A new report was released today by financial consulting firm, Deloitte with respect to the pending new market for cannabis edibles in Canada. According to Deloitte, the current market for “next-generation cannabis products” is worth an estimated $2.7 billion, with more than half of this total attributed to cannabis edibles.
Currently, value-added cannabis products are scheduled to become legal in Canada on October 17, 2019, with draft legislation currently under debate. This new cannabis market in Canada would be in addition to the existing market for recreational and medicinal cannabis, estimated at approximately $6 billion.
A BNN Bloomberg article quoted Jennifer Lee, Deloitte Canada’s cannabis national leader.
"When we legalize in October again for edibles, we are in a world where the formats and the assortment is much broader. The use cases are much broader."
In specific terms, Deloitte estimated roughly $1.6 billion will be spent on cannabis edibles in Canada, with another $529 million and $174 million to be spent on infused beverages and topicals, respectively. Parallel to this, spending on concentrates is projected at $140 million, with $116 million estimated for tinctures and $114 million estimated for capsules.
Looking further down the road, Deloitte sees this market doubling over the next five years. Lee doesn’t view the market for these new products as encroaching upon revenues for existing categories of cannabis products.
There was also a cautionary note from Deloitte on other sectors of the economy that are expected to be impacted by this next step in cannabis normalization. According to Lee, consumption of cannabis edibles “overlap a lot with alcohol” and “there are going to be tradeoffs.”
With alcohol sales already flattening globally, this is another indication of why multinational alcohol beverage companies are already establishing a foothold in the Canadian cannabis industry. Investors will likely continue to see increasing investment and consolidation on this front.
Meanwhile, the Deloitte survey found that consumers see topical cannabis products as potentially replacing other medicinal (pharmaceutical) products. Deloitte framed this as a “cause for concern for the traditional pharmaceutical sector”.
The survey involved 2,000 adult Canadians, taking place between February 26 and March 11.