Canada is expected to legalize marijuana edibles this October. This segment of the market was excluded when the country legalized its recreational use in the same month last year. However, skepticism is now rising, especially with new Health Canada rules released in June.
The first point of contention is a provision requiring cannabis companies to provide 60 days notice to Health Canada. The notice should specify their plans of selling edibles on top of the products they currently provide. This means that the first batch of edible products will only hit the market by mid-December 2019.
What has received the strongest reaction is Health Canada’s decision to limit the amount of tetrahydrocannabinol (THC) per package of edibles to 10 milligrams. In comparison, cannabis extracts, and topicals are allowed to have as much as 1,000 mg or 10 times that amount. Analysts and Canadian companies worry that with as little as 10 mg of THC, edibles will not satisfy the consumers they planned to target with their products.
With these issues surrounding the edibles, Jefferies analyst Ryan Tomkins said the edibles market will not immediately stabilize with most of the compliant products only hitting the shelves late into 2020.
Deloitte, one of the “Big Four” accounting organizations and one of the world’s largest professional services network, is out with its new report on the Canadian cannabis market.
Deloitte’s report, titled Nurturing New Growth: Canada Gets Ready for Cannabis 2.0, presented many interesting points about the potential of the new edibles market that is set to open come October. The firm projected that Canada’s edibles market alone could be worth $1.6 billion. That amount is entirely separate from the cannabis beverage market estimated to be worth C$259 million, topical worth C$174 million, concentrates worth C$140 million, tinctures worth C$116 million, and capsules worth C$114 million.
Deloitte said the Canadian cannabis industry has all the advantages compared to other markets anywhere in the world because of the government’s support and a steady stream of capital. With investments flowing in, Canada is currently in the leading position in the marijuana industry.
The up-and-coming edibles market is joining the recreational cannabis market, which is already worth $7 billion, according to Deloitte. Separately, the global cannabis market is estimated to be worth $100 billion, ballooning to $194 billion in the next five years. The report, however, cautioned Canada that it could take only 18 to 24 months for Europe and the United States take the lead.
The market for edibles
Deloitte surveyed 2,000 Canadian adults on how they use/consume cannabis concentrates, infused beverages, topical, tinctures, and capsules. Those who haven’t tried the products were asked how they intend to use them.
The report found that cannabis users can be divided into two types. The first ones are the millennials who are extremely experienced with cannabis use. They consume products several times a week, so they are more interested in potent cannabis after legalization. The second type is the curious ones who are usually the older generation, mostly women and have no interest in high-dosage products.
What will be the most favorite product type?
Though they differ with their preferred dosage, cannabis users tend to agree with the edible products they would want to consume regularly after the legalization: gummies, cookies, brownies, and chocolates.
Twenty-six percent of the millennials or experienced users prefer gummies. Another 23 percent prefer cookies, while 22 percent and 16 percent prefer brownies and chocolates respectively.
On the other hand, 50 percent of the curious consumers prefer cookies, 49 percent brownies, and 48 percent both chocolates and gummies. They are also more likely to try out candies, lozenges, and gum as well as savory snacks, chewies, and taffies.
In choosing or buying their products, 66 percent of Canadian cannabis consumers said they prioritize safety, 53 percent said product quality, and 45 percent cited the level of potency.
Interestingly, the first group of consumers, 80 percent of them, said they prefer buying premade cannabis edibles than make them on their own because it is more convenient that way. Still, there remains at least 71 percent who want to make their own products to control the dose and 54 percent who prefer making their own to ensure quality.
Where is Canada’s marijuana market heading to?
With the looming legalization of marijuana edibles, Canadian companies can participate in numerous market segments under the marijuana industry, not just domestically but also on a worldwide level. To date, the Canadian recreational market is worth C$1.81 billion to about C$4.34 billion. The country’s medical marijuana market accounted for C$.077 billion to C$1.79 billion. The entire Canadian market for marijuana is estimated to be worth between C$2.6 billion to C$6.13 billion.
But, as the report warned, the country should take care of its market leadership since more countries are realizing the economic benefits of legalizing cannabis. Canada should, therefore, move fast, seize every opportunity, and make sure its participation in the market stays above the rest.
(Featured image by DepositPhotos)