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Consumption Trends in Canada

As we approach the first anniversary of federal recreational cannabis legalisation, we can now reflect on how this cultural shift has affected Canadians’ consumption of cannabis.

While new regulations have provided enough legitimacy for some skeptics, seasoned users already have their trusted illegal sources in place with no intention of breaking loyalty. The latter believe that the pricing, convenience, and quality of products in the unregulated market cannot be rivaled by that of legal brands. Converting these experienced users has been one of the biggest challenges for the industry.

However, with each month passing, and regulated shops becoming more ubiquitous, we are starting to see a change in purchase behaviour.

The National Cannabis Survey by Statistics Canada covering the first quarter of 2019 stated that three-quarter of Canadians (76%) who consumed cannabis in the first half of 2019 cited quality and safety as an important consideration when purchasing cannabis, while 42% mainly considered price. About one-third also reported accessibility (such as open evenings and weekends), location (proximity to home), and the availability of a preferred potency (or formulation) as important.

Private cannabis retail sales reached a new high in July at $94,605,592.

The study notes that Canadians were beginning to change their cannabis source in the first three months of 2019. An estimated 47% (or 2.5 million) purchased cannabis from legal sources, including retailers and online licensed producers. This number did not shift much in the second quarter survey, with a reported 48% of consumers purchasing legally. Since quality and safety are such important criteria when deciding to buy cannabis, and since regulated cannabis undergoes strict testing, this trend will likely continue.

This conversion may be slower than desired, but sales are already seeing a positive impact. According to estimates from Cova, a point-of-sale system designed for cannabis retail in North America, private cannabis retail sales reached a new high in July at $94,605,592, which is up 20% from June. These sales estimates are based on 306 private Canadian cannabis stores operating in July, an increase from 256 stores in June.

Potency and Cannabinoid Ratios Influence Purchase Decisions

In order to gain a better understanding of what customers gravitate towards, we need to look at all the factors that go into a cannabis sale. Do consumers prefer dry flower or ingestible oil? Are they looking for high THC or balanced product?

The range of cannabis products offered by regulated brands ensures that users of all experience levels can find something that suits their needs. A March article from Nielsen discussing Canadian legal cannabis consumption and category potential, noted that consumer knowledge of THC and CBD factor into consumption trends. They discovered that 78% of Canadian consumers are aware of CBD, but only 16% understand it. In terms of products consumed, 19% have legally tried THC varieties, 11% favoured CBD varieties, and 9% used more than one format.

Frequency of use is also a factor. In the National Cannabis Survey’s second quarter results it was found that daily users were 2.5 times more likely to use three or more types of products compared to those who used less often. Daily users were also more likely to incorporate non-dried products, but less likely to exclusively use them.

New cannabis users favour balanced (1:1) and lower THC products, according to research conducted by Lift & Co. 60% purchase products with less than 19% THC. On the other hand, cannabis connoisseurs are purchasing high THC products. 58% of connoisseurs buy cannabis with more than 20% THC.

Customers Show Strong Preference for Smoking Dried Cannabis

With a product portfolio consisting of dried flower and ingestible oil, it’s no surprise that the former was the most popular. Dried cannabis was reported to be used by 84.2% of consumers in the first quarter of 2019. Dried cannabis sales in June 2019 increased 4.7% compared to May, whereas oil decreased 2.1%.

For 45% of people, flower was the only product used, whereas 39% preferred a mixture of products. Only 15.8% consume products other than flower.

Looking closer at the demographics purchasing these categories, users aged 19-39 make up the flower market, with those over 65 favouring oil.

New cannabis users favour balanced (1:1) and lower THC products.

Unsurprisingly, smoking is still the preferred method of consumption for Canadians. In a December 2018 study conducted by Western Canadian research company Insights West, it was found that two-thirds (67%) of Canadian cannabis users regularly or occasionally smoked a joint, with 27% using oil (either in capsules or drops). In the first half of 2019 these numbers remained somewhat stable, with two-thirds of male (68%) and female (62%) consumers still choosing smoking. However, females (14%) were almost three times more likely than males (5%) to have consumed cannabis through “other methods,” such as the application of products on the skin or under the tongue.

What’s Next?

Oils are proving to be a difficult sell. Canopy Growth Corp reports a huge inventory of unsold Tweed-branded oils and gel capsules. According to Mark Goliger, chief executive of National Access Cannabis, most of their 35 retailers are having problems selling oil as well.

The launch of edibles, concentrates, and topicals by the end of this year is an exciting expansion both for retailers and consumers. There is already a demand, as stated in the study by Insights West, with 36% of past-year cannabis users saying they consume edibles on a regular/occasional basis. Vaping and oils are also on the rise, at 30% and 27%, respectively. And 10% say they consume cannabis in drinkables on a regular/occasional basis. The National Cannabis Survey from the first half of 2019 further corroborates this: 26% consumed edible, as well as other types of products, such as liquid concentrates (20%), cannabis oil cartridges or vape pens (19%), and hashish or kief (16%).

We can definitely expect an increase of new users who want something more discreet and manageable than what is already available. It will be interesting to see how these new formats influence consumption trends, especially in a dry flower-heavy market.