Cannabis Market in North America
The North America legal cannabis market amounted to $12 billion in 2018, growing by 30 percent on the year. The largest market was the United States, which totaled $10.4 billion. It was followed by Canada with $1.6 billion.
The report from cannabis industry analysts Arcview Market Research, in partnership with BDS Analytics, forecasts that the entire legal cannabis market in North America to reach $24.5 billion in sales – a 28% annual growth rate by 2021 – as more countries and states legalize cannabis for recreational use and existing markets mature and will grow to $47.3 billion six years later.
Canadian cannabis market has been steadily growing. The country has seen an average of a 10 percent increase each month in the number of Canadian patients signed up to receive medical cannabis. The sale of dried cannabis has grown steadily at 6 percent a month, and the sale of cannabis oil has been growing by 16 percent a month.
In 2017, about 4.9 million Canadians aged 15 to 64 spent an estimated $5.7 billion on cannabis for medical and non-medical purposes. This was equivalent to around $1,200 per cannabis consumer.
Canadian Cannabis Market Forecast
The federal government legalized recreational cannabis on October 17th, 2018 and sales at cannabis stores in the first 15 days after legalization totaled $43 million according to Statistics Canada. Canadians spent $1.6 billion on legal cannabis in 2018, more than double the amount that was spent on solely medical cannabis in 2017, according to a new report “The State of Legal Marijuana Market”, released by Arcview Market Research and BDS Analytics.
The total cannabis market in Canada, including medical and recreational cannabis products, is expected to generate up to $7.17 billion in total sales in 2019. Legal sales are expected to contribute more than half of this total – up to $4.34 billion.
The cannabis market is poised to have a major effect overall on Canada’s economy. One study from Deloitte Private pegged the potential economic impact of legalized recreational marijuana in Canada at more than $22 billion, including transportation, licensing fees and security.
According to the Canadian Imperial Bank of Commerce (CIBC) analysts forecast, by 2020, the cannabis industry will have a retail value of $6.8 billion, larger than the hard liquor market and almost as large as the wine market.
Fees and Taxes
Cost recovery for the regulation of cannabis includes four fees:
- Application screening fee: recovers the costs associated with screening new licence applications ($3,277 for standard licence applicants and $1,638 for micro and nursery licence applicants);
- Security clearance fee: recovers the costs associated with screening, processing, and issuing or refusing security clearances ($1,654);
- Import/export permit fee: recovers the costs associated with screening, processing, and issuing or refusing to issue an import or export permit for medical or scientific purposes ($610); and,
- Annual regulatory fee: recovers the aggregate costs of administering the cannabis regulatory program that are not covered under any of the other fees (2.3% of cannabis revenue for standard licence holders, or $23,000 if cannabis revenue is less than $1 million, and 1% on the first $1 million of cannabis revenue for micro and nursery licence holders or $2,500 in cases where cannabis revenue is less than $250,000).
- Licence holders who produce cannabis exclusively for medical purposes are exempt from the annual regulatory fee.
The federal excise duty rate will be 25 cents per gram of cannabis, or 2.5 per cent of the producer’s sale price of that product. An additional rate will apply for an agreeing province or territory.
|Cannabis product||Flat‑rate cannabis duty||Ad valorem cannabis duty||Flat‑rate additional cannabis duty||Ad valorem additional cannabis duty|
|Flowering material included in the cannabis product or used in the production of the cannabis product||$0.25 per gram||2.5% of the dutiable amount for the cannabis product||$0.75 per gram||7.5% of the dutiable amount for the cannabis product|
|Non‑flowering material included in the cannabis product or used in the production of the cannabis product (this includes flowering material that is industrial hemp by‑product)||$0.075 per gram||2.5% of the dutiable amount for the cannabis product||$0.225 per gram||7.5% of the dutiable amount for the cannabis product|
The adjustment rates for the additional cannabis duty required when packaged and stamped cannabis products are delivered to a purchaser in a listed specified province are the following:
- Alberta, 16.8%;
- Nunavut, 19.3%;
- Ontario, 3.9%;
- Saskatchewan, 6.45%.
It is important to note that excise duties are not paid directly by consumers. Rather, they are paid by manufacturers.
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