In Q2, legal cannabis sales in Canada outpaced the illicit market for the first time (APHA, CGC)
In Q2, Canadians spent more on legal cannabis (medical and recreational) than they did in the illicit market for the first time, totaling $803M or 50.6% of Canadian household expenditure on cannabis. Q2 recreational spend grew to $648M, an increase of 74.2% YoY and 16.1% QoQ. Medical spend posted 0% change YoY, but grew 2.6% QoQ to $155M. Illegal spend, as estimated by Statistics Canada, hit a new bottom at $785M, falling -18.4% YoY and -4.7% QoQ. In an interview with BNN Bloomberg, CEO George Smitherman of the Cannabis Council of Canada said, “The progress is there and there's more progress to come. This is occurring when there's a lot of pressure on dried flower pricing. It's even more impressive because there's more volume being sold as cannabis is now being sold for very competitive prices.”
While the market dynamics are shifting in favor of legal cannabis in Canada, the pricing gap between the legal and illicit market continues to be a headwind for Canadian LPs and retailers. Heading into 2020, Statistics Canada’s Cannabis Implicit Price Index show that both medical and recreational continued to be elevated far above illegal cannabis prices.
Canopy Growth to open 10 retail stores in Alberta (CGC, HITIF, FFLWF, & CLIQ)
Canopy Growth will be opening 10 brick-and-mortar retail cannabis locations across Alberta under its Tweed and Tokyo Smoke banners – its first retail presence in the province. With these new outlets, Alberta will have upwards of 516 cannabis storefronts or close to half of all cannabis retail units in the country. Canopy will be competing against established cannabis retailers, High Tide (HITIF), Fire and Flower (FFLWF), and Alcanna (CLIQ), in an already crowded market.
Canopy’s retail expansion into Alberta will bring the number of Tokyo Smoke and Tweed retail cannabis stores in Western Canada to a total of 29, adding to existing locations in Manitoba and Saskatchewan. It will also increase Canopy’s retail banners across Canada to a total of 50. The company has said that it plans to open new stores with additional locations in the pipeline.
Curaleaf expands in Utah with first retail location (CURLF)
Yesterday, Curaleaf announced its first retail location in Lehi, Utah, marking its 90th retail location nationwide. The company was awarded one of the state's 14 licenses in 2019. Lehi is known as one of the state's highest growth cities, and its surrounding area is home to more than 50% of the state's total qualifying patients; Utah County has 44% of the so far certified 10,400 patients. Alongside its retail location, the company is also completing construction on its 7,500 square foot pharmaceutical-grade processing facility in North Salt Lake City, which is scheduled to open in mid-September.
Utah’s medical marijuana program launched at the beginning of March 2020. Currently, only five of 14 dispensaries legally allowed under Utah law are operating. Aside from Curaleaf, which owns one license in the state, Columbia Care (CCHWF) is the only other public company awarded a medical marijuana pharmacy license. Market demand in Utah is expected to be curbed for the time being with only 14 dispensaries legally allowed and less than 150 publicly registered qualified medical providers currently giving prescriptions for the state’s population of 3.2 million people. However, the qualifying conditions in Utah are broad, including chronic pain, terminal illness, cancer, epilepsy, and PTSD.
