New Cannabis Markets: Show Us the Money!

A bevy of new territories began selling legal cannabis in 2018, including Canada, Massachusetts, Maryland, Ohio, and Oklahoma. How well these new markets are faring gives us a sense of the strength of the cannabis market and how closely actual results are meeting expectations.

Great Expectations for Canada  

As CNBC reported, when the country’s first recreational cannabis dispensaries opened on October 17, 2018, Canada became “the world’s largest legal marijuana marketplace.”

No official government tally is available for Canada’s first three months of legal cannabis sales, so it is not clear how well Canada has performed so far.

Statistics Canada projected sales would hit $1 billion in the fourth quarter of 2018 for the entire country. However, the only results provided by Statistics Canada so far are for the sales in the first two weeks after legalization, which totaled $43 million.

Vice, meanwhile, reported that Canadians spent $1.6 billion on legal cannabis in 2018, based on a report by Arcview Market Research and BDS Analytics.

Going forward, Arcview projects that Canada’s legal cannabis market will hit $7.8 billion in 2022. Recreational cannabis is expected to make up the lion’s share, with medical cannabis generating $1.4 billion of the total.

Deloitte projects that the total cannabis market in Canada, including medical and illegal as well as legal recreational products, will 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—in the first year.

According to Statistics Canada, Canadians spent $5.7 billion on cannabis in 2017, the vast majority of which came from the black market. This shows a strong demand for cannabis that will translate into large figures as consumers transition to the legal market.

Massachusetts Strong Out of the Gate

Massachusetts generated $23.8 million in recreational cannabis sales since its first dispensaries opened in November 2018, according to state officials. The number of dispensaries has increased from two to eight since sales began.

With only two dispensaries operating, the outlets totaled $9.3 million in recreational marijuana sales during the first four weeks of operation. The two dispensaries took in more than $440,000 on the first day of sales, and the state averaged $2.3 million in sales per week.

These are strong numbers compared with first month sales in other states that had many more dispensaries operating, such as Oregon ($14 million, 320 dispensaries), Colorado ($14.7 million, 59 dispensaries), and Nevada ($27.1 million, 53 dispensaries).

Maryland Med Market Soars

In its first year of operation, Maryland’s medical marijuana sales mushroomed to $96.3 million, according to state officials.

Medical cannabis sales in Maryland began in December 2017 with the opening of 10 dispensaries, and demand was so strong that supplies ran out within days. Since that time, the number of dispensaries has grown to 71.

Maryland’s first-year medical cannabis sales topped those of Illinois, Massachusetts, and New York combined. With about 52,000 registered patients at year’s end, Maryland also outpaced Illinois and New York, which each had fewer than 13,000 patients after one year of sales.

Oklahoma Posts Strong Med Sales  

Oklahoma, which legalized medical cannabis in June 2018, began selling plants in October and dried flower in December. In the first full month of operation, Oklahoma’s four dispensaries sold nearly $1 million worth of medical cannabis.

The Oklahoma market is projected to generate $400 million in annual sales over time, according to Marijuana Business Daily estimates.

Domino Effect

Legalization of recreational cannabis in Massachusetts seems to be spurring other New England states into action, including New York, New Jersey, and Connecticut. 

“Now that there’s cannabis stores in Massachusetts, we are really starting to see the dominoes fall,” said Matt Schweich, deputy director of the Marijuana Policy Project.

As mjbizdaily notes, recreational marijuana seems poised to sweep across the Northeast, which could mean billions of dollars of new business opportunities in the densely populated region.

Legalization Sweeping Across Europe

As ICBC reports, there are “fresh signs that wide-spread cannabis reform is afoot across the European Union.”  As the new year began, several European countries moved forward with their legal cannabis programs, including Poland, Portugal, and Luxembourg.

In Poland, medical marijuana supplied by Canada’s Aurora Cannabis went on sale in Polish pharmacies on January 17.

Luxembourg last year announced that it planned to legalize recreational cannabis, which would make it the first EU country to do so. Luxembourg currently is moving ahead with its medical cannabis program.

In Portugal, two bills have been introduced in the Parliament to legalize recreational cannabis.  As of January 15, the medical use law in Portugal, as well as the right to export the drug, was formalized by the Republic Journal, the official publication of the government documenting the passage of new laws.

Cultivation Craze

Another sign of the burgeoning cannabis market in new territories is the number of companies applying for cultivation licenses. In Germany, 79 bidders have applied for the 13 cultivation licenses that will be granted.

Only medical cannabis is legal in Germany, and until the first internal harvest occurs, which is expected in the last quarter of 2020, all medical cannabis flower and oil sold in Germany will continue to be imported.

In Canada, more than 800 new applications were in the pipeline, according to Health Canada.  There currently are 145 licensed cultivators, processors, and sellers in Canada. Beacon Securities analyst Russell Stanley says the Canadian market cannot support so many cannabis producers, which means “a reckoning is coming.”

Altacorp Capital predicts that cannabis cultivation companies will experience “margin compression” as the market matures. To combat this threat, cannabis producers must take measures to minimize their cost of operations. One of the best ways to control costs and maximize efficiency is through a highly integrated and automated cannabis management system.

As the maker of the most modern, integrated, and scalable cannabis manufacturing solution, MaxQ has deep cannabis industry expertise. Contact us to learn more about the latest trends and management solutions in the cannabis manufacturing industry. 

 

Please Login to Comment.

This site uses Akismet to reduce spam. Learn how your comment data is processed.