In October 2018, Canada became the first G7 nation to federally legalize cannabis with national laws and regulations that allow LPs to ship products from coast to coast. This creates some level of consistency across the Canadian cannabis market, but there are still differences between provinces. This is mainly because during legalization in Canada, provinces were able to self-determine the level of involvement they would have in the retail and distribution sectors of the cannabis industry. This created several types of provinces:
Provincial government is the only licensed retailer and distributor. Quebec is an example.
Provincial government has no involvement in distribution or retail, both roles are fulfilled by private operators only. Saskatchewan is an example of a completely private market.
Provincial government has some involvement in distribution and/or retail, but there are also private operators, typically in the retail sector. For example in Alberta, Ontario, and British Columbia, the provincial governments hold a monopoly on distribution to private retailers (i.e. the Ontario Cannabis Store), making vertical integration in these markets tricky. In these markets, they also hold a monopoly on the e-commerce market as well.
Below, we compare sales data across Alberta, British Columbia, Ontario (private retail only), and Saskatchewan to see how these provisional differences are expressed. All data collected is from January through October 2020. As always, our Ontario forecast is only for the private retail market there (not online OCS.ca sales), which is estimated to be approximately 80% of total sales. If you'd like to keep track of cannabis sales in these Canadian provinces, sign up for a free Insights Pulse account.
Here we can see that population size does not directly correlate to cannabis sales, at least not this year. While Headset only reports on private retail in Ontario (approximately 80% of total sales), if provincial sales totals were proportional to population, Ontario's sales would be more than three times larger than Alberta's. These discrepancies are likely related to the unique nuances and retail licensing timelines of each province.
Despite differences in distribution and retail structure, the new Cannabis 2.0 product categories have been universally popular, growing to about 20% market share through November 2020. However, some markets had more of a head start than others.
In this table we can see that customers in Saskatchewan had access to Cannabis 2.0 products nearly an entire month before customers in Alberta.
We've already seen some big picture differences between provinces, and unsurprisingly there are significant differences when we drill down to the basket level as well. Here we can see that the Ontario market has significantly higher average basket sizes than any other province, more than 25% higher than Alberta!
When we take a look at the market share of the top five selling brands in each province, we can see some large differences in brand consolidation between these four provinces. For example in the Ontario market, the top five brands own more than one third of the total market. This is much more consolidated than Alberta, where the top five brands captured less than 24% of sales so far this year.
And finally, when we dive into exactly which brands are on top in each market, there are definitely some consistencies. For example Redecan is the best selling brand in all provinces besides Alberta, but no single brand has held a top five position in all four provinces through 2020 YTD.
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