Published Sep 14, 2022
Pre-legalization of cannabis in Canada, about 1 in 3 Canadians had ever consumed cannabis in their lifetime. Approaching legalization in 2018, share prices surged as producers, brands and consumers expected a flood of consumption into the legal market. Instead that was not the case. Despite the prediction that legalization would be a category growth driver, over the next few years we saw little movement in the rate of Canadians trying cannabis.
Now, 4 years since legalization, the consumption rate has gradually increased. As of August 2022, nearly half of legal-consumption-aged Canadian adults have ever consumed cannabis. That is a 15% population increase over 4 years.
Measured R3M % of Canadians who have ever consumed cannabis vs have consumed in P4W
Is there a change in sentiment towards cannabis, a true lift in Canadian consumption, or a shift from illicit to legal markets?
With a gradual incidence growth rate, it may be assumed that there are new light consumers trying cannabis for the first time. However, there is an increase in heavy consumers of cannabis. These weekly (or more frequent) consumers aren’t trying cannabis for the first time. Instead, these consumers are converted from previously consuming the category in illicit markets to purchasing from legal outlets.
What are Heavy Cannabis Consumers?
Among the over 100,000 Canadians surveyed since April 2019, heavy consumers, those who consume cannabis weekly or more, are increasingly important to the industry. It should come as no surprise that there is a direct correlation between consumption frequency and annual purchase amounts. Heavy consumers make up 49% of all cannabis consumers and approximately 90% of cannabis purchases across all channels by value. On average, their value contribution per capita is >10x that of people who consume less than weekly. Learn more about who your heavy consumers are in this article.
Proportion of all purchases ($) by consumption frequency
Legalization was not a barrier in Canada to the cannabis industry, and therefore growth moving forward won’t be led by new entrants to the category. Instead, growth in cannabis will be achieved through penetration of existing cannabis consumers, particularly heavy consumers of the category, as well as continuing to convert illicit market shoppers to legal market shoppers. Understand how licensed producers attract cannabis consumers who are not well served by the illegal market, for reasons such as safety, and ensure competitive price points to continue to attract consumers to this form of purchasing the category.