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Pandemic Had No Effect on Cannabis Sales

The doubling of Canada’s recreational cannabis sales during 2020-2021 has been repeatedly blamed on the pandemic and its public health measures. However, it was unclear whether the increases were due to pandemic effects or industry expansion.

A new study, by a team at Brock University, reviewed sales in the pandemic’s first 12 months and found most sales growth could be explained by existing retail trends and increasing store numbers.

The graph below demonstrates Canada’s legal recreational cannabis retail sales and store growth from March 2019 to February 2021.

cannabis store count
Per Capita Sales vs. Store Count

 

 

 

 

 

 

 

 

 

 

 

There was a modest but statistically significant change, as month-over-month sales growth accelerated during 2020–2021: the acceleration’s timing better fit January’s increasing product selection of legal vapes and edibles than March’s increasing pandemic measures.

The researchers also found more of a post-holidays sales drop in January than a pandemic surge in March. This was likely due to a post-holiday spending slump: people who spent more than normal on cannabis in December (for gifts or self indulgence) cut back a bit in January. That suggests that (outside of Ontario) the legal market has matured enough to begin showing a seasonal sales pattern, much as we see with alcohol and other retail sectors. Looking at the Statistics Canada data since then, there are similar dips in sales in January 2021 and January 2022.

The main exception to this trend is Ontario, which is still opening stores at a quick enough rate that the upwards growth in sales still overshadows any seasonal pattern. But that will likely change in a year or so as the industry matures.

This means Canadian regulators should attribute rising cannabis sales more to legal industry expansion than to pandemic impacts. And cannabis producers should not blame the pandemic for lackluster revenues.

See the complete report.

Tags: Brock University (1), cannabis research (7), cannabis sales trends (49), pandemic retail sales (1), recreational cannabis sales (2)