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Opportunity Assessment of the Canadian Legal Recreational Cannabis Market, 2019 - Will Edibles Take a Bite Out of Cannabis Flower Sales? - ResearchAndMarkets.com

February 25, 2019

DUBLIN--(BUSINESS WIRE)--Feb 25, 2019--The “Canadian Legal Recreational Cannabis Market 2018-2022” report has been added to ResearchAndMarkets.com’s offering.

The Canadian Recreational Cannabis Market is modeled over a four-year time horizon, focusing on cross-price elasticity of demand of individual consumer cohorts. Second order model drivers include Canadian population dynamics, producer efficiency gains, and spillover effects of recreational legalization.

In summary, the research finds:

  • Canadians will consume 473.7 metric tons of recreational cannabis in FY2018; consumption will increase to 860.8 metric tons by FY2022.
  • At the inception of legalization pretax prices will average $8.33 CAD per gram, falling 28.3% to $5.97 CAD by FY2022. As in any black-to-white market, legal producers must underprice illegal ones to maintain a sustainable market, and thus, Canadian Licensed Producers should seek to price competitively and pass on associated costs and other efficiency gains to end consumers.
  • Throughout the modeling period, heavy and regular users drive the lion’s share of demand (see graph above), 95% in FY2018 to 94.5% in FY2022.
  • Total revenues will increase over time, with higher sales volume offsetting downward pricing pressure. Revenues of $5 billion CAD are projected for FY2018, increasing to $7 billion CAD in FY2022.
  • Importantly, increasing revenues should not be conflated with overall market growth; it is instead a function of existing consumers moving from the black to the white market. Contrary to the consensus view, it is predicted that total market demand will contract by an average of 0.98% annually over the four-year period in the absence of population growth.
  • With expectations for overall market growth tempered, investors may wish to focus on Licensed Producers that emphasize cost efficiency.

Topics Covered

  1. Executive Summary
  2. Introduction
  3. Who Drives Recreational Sales?
  4. Consumer Profiles
  5. Puff, Puff, Pass: Sales to New Users Will Be a Flash in the Pan
  6. Legality Bump: Word of Mouth Effect
  7. Risks of Narcotic Abuse
  8. Will Edibles Take a Bite Out of Cannabis Flower Sales?
  9. Unpacking Cannabis Expenditure
  10. Link Between THC Yields and Prices Is Overwrought
  11. Bridging Perception and Reality: The Chemistry and Biology of Potency
  12. A Zero-Sum Game: Tug of War Between BMC and CRCM
  13. Segment Proclivity for Contraband Procurement
  14. Supply-Side Dynamics
  15. Death and Taxes
  16. The Dealer Next Door
  17. Cost Structures by Growing Operation
  18. End Game: Revenue Trajectory
  19. Dissecting Aggregate Demand
  20. End Game: Revenue Trajectory
  21. Licensed Producer Profiles
  22. Aphria (APH) Firm Profile
  23. Canopy (WEED) Firm Profile
  24. ABcann (ABCN) Firm Profile
  25. Aurora Cannabis (ACB) Firm Profile
  26. CanniMed (CMED) Therapeutics Firm Profile
  27. Cronos Group (MJN) Firm Profile
  28. Emblem Corp (EMC) Firm Profile
  29. Emerald Health Therapeutics (EMH) Firm Profile
  30. Newstrike Resources Ltd (HIP) Firm Profile
  31. Harvest One (HVT) Firm Profile
  32. Invictus MD Strategies Corp (IVITF) Firm Profile
  33. MedReleaf Corp (LEAF) Firm Profile
  34. OrganiGram Holdings Inc (OGI) Firm Profile
  35. Supreme Cannabis (FIRE) Firm Profile
  36. Hydropothecary (THCX) Firm Profile
  37. References

List of Exhibits

Exhibit 1: Heavy and Regular Consumer Demand Rules the Day

Exhibit 2: The Cost of Evasion Adds Up

Exhibit 3: Cannabis Spend Is Greater Than Spirits Spend

Exhibit 4: Survey Data Implies That Cohort Sizes are Static

Exhibit 5: They Are Dynamic and Fluctuate with Time

Exhibit 6: Sources of Reporting Biases

Exhibit 7: Cumulative Cannabis Habituation Risk

Exhibit 8: Incremental Cannabis Habituation Risk

Exhibit 9: Canadian Demographics Are a Headwind

Exhibit 10: Cumulative Alcohol Habituation Risk

Exhibit 11: Cumulative Cocaine Habituation Risk

Exhibit 12: Trial Rates are Driven by the Word of Mouth Effect

Exhibit 13: Potential Adopters Live Up to Their Name

Exhibit 14: Cannabis’ Overdose Risk Is Lower Than of Other Narcotics’

Exhibit 15: Cannabis Risk Factor Loads Are Different from Alcohol’s

Exhibit 16: Whose Got Time for That?

