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Retail Cannabis Holiday Sales Trends

With fall 2021 winding down, retailers begin looking forward to the rapidly approaching holiday season and the sales surge it could provide.

Before the COVID-19 pandemic, retailers could rely on consumers exhibiting predictable spending behaviour and statisticians could factor in prevailing socioeconomic factors that influence spending habits. It used to be, to embellish Mark Twain, that “In this world, nothing is certain, except death, taxes, and holiday sales predictions backed by reliable data.” The only thing certain about sales forecasts during the pandemic is their uncertainty.

Only One Season of Holiday Sales Data Untouched by COVID-19

Historical sales data is at the heart of retail sales predictions, and although three holiday seasons have now passed since legalization in Canada, we truly can’t rely on historic cannabis sales data within that period to predict trends in any detail.

Holiday shopping season 2018/19 (November, December, January) was too soon after legalization to predict where sales would end up. There were fewer than 200 retail cannabis stores in Canada and the reported November 2018 sales were $55 million, with December 2018 hitting $58 million in sales. The 2019/20 season came and went just before the first reported case of COVID-19 in Canada and in November 2019, sales increased 148.6% over the year before, coming in at $136,775,000 and growing into December 2019 to reach $147,885,000.

In Winter 2020/21 holiday shopping was amid the second wave of the pandemic, re-tightening of restrictions, and in the case of Ontario, rolling lockdowns culminating in a full lockdown. While 2020 saw legal retail cannabis sales double Canada-wide, with November 2020 sales coming in at $259,413,000 and December 2020 sales peaking at 297,485,000 its begs the question, how much of that increase can be attributed to there being twice as many licensed cannabis stores? In December 2019, there were approximately 700 cannabis stores operating in Canada, while in December 2020, there were 1405.

Now, with the 2021/22 holiday season fast approaching, cannabis retailers have only one real year of holiday season data, 2019/2020, upon which to forecast.

What Can We Predict This Holiday Season?

First, we can look to typical retail sales trends and make some safe generalizations. Assuming no closures, resets, or further limitations, there will be the usual late November to mid-December spike in sales, followed by a sharp decline in January.

We can also predict that individual store sales will be better this holiday season than last year, because the country is not in lockdown.

At the time this article was written, there were fewer closures and restrictions than the prior year, and 83% of Canadians over the age of 12 had been double vaccinated (and are probably less anxious about in-store shopping).

Unemployment rates are inching closer to pre-COVID numbers, as well, with joblessness at 7.5% in July 2021 compared to a high of 13.7% in May 2020. As employment rates rise, so does expendable income and expanded retail hours as retailers can properly staff their stores.

On top of that, purchases from legal cannabis retailers are rising. In 2020, despite the pandemic, 41% of Canadians who bought cannabis purchased it from a legal storefront, compared to 24% in 2019.

Expected Shopping Trends: Topicals and Edibles

Dried cannabis products are still the main source of revenue for most retail stores but demand for products within the categories of topicals and edibles seems to be rising rapidly month-over-month. It would be expected that retailers will continue to see an increase in dried flower sales, however, the categories of topicals and edibles will continue to keep pace as awareness and availability have increased since their legalization in October 2019.

The COVID-19 pandemic has significantly impacted how consumers shop. Nevertheless, this holiday season, expect to see another jump of 25% to 30% in Canada over the prior year. Countless new stores, combined with the reopening of retail stores with full hours of operation and the availability of curbside pick up and delivery should bring positive sales data.

Edibles: Party goers are bringing edibles to adult dinner parties both as an after-dinner gift and as a way to avoid the odour and second-hand smoke when vaping or smoking at someone else’s home. The cannabis-infused beverage category continues to rise as well, as consumers reach for products they know how to consume.
Topicals: Consumers are buying gifts for their senior family members and friends who suffer aches and pains. Many seniors don’t know what to purchase, or where. Often, they are not comfortable going into a cannabis store due to the stigma still connected with purchasing cannabis. Younger family and friends continue to educate and introduce the items to the elderly. This trend is expected to continue to rise.

Rebecca Hardin, is President & CEO of Thrive Liquor & Cannabis Advisors

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