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How to think about cannabis’ impact on alcohol sales

The CCSI was assessed at C$5.81 per gram this week, up 1.4% from last week’s C$5.73 per gram. This week’s price equates to US$2,101 per pound at the current exchange rate.

Each week, Business of Cannabis delivers a series of insights from our partners at Cannabis Benchmarks®.

This week, Cannabis Benchmarks examines whether legal cannabis sales in Canada have impacted alcohol sales. Some alcohol companies feared they would see a reduction in sales with the opening of the legal recreational cannabis market in October 2018, with the possibility that consumers may substitute the latter for the former.

Official sales data for each category from the Canadian government shows that alcohol sales have been growing steadily even after legal cannabis sales began in late 2018. From January 2019, monthly alcohol sales have grown by C$219M to C$2.22B. Monthly legal cannabis sales have grown by C$227B to reach C$282M in the same span.

The COVID-19 pandemic almost certainly boosted sales of both categories beginning in March 2020, adding a (hopefully) unique anomaly to this analysis.

Overall to this point, however, it appears that legal cannabis sales growth has not yet impacted alcohol sales negatively. Going forward, Cannabis Benchmarks does believe that at some point cannabis sales will impact alcohol sales.

Cannabis Benchmarks is already seeing legal cannabis sales beginning to represent a larger proportion of the total spend on the two categories. Currently, cannabis’ share of total cannabis and alcohol spending stands at 11.3%. Based on Cannabis Benchmarks’ projections for 2021, we expect that share to grow to 16% by the end of the year.

Source: Canada Cannabis Spot IndexCannabis Benchmarks

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