Adult-use cannabis sales in Canada rose by 12.9 per cent year-over-year (YoY) in June, according to new data released by Statistics Canada on Wednesday.
Ontario was the top revenue contributor that month, generating $167.8 million — a 9.9 per cent rise from June 2022. Alberta placed second, contributing approximately $75.2 million, a significant increase from the $67.2 million the province raked in the previous year.
However, British Columbia had the most significant increase in pot-derived income from June last year percentage-wise, generating almost $66 million — a 22 per cent rise YoY.
Quebec’s cannabis revenue did increase YoY but at a slower rate than any other province, rising by 7.1 per cent to $53.4 million. Edmonton and Vancouver were Canada’s top cannabis revenue-generating cities in June, bringing in $24.9 million and $21.5 million respectively.
It is also notable that monthly recreational cannabis revenue in Canada exceeded $400 million from March to June, a dollar figure only obtained once in December during the previous 9-month period.
Despite growth, many small operators still struggle
Although adult-use sales have risen significantly this year, a new report from Health Canada has also shown that the country’s regulatory fees on cannabis are contributing to profitability challenges among smaller businesses in the industry.
Results from a 2021 survey by the government department detailed in the new report showed that although the government’s fees only represent a small portion of operating costs, they are still contributing to challenges in achieving profitability among small operators — which are already under significant pressure due to steep competition, inflation and other issues.
The government has spent over $430 million on cannabis regulation in the past five years and collected about $160 million from legal cannabis businesses to offset those costs.
“Fees collected under the order can impact smaller operations more than their larger competitors due to economies of scale,” read the report.
However, despite challenges in the industry, a June report from the cannabis market intelligence company Headset revealed that Canada’s cannabis sector has had a 157 per cent surge in sales over the past three years.
Major market players in the country’s industry include Cronos Group Inc. (NASDAQ: CRON) (TSX: CRON), Canopy Growth Corp. (TSX: WEED) (NASDAQ: CGC), High Tide Inc. (NASDAQ: HITI) (TSXV: HITI) (FSE: 2LYA), Aurora Cannabis (NASDAQ: ACB) (TSX: ACB) and TerrAscend Corp. (TSX: TSND) (OTCQX: TRSSF).