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Saturday, Aug 13, 2022
Mugglehead Magazine
Alternative investment news based in Vancouver, B.C.

Canada

Pandemic not responsible for rising pot sales in Canada: study

But the data fails to account for the impact of the illicit market

Pandemic not responsible for rising pot sales in Canada - study - muse
As lockdowns loomed in March 2020, many retailers said consumers were stockpiling cannabis. Photo by Nick Laba

While some reports pointed to pandemic lockdowns and related stressors as factors responsible for cannabis sales growth in Canada over the past couple years, new research suggests that’s not the case.

A study published this week in Drug and Alcohol Review concludes that increasing pot sales during after Covid-19 hit was consistent with pre-existing trends and more stores opening across the country.

While the researchers couldn’t rule out incoming restrictions in March 2020 as contributing to a boost in sales, they found little evidence of the pandemic influencing aggregate revenues over time.

“Canada’s legal cannabis sales growth during the pandemic’s first year was more consistent with ongoing market expansion than with pandemic effects,” reads the study

“Consequently, reports attributing increased usage and health impacts to the pandemic may be underestimating industry effects.”

But while general market trends and new stores explain most of the sales growth during 2020 and 2021, the researchers admit that sales grew more than what those two factors alone would have predicted.

Read more: Consumers and companies embrace cannabis retail rush before expected mass shutdown

For the study, researchers looked at monthly per-capita cannabis sales from March 2019 to February 2021.

They note other research showing that Canadians reported upping their cannabis use over the course of the pandemic, with 40% of consumers said they upped their intake. But the researchers explain that these trends could simply be due to cannabis legalization in general.

On the other hand, many pot companies have blamed their poor performance on pandemic-related slowdowns.

One of several limitations noted in the study is that it ignored medical and illicit cannabis sales. “However, recreational sales surpassed medical sales in late 2018 and illicit sales in summer 2020; so, our analysis covered most Canadian sales.”

But a limitation not mentioned is the shortfalls of the data referenced. Those sales data come from Statistics Canada, and the claim that recreational sales overtook the illicit market in 2020 have been widely discounted by industry experts.

At the time, many believed that the illicit sales still outpaced recreational by at least two-to-one.

Read more: Illicit likely still outpaces legal Canadian weed by at least 2-to-1

Read more: Canadian researchers concerned over continued spike in Covid-related cannabis and alcohol sales

With such glaring discrepancies at play, a better understanding of the relationship between sanctioned and unsanctioned sales could better explain trends related to market capture over time.

Underestimating effects of the industry highlights the need to further monitor the industry in Canada, the researchers say, as well as new legal markets potentially opening in Mexico, Israel and Germany.

But without a better understanding of underground figures, it’s likely that significant knowledge gaps will remain.

 

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