest cannabis market of the four provinces, it is growing at a rate similar to Alberta, British Columbia, and Ontario. SK has the second-largest average transaction size out of the four provinces and a much wider offering of products and brands due to the fully-private nature of the market, making it a great opportunity for smaller brands to introduce products to consumers before expanding to other provinces. It will be intriguing to watch how Saskatchewan’s fully-private market model continues influencing sales and how the market overall plays out for the remainder of 2020. Request a demo today to learn more about Saskatchewan on Insights Premium, or sign up for a free Insights Pulse account to keep an eye on high-level trends and how the market progresses.