Last year was a bit of a rocky ride for the Canadian cannabis investment sector. Canadian cannabis companies hoped to position themselves in the growing markets south of the border as federal legalization was hanging in the balance. With the prices of recreational cannabis continuing to dip, cannabis producers’ financial resilience was really put to the test. All of this while anxiously awaiting Ottawa’s three-year review of cannabis legalization in hopes of long-awaited policy changes (whose deadline isn’t until 2023).
With all of this uncertainty and hope for change on the horizon, we thought we’d lay out some of the market trends we anticipate to see within the Canadian cannabis sector in 2022:
Federal Legalization of Cannabis in the United States
Today, Canada is one of the only industrialized countries where cannabis is fully legal. As a result, this makes cannabis capital much more accessible for Canadian producers than those in the United States. As it continues, Canada’s structural advantages will no doubt be an edge as other countries follow suit. If the United States were to legalize cannabis, it would likely mirror much of Canada’s regulations—leaving Canadian cannabis companies in a very favorable position to expand their global reach.
In a congressional defense bill, the House of Representatives withdrew an amendment that borrowed heavily from the SAFE Banking Act—a new law that would allow federally-regulated financial institutions to provide banking services to marijuana companies. While this may have seemed like a bump in the road to legalization, we’re hopeful that this year’s midterm elections might have some new and improved cannabis measures on the ballot. Wouldn’t that be nice?
Eradication of Municipal Bans of Licensed Cannabis Retailers
As of late, the Canadian cannabis market has been at a bit of a standstill. While recreational cannabis has been legal for over three years, many communities still have trouble accessing it. Bans on brick-and-mortar retailers halted growth and forced consumers to commute long distances to acquire their products. Licensed retailers have found innovative ways around this like evolving marijuana delivery services and using the virtual realm to their advantage. But is it enough?
In Ontario, the licensing commission for cannabis retailers reported that 66 of 414 communities in the province had blocked the opening of cannabis retail stores. These bans have highly impacted the Canadian cannabis market. We hope to see the number of municipal bans in Ontario and other municipalities fall in 2022—providing much-needed room for continued market growth.
Reduce Obstacles for Canadian Edible Products
In Canada, the current potency limit is capped at 10 milligrams of THC per package. This potency is way too low for experienced consumers and patients living with chronic pain and other medical conditions. You’d think a fully legal cannabis market would encourage consumers to purchase their product from government-licensed retailers, but the unregulated market still provides more options in terms of potency. These low dosage regulations only work to help the illicit market in filling the gap. According to a Deloitte report, 28% of participants who prefer buying unregulated products said that higher THC content would prompt them to switch to regulated sources. Perhaps 2022 will bring some much-needed reform in dosage regulations for the Canadian edibles market.
Closing the Gap of Price Disparity Between Legal and Illegal Products
As progress is made in Canadian cannabis policy reform, the falling prices of regulated products also create a promising landscape for market growth. According to new Statistics Canada data, the sales of regulated adult-use cannabis in Canada overtook illegal transactions for the first time in the third quarter of 2020. That trend seems to have carried into 2021. More than half of cannabis products purchased from July to September were from government-licensed retailers.
In Ontario alone, legal cannabis channels trumped the illicit market for the first time ever. No doubt, this is in response to their diligent work in decreasing prices on regulated products and going after unlicensed dispensaries.
Leveling out prices, widening the assortment of inventory, and expanding retail options are all contributing to the Canadian cannabis market’s success. While much still needs to happen to eradicate the underground market entirely, price reductions have certainly helped narrow the gap and drive some illicit sellers to retreat. Albeit, not without a fight.
Cannabis Delivery Services Are Here to Stay
Whether as a response to outdated cannabis regulations or post-pandemic accommodations, recent years have opened doors for so many new virtual industry trends like online dispensaries and cannabis delivery services.
As we look into 2022, we can expect the Canadian online dispensary market to continue to thrive. With almost every industry being forced to pivot as a response to COVID-19, cannabis delivery services (which aren’t a novel idea) saw major upgrades and consumers couldn’t be happier. Whether you need cannabis to live a more quality life or just like vaping with your friends on a chill night out, marijuana delivery services make cannabis products more safely accessible.
Mainstream companies are definitely taking note. Take a look at Uber—they recently launched a pilot program in Ontario allowing customers to order and pay for cannabis products (for in-store pick-up) through their app. While they’ve made no promises on expanding at this time, a spokesperson for the company stated that they will be exploring more opportunities as laws and regulations evolve.
Could UberWeed be in our future? We’d like to think so.
2022 and Beyond
Since its legalization in 2018, marijuana has become the most valuable crop in Canadian horticulture, with an estimated annual market value of $5.7 billion, according to Statistics Canada. With the cannabis era continuing to dawn, so too does cannabis research and innovation.
There is still so much that cannabis can teach us. We continue to see new studies being conducted, a growing consumer base, a rise in detox products, THC-infused products, new smoking accessories, and new innovative ways to enjoy the benefits of this amazing plant. No one can say with 100% certainty exactly what the future holds, but one thing is for sure—cannabis in Canada is on the up and up; we can’t wait to see how it evolves in 2022.
This content reflects the personal opinions of the author. It is accurate and true to the best of the author’s knowledge and should not be substituted for impartial fact or advice in legal, political, or personal matters.
© 2022 Laura Henry