Canada Cannabis Spot Index (CCSI)
Published December 4, 2020
*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$6.04 per gram this week, up 1.7% from last week’s C$5.94 per gram. This week’s price equates to US$2,114 per pound at the current exchange rate.
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This week we provide an update on store counts nationwide. The Canadian cannabis industry has continued to open new retail outlets across the country at a steady pace. As of the end of November, we counted 1,276 licensed retailers, with an average monthly growth rate of 6.1% in 2020. This growth rate has been very consistent throughout the year, which gives us confidence that the cannabis industry will continue to grow at a stable rate in 2021.
Source: Cannabis Benchmarks
At the national level, the increase in store counts look to be growing linearly, but drilling down into each province shows a very different picture.
Source: Cannabis Benchmarks
All provinces are seeing store counts grow, but at different rates. British Columbia’s store count is growing at a steady-state, while Ontario’s has been growing exponentially. Ontario, however, is playing a bit of catch up to the rest of the provinces on this front. While Ontario has not achieved its goal of opening 40 stores per month set in September, they have not far behind; since September, an average of 34 new stores per month have opened in the province.
The more interesting story is Alberta, where the number of new store openings has decreased significantly. The province appears to have reached a plateau on how many stores it needs to support its relatively small population of 4.3M people. Alberta’s current store count equates to one per 8,018 residents.
For context, Alberta’s per capita store count lies between those of two of the most mature legal cannabis markets in the U.S.: Colorado and Oregon. In Colorado, there is one recreational retailer per roughly 9,600 residents. In Oregon, there is one legal store for about every 6,150 people.
If we assume Alberta’s to be the optimal number of stores – an assumption buttressed by its position between two relatively stable, mature U.S. state markets – it provides some insight into how many retailers each province ultimately needs to open to reach the same ratio. Below is the result of this simple model: calculating the number of stores each province needs to meet the same ratio of one store per 8,018 people.
*note adjusting for the % of the population that does not use cannabis products
Based on this analysis, Canada as a whole would require a total of 4,638 stores, or 3.6 times the current number of retailers. While it is unlikely that Canada will reach that amount anytime soon, continued growth in store counts will ultimately lead to higher sales across the country. If we project using the average of 55 stores opened each month across Canada – the 2020 average so far – then we reach 4,638 stores at the end of 2023. This level of accessibility would almost certainly minimize illicit market activity and shift most of the overall cannabis sales volume to legal channels – something the regulated industry is very much looking forward to.
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.