Canada Cannabis Spot Index (CCSI) 

Week Ending August 6, 2021

CCSI image 1 2021-07-30

*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.

**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..

The CCSI was assessed at C$5.40 per gram this week, up 0.2% from last week’s C$5.39 per gram. This week’s price equates to US$1,961 per pound at the current exchange rate.

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This week we once again examine the impact of legal cannabis sales in Canada on the alcoholic beverages industry. Since the legalization of recreational cannabis in October 2018, alcohol companies have feared they would see a reduction in sales, as consumers of legal age might switch in large numbers to cannabis from alcohol. The Canadian government releases monthly retail sales data for both cannabis and alcohol (beer, wine, and liquor), which provides us with a better understanding of whether cannabis has had an impact on alcohol sales.

Below is the latest monthly data from the start of 2016 through May 2021, showing sales in both categories. The chart illustrates that alcohol sales have been growing steadily despite the introduction of legal recreational cannabis sales in late 2018. Since January 2020, monthly alcohol sales have grown by C$186M to C$2.24B. Meanwhile, monthly legal cannabis sales have grown by C$159M to reach C$313M. Looking at sales in 2021 alone, alcoholic beverage sales were flat from January to May, while cannabis sales increased C$33.7M per month.

It should be noted that the COVID-19 pandemic, with its associated lockdowns and ongoing restrictions, have worked to boost both alcohol and cannabis sales higher than they might have been otherwise. This can be seen in the spike in alcohol sales that occurred in March 2020, as lockdowns were put in place across Canada. 

Going forward, we believe cannabis sales will continue to grow while alcoholic beverages will also increase, but not at the same pace. Consumers have a finite amount of money to spend in this category, and increased accessibility and education around cannabis may lead to larger proportional expenditures for the newly legal intoxicant. Indeed, this is occurring already. As shown in the chart below, cannabis sales are starting to represent a larger portion of the total dollars spent on alcohol and cannabis. Currently, cannabis’ share stands at 12.3% of the total spend of the combined categories.

Our current forecast for cannabis sales projects monthly spending to reach C$433M by the end of 2021. If we assume an average annual alcohol sales growth of 1.5% each year, we can expect monthly alcohol sales to reach C$2.33B by the end of the year. At those levels, cannabis sales would grow to represent 15-16% of the total spent on the two categories.

For more data and analytics like this, subscribe to the Cannabis Market Insights report developed in collaboration Nasdaq. This in-depth monthly report provides exclusive data and analysis on the legal cannabis industry, focusing largely on the Canadian cannabis market, as well as the cannabis equities market in the U.S.