Cannabis sales could jump with edibles, but industry should be prepared

Edibles, extracts and topicals could bring in millions of consumers, many of them ‘canna-curious,’ but Canadian producers will face challenges.

Canadian Cannabis 2.0 is here! It’s been over a year since recreational cannabis was legalized for adult use in Canada, and with the edibles, extracts and topicals category recently legalized, the market is shifting into what many envision as a new wave of consumption. How will the introduction of these new products impact the market?

Let’s start with Cannabis 1.0.

Canada legalized recreational cannabis in October 2018 with the Cannabis Act, becoming the first G7 nation to do so. Legalization was met with much fanfare and a very bullish outlook for operators in the space. In the first stage, cannabis consumers got access to dried flower and oils. However, consumer purchases have been limited.

Many point to regulations as the reason that financial results for the first year have been sobering, and some highly valued publicly traded companies have seen their stock prices tumble in recent months. Limited product offerings have not been attractive enough to entice all consumers away from the illicit market. Brands have found it difficult to connect with consumers because there are not enough retail outlets in the country and because of the Cannabis Act’s heavy restrictions on the promotion of cannabis and cannabis-related products.

Ontario has 14.5 million people. The province has issued only 75 cannabis retail licences. Once all locations are actually open, there will be roughly 1 store for every 193,000 people. On the other hand, Alberta currently has the most retail stores in the country, with 300, which is about 1 store for every 14,500 people. To compare, there are almost 3,000 liquor stores in Canada, with 739 in Ontario and 874 in Alberta. You do the math.

Let’s hear it for Cannabis 2.0.

Canada’s second coming of cannabis legalization this fall means a new range of choices for buyers. Retailers will soon be able to stock shelves with:

• edibles: foods and beverages;
• extracts: other ingestible products, like capsules and tinctures; and
• topicals: products applied to hair, skin and nails. 

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