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Cannabis store expansion in Canada strongly linked to sales growth, but weakly related to prevalence growth

Cannabis store expansion in Canada strongly linked to sales growth, but weakly related to prevalence growth

The growth in cannabis retail stores between 2018 and 2020 was driven by more than just the move to legalize recreational weed three years ago, suggests a new Canadian study.

“From 2018 to 2020, Canada’s rapid cannabis retail expansion was strongly related to legal sales growth, but only weakly related to prevalence growth,” reports Michael Armstrong, an associate professor of operations research in Brock University’s Goodman School of Business.That discrepancy “implies prevalence growth during that period was related more to legalization’s other aspects and/or to the continuation of already-existing trends,” Armstrong writes in the pre-proof study in Drug and Alcohol Dependence.

To get a better feel for what, if any, relationship exists among increased cannabis stores, sales and prevalence, Armstrong looked at government data to calculate store numbers, retail sales and past-three-month users in 10 provinces.

What he found was that from 2018, the year following legalization, and 2020, “legal stores supported legal sales while having little apparent impact on prevalence.”

Specifically, store growth explained 46.3 per cent of the variation in provincial sales growth, with each added store associated with contributing average quarterly sales of $305,000. Compare that with store growth explaining only 7.7 per cent of the variation in provincial user growth. Armstrong found that “each added store was associated with 696 added users.”But a Canadian study published earlier this summer shows that access to cannabis varies widely across the country. “There is substantial variation in access between jurisdictions and evidence of concentration in lower-income neighbourhoods. These differences may contribute to disparities in cannabis use and harms,” authors write.

The findings of a study published in 2019, again looking at access to legal cannabis retail in Canada, were along similar lines. Investigators determined that marked differences in physical access to these stores was emerging between jurisdictions with private/hybrid retail models and those with government-only retail models.

“Ongoing surveillance, including monitoring differences in cannabis use and harms across jurisdictions, is needed,” study authors recommended.

In Ontario, Canada’s largest province and cannabis market, the province recently welcomed its 1,000th weed store. Even though cannabis retail has been opening in Ontario since the spring of 2019, the rollout was initially quite slow, trailing Alberta for a long time before catching up and surpassing it.

The 2020-2021 report from the Ontario Cannabis Store (OCS) notes that the OCS and retail stores sold a combined 99.1 million grams of legal recreational cannabis valued at approximately $840.1 million.

Looking at the country as a whole, cannabis store sales reached almost $319.2 million in June, up from about $313.2 million in May and approximately $306.3 million in April, according to information from Statistics Canada.

“By the end of 2020, nearly 6.2 million people aged 15 or older, or 20.0 per cent of Canadians in that age group, reported having used cannabis in the past three months,” notes a Statistics Canada report released this past April.

That compared to the 14.0 per cent of respondents reporting use before legalization and the 17.5 per cent reporting use in the first months after the Cannabis Act was enacted.

This article originally appeared on The Growth Op.


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