Canadian Cannabis Landscape vs Tobacco and Alcohol

Canadian Market - Cannabis - Tobacco - Alcohol


A new report from CIBC, one of Canada’s largest banks, estimates marijuana will be a $US6.5 billion industry by 2020 in the country.

That’s more than the $US5.1 billion Canadians spent on liquor in 2017, and it’s approaching wine sales. CIBC predicts Canadians will buy over 800,000 kilograms (over 1.7 million pounds) of marijuana by 2020.

The market will be led by adult-use (recreational) consumers, who CIBC predicts will account for 95% of sales, with the other 5% going to medical patients.

The private sector will be able to generate over $US1 billion in earnings on marijuana sales, with the bulk of that flowing into the production side – companies that cultivate and produce marijuana.

CIBC also predicts that mergers and acquisitions in the sector will continue at a “frenetic pace,” as producers seek to acquire medical expertise and elbow into new markets.

As one of Canada’s “Big Five” banks, CIBC’s report on the cannabis sector is a sign that large, institutional investors – at least in Canada – are taking a serious look at the space after remaining mostly hands-off.

Canada has legalised marijuana nationwide this summer, with retail sales likely to begin in November, depending on the province.

But truth be told, we don't have to wait till this summer to see just how much Canadians love their cannabis. According to recently released data from Statistics Canada, an estimated 4.9 million Canadians between the ages of 15 and 64 purchased $4.6 billion (CA$5.7 billion) worth of marijuana in 2017. This works out to about $974 per cannabis consumer. Keep in mind that this includes medical marijuana, as well as recreational cannabis, which has been given the green light in some provinces.

How does this compare to other so-called vice industries, you wonder? Data shows that the alcohol and tobacco industries in Canada generated a respective $18.1 billion and $13 billion in sales in 2016. Though cannabis still has a long way to go to catch these traditional vice industries in sales, the Canadian cannabis industry does have a major leg up when it comes to domestic production. The vast majority of alcohol and tobacco sold in Canada is imported. Meanwhile, practically all of the cannabis sold to Canadians is grown within the country. In fact, sales of Canadian cannabis outside the country as a percentage of total production has increased from 2% in 1961 to 20% as of 2017. Canadian growers are finding consumers, whether they be domestic or abroad.

Here's another interesting tidbit: according to Statistics Canada, more than 90% of the $4.6 billion sales figure were for non-medical purposes! This demonstrates just how much of a monster the recreational industry is and why YuuPay with SDZ will play a role in managing the on boarding of retail sites and dispensaries as these days 95% of all transactions are cashless and require infrastructure that YuuPay and SDZ currently have.