September 20, 2019

CANADA CANNABIS SPOT INDEX — September 20, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published September 20, 2019

*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$7.38 per gram this week, up 2.2% from last week’s C$7.22 per gram. This week’s price equates to US$2,524 per pound at current exchange rates.

 

This week we examine the number of retail stores open in each province and how that has impacted both legal cannabis sales and the black market. After reviewing information from the provincial cannabis sites, we determined there are a total of 555 retail stores operating in Canada. This works out to 1.5 stores for every 100,000 Canadians. Let’s compare this to liquor stores. The Liquor Control Board of Ontario (LCBO) website states there are 660 liquor stores across Ontario to serve 14.4 million people. This works out to 4.6 stores for every 100,000 Ontario residents. 

 

The cannabis store numbers look even worse when we break it down by province. Except for Alberta with 286 store locations, all other provinces appear as if they will severely underserve the growing demand for cannabis products. For example, Ontario and Quebec contain 61.5% of the Canadian population, but only 8.2% of stores, or 46 locations.

Source: Cannabis Benchmarks, Statistics Canada, Provincial cannabis websites

The chart below shows the current number of stores in each province per 100,000 residents. Alberta is an anomaly with 6.5 stores per 100,000 people. While most of the other provinces are above the national average, Ontario, the largest, is well under it. In Ontario there are currently 0.17 cannabis retail stores and 6.5 liquor stores, respectively, per 100,000 people. We recognize that demand is not the same for these two categories, but there appears to be a major imbalance.

Source: Cannabis Benchmarks

A comparison that further illustrates this discrepancy is the June 2019 cannabis sales from online and physical stores in Alberta and Quebec as reported by Statistics Canada. Cannabis sales in both provinces were $18M during the month of June, but their populations are very different.

Source: Cannabis Benchmarks, Statistics Canada

Quebec’s population is roughly twice that of Alberta, yet sales are the same. As it is extremely unlikely that Albertans simply consume twice as much cannabis as Québécois – in addition to the fact that adult residents of Quebec could simply order products online if going to a shop is not convenient – this data suggests that licensing more legal cannabis outlets and increasing physical access to the regulated market is a step that can be taken to boost legal sales and, by extension, reduce the size of the illicit market.

*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..

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20 September 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved