The Canadian Cannabis Market

Predictions, Assumptions, & Unreliable Poll

The Predictions


With the recent legalization of Cannabis for Canadians there comes a push from market share holders to try and figure out exactly what this brand-new market looks like. The numbers floating around tend to vary but some of the latest numbers indicate that this is a multi-billion dollar industry with high estimates somewhere in the realm of 5 billion plus dollars by 2020.

Current spend

Stats Canada data shows that over 5 million Canadians spent on average $1200 per year last year on cannabis.  Almost 90% of that was to the illicit non-medical market, and that is more than enough to have the producers and investors in the market excited at the opportunity to break into the legal industry. Looking at some Stats Can numbers there are over 100 producers in the market and there doesn’t seem to be any sign of it slowing.

This growth of an industry brings with it huge investment, thousands of jobs, and this is all before we even consider the retail industry.  All of this hope and promise is not without its detractors however, and there are those that remain cautious.  This is still an industry that seems to require a leap of faith in the positive predictions and sales models that are still untested.

Mark Lehtovaara Cannabis article

The problems


With all those promising numbers on what appears to be a new untapped market what could possibly go wrong? It would seem exists a huge ready made consumer base and potentially even larger one with statistics unreliable from the illicit market based on legalities. But not so fast… The fact that that consumer base already exists means that there is already a market out there that has been successfully managing that demand.

Undependable Stats

That illicit market appears to also prove itself much less expensive offering volume discounts that is almost 30% lower than the discussed $10 per gram that the legal market will follow. Stats Canada has warned that “assumptions, models, and sparse data sources” have played a large role in their reporting.  This raises concern.  Overestimating the market, and how consumers will accept it could be a fatal flaw in its early stages.

Illicit Market Data

The predictions for the size of the legal market seem to assume that the black market will dwindle and migrate rather than thrive, which is potentially a major fault that should not be ignored. With hurdles to consumers like the talk of online markets, and the potential for cities to ban retail locations, I don’t believe that those that already have a robust supply chain will flock to the new legal market.  It will take time and convincing.  There will likely be an initial boom, as interest and curiosity are quite powerful, but with higher prices, shipping delays and costs, and convenience considered, buying from existing channels seem more feasible.

Understanding the Market Better

Is There Another Way?

The current approach to data collection leaves much to be desired, and this seems to be a recurring theme. Political polling in recent years has highlighted the flaws of the online polling and survey systems that seem to be relied upon so much. Anyone who has paid attention to any major elections in the last few years knows that the polling of biased audiences creates very unreliable results.

Stats Canada has started using crowdsourced data to help in the reporting of the Cannabis industry and while this is a step in the right direction it may not be perfect.

The problem is with online polling and even with the crowdsourcing of survey data the participants are those that seem to have an interest in the topic at hand, and who may have a strong opinion one way or the other rather than just a snapshot of the general public or a specific segment of it.

Recognizing Bias

With a topic like Cannabis there is a lot of bias and opposing opinions involved which can skew data.  Trying to capture the unbiased thoughts of someone who really has no strong opinion on the topic can be challenging, and with certain stigmas involved around cannabis participation can suffer. All of these issues make the collection of data on topics like Cannabis at least somewhat unreliable, and as mentioned there is a lot of assumption that follows. Obviously not the ideal scenario…

Mark Lehtovaara Canadian Cannabis Market

So is there something better?

As mentioned I believe Stats Canada is moving in the right direction with the crowd sourcing option, but as with other industries there is a push for better surveys and insights into consumer purchasing decisions, and that is where Caddle shines.

With Caddle we can conduct paid surveys conducted across a broader unbiased audience rather than just those parties with an interest. With such a broad audience base, and the fact that we are paying for the survey data from our users means that those that have no interest in the topic are much more likely to participate, and this is a major benefit to the overall picture we are trying to create. For the same reason I am a big advocate for the use of survey tools like this for other avenues like politics for example.

How Caddle works

Caddle can go further with targeting as audiences can be segmented based on demographic info, varying personal attributes or pre survey screener questions, and specific questions can be asked to different segments as a result. This is why the Consumer Packaged Goods industry has been using systems like ours and relying on the insights gained from Caddle’s surveys for years now.

Having worked with clients like Pepsi, Hershey’s, and Procter & Gamble using Caddle to help them gain valuable insights into their consumer preference and buying behaviour I know that the same value can be passed onto the Canadian Cannabis Industry, and a more accurate picture is yet to come.