Canadian Cannabis Sales Hit Record Highs in 2022

According to predictions, in 2022, Canadians will buy more cannabis products than ever before — a shift that directly affects how much Canadian dispensary owners earn. Although the market may not have ramped up as quickly as global analysts initially projected, sales have continued a steady upward trajectory four years into the adult-use market.

As per MJBiz Daily, 2022 sales will likely hit $4.8 billion in Canada. That’s an expected 13.4 percent compound annual growth rate (CAGR) until 2030.

Cannabis retail storefronts across Canada — from independent dispensaries to national franchise chains — stand to benefit most from this sustained sales growth.

Rising Producer Competition Drives Cannabis Prices Down

Solomon Israel for MJBizDaily reported that across all cannabis product categories, prices continued to plummet across Canada. For example, the price of vape pens and concentrates each fell sharply by 35 percent, flower by 16 percent, and edibles by 11 percent.

In a world where seemingly all other goods are seeing inflation in prices triggered by supply chain issues and a global pandemic, Canada cannabis is experiencing the exact opposite.

Steep competition among cannabis producers is the primary driver of this price decline. According to BNN Bloomberg, approximately 800 individually licensed cannabis producers currently operate in Canada — roughly one third serving the recreational market and two thirds serving the medicinal market.

Canada’s cannabis market remains unsettled four years after legalization. As more producers and retailers compete for market share, downward pressure on cannabis prices will continue — making it critical for dispensaries to explore data-driven cannabis retail analytics tools.

Mergers and Acquisitions Will Reshape the Cannabis Industry

With the current landscape of steep retailer and producer competition, there will likely be an increased number of mergers and acquisitions over the coming year — raising the stakes for dispensaries that rely on a compliant Canadian cannabis POS system.

Market Consolidation Favours Large Cannabis Producers

In the interview, BNN Bloomberg Nawan Butt, a portfolio manager at Purpose Investments, indicated that a market with more than 800 producers is not sustainable. He predicts that six major players will come to dominate the entire sector in only a few short years. This will help stabilize the Canadian cannabis market.

Small cannabis retailers face the same consolidation pressure. Many independent dispensaries struggle to compete with larger franchised brands expanding across Canada. In another BNN Bloomberg report, low prices combined with supply chain issues are reducing gross profit margins. As per BMO capital markets analyst Tamy Chen, interviewed for the piece, “It is hard for us to envision independent mom-and-pop retailers being able to generate sustainable profits in such an environment.”

Farm Gate Licenses Expand Cannabis Access Across Canada

In 2021, several provinces launched a new initiative for cannabis cultivators: the farm stand license or the Farm Gate program in Ontario. This initiative aims to mirror the formula perfected by wineries across the country. Saskatchewan has also authorized farm gate operations, though no licensees have launched to date, and additional provinces may adopt similar programs.

The Farm Gate program allows cultivators a complete seed-to-sale option, which may benefit from a smart printed menu for cannabis cultivators. Neighbours and tourists alike can shop hyper-local. Businesses can offer the freshest flower or more of an immersive experience. Plus, for residents in rural areas, there is improved access to legal sources of cannabis in their own community.

Federal Cannabis Act Amendments Are Scheduled for 2023

One major point that is missing from 2022 trends in the Canadian cannabis market is federal policy updates. The next big shakeup for the Canadian market will come in 2023, when the federal government is scheduled to amend the Cannabis Act. There will be five years of legal sales at this point, and surely many lessons learned.

Conservative Legislation Left Room for Future Reform

Lawmakers may have taken a relatively conservative approach when crafting the original legislation, as no one knew if an adult-use market would increase crime, ER visits, or other negative activities. But, it’s already clear that in 2022, the sky hasn’t fallen, and likely some of the amendments in 2023 will eliminate the more onerous aspects of the current Cannabis Act.

Most 2022 Canadian cannabis trends reflect patterns common in a maturing marketplace. That means smaller companies getting consolidated within larger ones. Also, prices evening out to what the market can bear, and slow and steady overall growth.