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Oh, Canada: What the U.S. can learn from Canada’s marijuana rollout.

Writer's picture: Melissa Vonder HaarMelissa Vonder Haar

By Melissa Vonder Haar

Originally ran in NACS Magazine, July 2020



When Canada became the first major country to allow adult-use cannabis sales in October 2018, analysts and investors alike projected major numbers. Deloitte Touche Tohmatsu Limited predicted Canadians would purchase $4.34 billion in the first year of legal marijuana sales.


As it turns out, that projection was quite off. Statistics Canada reported non-medical cannabis sales hit $1.2 billion in the first full calendar year.


Not everyone was surprised by Canada’s first-year numbers. It’s a pattern similar to what happened in U.S. recreational states like California, Colorado and Oregon, said Jessica Lukas, senior vice president of commercial development at the cannabis research company, BDSA. “It’s interesting when we’re all surprised that a market doesn’t perform as well as we think it will—after seeing every single market not perform as well as we thought it would the first year,” she added.


Jonathan Havens, a partner at Saul Ewing Arnstein & Lehr LLP who has worked on a number of deals involving U.S. cannabis companies going public in Canada, agrees that it can be difficult to predict the shape early cannabis markets will take. This is especially true when regulations vary state-to-state, as in the U.S. or province-to-province, as in Canada. “Knowing the rules versus how they’re rolled out and seeing how consumers respond to them can be challenging,” he said.


Pablo Zuanic, a cannabis analyst at Cantor Fitzgerald, said the data suggest Canada’s rollout was a bit behind other recreational markets. In a recent research note, Zuanic wrote that Canada’s per-capita sales were “less than half” where Colorado was after 14 months of legalization. At that point, Canada’s market was about C$45 (US$33) per person, whereas Colorado was at C$97 per person 14 months into its adult-use cannabis program.


While a period of adjustment is typical, there were some unique aspects of Canada’s marijuana launch that caused unnecessary problems. This information might prove useful for the U.S. to consider if—or when—marijuana is legalized.


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