Canada Cannabis Spot Index (CCSI)
Week Ending May 21, 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$5.58 per gram this week, down 0.8% from last week’s C$5.63 per gram. This week’s price equates to US$2,093 per pound at the current exchange rate.
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This week, we look at Canada’s expanding role in international medical cannabis markets.
Dried cannabis flower and cannabis oil exports out of Canada more than doubled in 2020, while imports dropped to virtually zero.
In 2020, Canada exported an endorsed quantity of 15,684 kilograms of dried flower for medical and scientific purposes, a 131% year-on-year increase. Endorsed exports of cannabis oil also expanded substantially year-on-year to 22,342 litres, a 73% increase. The endorsed quantities are the actual quantities of cannabis exported or imported, with the exporter required to provide the Minister of Health with information related to the shipment within 15 days after the date of exportation.
Source: Cannabis Benchmarks
Canadian licensed producers have always had a close eye on the international market. The overbuilding of cultivation capacity relative to domestic demand was intended to supply global medical-use markets. Additionally, Canadian cultivators would thereby be the first to establish intellectual property, economies of scale, brand power, and cultivation experience in a sector expected to grow dramatically.
The big jump in 2020 exports is no coincidence. In Canada, increased exports were driven in part by more cultivators receiving the proper certification to export to European markets. For the medical and pharmaceutical industries, including medical cannabis, manufacturers need to achieve the European Union’s compliance certificate for Good Manufacturing Practices (EU GMP). For the cannabis industry, obtaining EU GMP certification requires an inspected facility that meets mandated production guidelines to release medical cannabis products into European markets.
In late 2016, Tilray became the first Canadian medical cannabis producer to legally export medical cannabis products to the European Union and Australia. Today, more than a dozen cannabis cultivation sites have received EU GMP certification, increasing the production capacity available to generate supply to export to the EU. Some of the other firms that have EU GMP certification include Canopy Growth, Aphria, Aurora, Zenabis, TerrAscend, Northern Green, and Eve & Co.
Another reason for the increased level of exports is the opening of more international markets and the expansion of existing ones. In 2019, 95% of the dried flower exported by Canadian producers was sold into Germany. While Germany continues to increase its overall import level, it is now second to Israel, which in 2020 imported 10 tons of flower, or 63% of all Canadian exports by weight. Israel’s imports of Canadian medical cannabis last year were almost double the volume of Germany’s.
Over the next five years, we expect Canadian medical cannabis exports to continue to grow as more countries legalize and import medical cannabis. While Canada will continue to be a major global supplier, over the longer term we expect lower-cost operations located in Africa, Latin America, and the Caribbean will take a larger share of the market.
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