Let's talk about Cannabis consumption in Canada. We’ve got cannabis in Canada covered from every imaginable angle, from growing to sales, consumption and others. Most importantly of all, we know what Canadians have learned about cannabis post legalization.

The revenue in the Cannabis market in Canada is projected to reach US$5.63bn in 2024. It is expected to show an annual growth rate (CAGR 2024-2029) of 3.17%, resulting in a market volume of US$6.58bn by 2029. When compared globally, the United States is predicted to generate the most revenue (US$42.98bn in 2024).

Canada is the first major industrialized country to provide legal and regulated access to cannabis for non-medical purposes. The Cannabis Act (C-45) came into force on October 17, 2018. The Act legalizes and strictly regulates the production, distribution, sale, import and export, and possession of cannabis for adults of legal age.

During the first year of legalization of cannabis for non-medical purposes, legal sales were limited to dried cannabis, fresh cannabis, cannabis oil, cannabis plants and cannabis seeds. Starting on October 17, 2019, a wider array of products was permitted for legal production and sale, including cannabis extracts, edibles and topicals.

The regulation of cannabis remains a shared responsibility of the federal, provincial and territorial governments. Provinces and territories are responsible for regulating cannabis sales and distribution in their jurisdiction. They also have the flexibility to establish more stringent controls, such as further restrictions for personal (home) cultivation, restricting public use and access to some products, or increasing the minimum legal age.

The main objectives of the Act are to keep cannabis out of the hands of youth, keep profits out of the pockets of criminals, and protect public health and safety by allowing adults access to a quality-controlled supply of legal cannabis.

Over one in three Canadian adults use cannabis In 2023, more than one-third of adults aged 18 to 24 years (38.4%) and 25 to 44 years (34.5%) reported using cannabis in the previous 12 months, compared with 15.5% of adults aged 45 years and older.

About 1 in 10 adults aged 18 to 24 years (8.7%) and 25 to 44 years (10.3%) reported using cannabis daily or almost daily in the previous 12 months, compared with 4.8% of adults aged 45 and older.

Dried cannabis remains the top seller but inhaled extracts catching on Sales of recreational cannabis by provincial cannabis authorities and other retail outlets increased 15.8% to $4.7 billion in the 2022/2023 fiscal year. Most of the increase was due to higher sales of inhaled extracts (+59.0%), which accounted for one-quarter of total cannabis sales.

Dried cannabis remained the top seller in 2022/2023, accounting for almost two-thirds (64.9%) of sales.

Canadians of legal age spent on average $150 per year per person on cannabis in 2022/2023.

Two of every five dollars spent on legal cannabis enter government coffers

Federal and provincial governments received $1.9 billion from the control and sale of recreational cannabis in 2022/2023, up by almost one-quarter (+24.2%) from a year earlier.

Over two-thirds of Canadians who used cannabis in the previous 12 months bought legal cannabis With more than 3,000 legal cannabis stores in Canada, over two in three cannabis consumers bought from the legal market. Among those who used cannabis in the 12 months before the survey, just over 7 out of 10 (71.7%) bought exclusively from legal sources.

The main reasons reported for buying cannabis from a legal source were product safety (38.0%), convenience (16.9%) and a desire to follow the law (12.9%).

Retail sales of non-medical cannabis are a growing fraction of the retail sales of alcohol

From 2019 to 2022, liquor authorities and other retail outlets sold, on average, $26 billion worth of alcoholic beverages annually in Canada. In 2022, the annual sales of cannabis for non-medical purposes by provincial cannabis authorities and other retail outlets were $4.5 billion.

Cannabis-related drug offenses drop as a result of legalization

Before legalization, cannabis possession was almost always illegal and accounted for the majority of cannabis-related drug offenses.

After legalization, total cannabis-related offenses fell overall, and under the new legislation, most offenses are related to illicit importation and exportation.

In 2022, two-thirds (67%) of the 10,824 total cannabis offenses were for illicit importation and exportation, and 12% of cannabis-related offenses were for possession.

The downside of cannabis - Cannabis growth stunted in 2023

Growers sold $2.8 billion of cannabis seeds, vegetative plants and flowering tops (including leaves) in 2023, down 2.9% from a year earlier but 75.5% higher compared with 2019—the first full year of legalization.

Wastewater is flush with anonymous cannabis usage data

The Canadian Wastewater Survey has been regularly collecting wastewater samples from select municipalities across the country since 2019 to test for various drugs, including cannabis. Wastewater testing also proved a key tool to gauge COVID-19 levels during the pandemic.

What makes this survey so valuable is that a single sample represents the entire community served by the wastewater treatment plant at very low cost, provides nearly real-time data and, importantly, is naturally anonymous.

In line with results from other sources, wastewater testing has shown that cannabis usage has significantly increased in all the measured cities in recent years.

Growth was highest in Toronto, where average cannabis levels were up 85.2% in 2023 from three years earlier. Metro Vancouver saw the second-highest increase, with levels up 56.0% from three years earlier.

While Halifax has consistently had the highest average cannabis levels in wastewater nationally since data collection began, they had the smallest increase (+27.5%) among participating municipalities from 2020 to 2023.

Canada’s cannabis sector grew from October 2018 to December 2022, but started to decline in 2023

The economic activities associated with cannabis have always been in the Canadian economy but were allocated to other activities. Legalization made the direct measurement of the industry possible. Before legalization, experimental (modeled) estimates of cannabis-related economic activity were developed to create provisional measures of production and consumption activities. The cannabis sector accounts for about 0.5% of the total Canadian economy.

Industry headwinds persist

Despite the annual increase in sales, Canadian cannabis industry insiders say the regulated market still faces significant struggles. High excise taxes are a particular industry complaint, and the entrenched illicit market remains a key challenge.

Meanwhile, the industry is holding its breath for a legislative review of legalization due for release this spring, although that review is not guaranteed to lead to reforms that would benefit marijuana producers and retailers. Canada's cannabis retail sector is still consolidating, with some stores being acquired or closing entirely in 2023.

Government-owned cannabis businesses, including provincial wholesale and retail monopolies, have in many cases fared better than private-sector producers and retailers.

Poulos of Toronto Metropolitan University estimates that Canadian cannabis sales could grow by roughly 10% in 2024 over 2023. "Where that growth would come from is that continued trickling away of users from the illicit market - either entirely, or at least for some of their consumption".

Continued rollouts of legal cannabis stores in certain parts of Canada could also help, Poulos added. For example, the province of Quebec still has "fairly low penetration, store-wise," he said, noting that the leading province, Ontario, still has "a handful of cannabis deserts remaining" in municipalities that don't permit cannabis stores.