Canada Cannabis Spot Index (CCSI)
Week Ending February 19, 2021
*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$5.77 per gram this week, down 0.5% from last week’s C$5.80 per gram. This week’s price equates to US$2,066 per pound at the current exchange rate.
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We continue to keep a close eye on the expansion of cannabis retail stores across Canada, but most importantly in Ontario, the country’s most populous province where the establishment of licensed retailers initially got off to a slow start. As of the end of January 2021, we showed 317 active stores in Ontario. Last year at this time, only 26 stores were open for business in the province. Significant progress has been made with Ontario streamlining the licensing process, even as COVID-19 lockdowns last year raised barriers to new businesses opening generally.
As noted, Ontario had the slowest rollout of licensed stores among all provinces, but that has drastically changed since Q2 2020. The speed at which new stores are coming to market is helping drive strong sales growth in the province, a trend that looks as if it will persist for the foreseeable future.
From data received from the Alcohol and Gaming Commission of Ontario (AGCO), we can get a glimpse of the number of stores that could be coming online over the next few years. AGCO continues to receive a high volume of applications and is now issuing 30 retail store authorizations (RSA) per week. RSA applications are processed in order of receipt.
The AGCO provides detailed reports of the status of all applications. They are laid out in one of the following categories:
In Progress: This status indicates that the AGCO has received the application and the evaluation process is underway.
Public Notice: This indicates an application has been successful, and the provincial government is now accepting written submissions for 15 days for a specific location from residents of that municipality.
Authorized to Open: This indicates that the store has met all regulatory requirements and has passed its pre-opening inspection from the AGCO.
Based only on current application data (and not taking into account additional new applications that will certainly be submitted), it appears that Ontario could see as many as 1,350 new cannabis stores open in the relatively near future.
Source: Cannabis Benchmarks, AGCO
Next we look at cannabis purchasing in comparison to that for alcohol and tobacco. Major alcohol and tobacco companies have made significant investments in cannabis operations over the last few years, in part as a hedge to ensure they do not lose out to the latent demand for cannabis that is being captured gradually by legal businesses. The data released by Statistics Canada to date shows that alcohol and tobacco sales remain much stronger than cannabis sales, and that increased cannabis sales have not impacted those categories negatively. As seen in the chart below, both alcohol and tobacco sales remained consistent between Q3 2019 and Q3 2020, with 51% and 37-38% respectively.
Source: Cannabis Benchmarks, Health Canada
The map below from the AGCO website shows the locations of shops currently authorized to open. The vast majority of stores are concentrated in the Greater Toronto area.
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.