Two days before the Canadian Senate is set to vote for a final time on the Cannabis Act, Deloitte has released a report that predicts substantial sales growth for legal recreational cannabis in the years ahead.
The report, A Society in Transition, an Industry Ready to Bloom, is largely based on a survey of current or likely cannabis consumers and it estimates that Canadians will increase their cannabis consumption by up to 35% once recreational cannabis is legalized. They will also buy more frequently and spend more, according to the report.
Deloitte expects cannabis sales to generate $7.17 billion Canadawide in 2019, with about 60% of that volume being legal recreational sales and the rest being either transactions in the black market or medical-cannabis sales.
Other reports have also projected huge growth in cannabis production and sales. A CIBC report last month calculated demand for legal cannabis in Canada at 800,000 kilograms by 2020. Current production, it noted, is in the 350,000-kilogram range.
Current and likely customers for legal recreational weed, according to Deloitte, are willing to spend up to 10% more for their purchases in part because of the perception that it is safer and has undergone testing.
“Most current and likely cannabis consumers want a variety of products offered at reasonable prices from suppliers who can vouch for the safety and origin of those products,” said Jennifer Lee, partner, retail and consumer and cannabis sector leader at Deloitte Canada.
“Cannabis companies will need to have secure supply chains to protect the quality and integrity of their products, and retailers will need to meet consumer expectations, including providing a positive, engaging retailing experience and protecting the privacy of their customers, especially online.”
The report found considerable interest in cannabis-based edible products, even though these will not be available for at least a year after legalization. Six out of 10 likely consumers are expected to choose edible products once those products are an option, the report found.
Deloitte’s survey found that legalizing recreational cannabis will also create a new type of cannabis consumer who is older, at between 35 and 54 years old, compared with today’s typical consumer, who is aged between 18 and 34 years.
The survey determined that that future cannabis users will also be better educated, with university or graduate school education versus high school or college education.
"Today's consumer is what we describe as a risk taker," the report noted.
"They're young, typically with a high school or college education. In their quest to live life to the fullest, they're more likely to put their health or safety at risk, even going so far as to skirt or break the law. And they consume several times a week."
Legalization, the report found, will bring in an older consumer who has historically been more risk averse.
"This consumer is more of a conservative experimenter – typically middle aged, with a university or graduate-school education. They don't tend to put their personal interests before family needs or other responsibilities. They're unlikely to have a big social network. And they're more likely to consume less than once a month."
If you are interested in learning more about opportunities in the cannabis sector, and hearing a panel presentation that Business in Vancouver is hosting on July 12, check out BIV's Business Excellence Series: Legalizing Cannabis at the Vancouver Club.