Exhibit 17: Prices Are Driven by Perceived THC Content

Exhibit 18: Not Actual THC Content

Exhibit 19: Legal Premium Will Funnel Demand into Illicit Market

Exhibit 20: The Most Lucrative Segments Are the Most Price Sensitive

Exhibit 21: Cannabis Spend is Highly Skewed

Exhibit 22: $1 Price Hike Can Dent Heavy Consumers’ Wallets

Exhibit 23: Occasional Consumers Face Raw Deal

Exhibit 24: It is Hard to Do Hard Time

Exhibit 25: Dissuading Contraband Purchases is No Mean Feat

Exhibit 26: Excise Tax = Cost Advantaged BMC

Exhibit 27: Coordinated Tax Regime Is Unlikely

Exhibit 28: Sin Taxes Will Likely Be Driven by Spillover Effects

Exhibit 29: Cannabis Is Usually Sourced from Friends and Family

Exhibit 30: Pound Per Pound Sin Taxes Offset Efficiency Gains

Exhibit 31: Legal Demand Gains Driven by Most Frequent Consumers

Exhibit 32: Heavy Consumer Contraband Purchases Will Ebb

Exhibit 33: Regular Consumer Demand Cascades Into CRCM

Exhibit 34: Price Volatility Is Pink Noise

Exhibit 35: APH Share Performance

Exhibit 36: APH Key Statistics and Ratings

Exhibit 37: APH Selected Fundamentals

Exhibit 38: WEED Share Performance

Exhibit 39: WEED Key Statistics and Ratings

Exhibit 40: WEED Selected Fundamentals

Exhibit 41: ABCN Share Performance

Exhibit 42: ABCN Key Statistics and Ratings

Exhibit 43: ABCN Selected Fundamentals

Exhibit 44: ACB Share Performance

Exhibit 45: ACB Key Statistics and Ratings

Exhibit 46: ACB Selected Fundamentals

Exhibit 47: CMED Share Performance

Exhibit 48: CMED Key Statistics and Ratings

Exhibit 49: CMED Selected Fundamentals

Exhibit 50: MJN Share Performance

Exhibit 51: MJN Key Statistics and Ratings

Exhibit 52: MJN Selected Fundamentals

Exhibit 53: EMC Share Performance

Exhibit 54: EMC Key Statistics and Ratings

Exhibit 55: EMC Selected Fundamentals

Exhibit 56: EMH Share Performance

Exhibit 57: EMH Key Statistics and Ratings

Exhibit 58: EMH Selected Fundamentals

Exhibit 59: HIP Share Performance

Exhibit 60: HIP Key Statistics and Ratings

Exhibit 61: HIP Selected Fundamentals

Exhibit 62: HVT Share Performance

Exhibit 63: HVT Key Statistics and Ratings

Exhibit 64: HVT Selected Fundamentals

Exhibit 65: IVITF Share Performance

Exhibit 66: IVITF Key Statistics and Ratings

Exhibit 67: IVITF Selected Fundamentals

Exhibit 68: LEAF Share Performance

Exhibit 69: LEAF Key Statistics and Ratings

Exhibit 70: LEAF Selected Fundamentals

Exhibit 71: OGI Share Performance

Exhibit 72: OGI Key Statistics and Ratings

Exhibit 73: OGI Selected Fundamentals

Exhibit 74: FIRE Share Performance

Exhibit 75: FIRE Key Statistics and Ratings

Exhibit 76: FIRE Selected Fundamentals

Exhibit 77: THCX Share Performance

Exhibit 78: THCX Key Statistics and Ratings

Exhibit 79: THCX Selected Fundamentals

For more information about this report visit https://www.researchandmarkets.com/research/ztxkl5/opportunity?w=4

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SOURCE: Research and Markets

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PUB: 02/25/2019 12:10 PM/DISC: 02/25/2019 12:10 PM


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