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Understanding the impact of cannabis on alcohol sales in Canada

The CCSI was assessed at C$5.40 per gram this week, up 0.2% from last week’s C$5.39 per gram. This week’s price equates to US$1,961 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 once again examines the impact of legal cannabis sales in Canada on the alcoholic beverages industry.

The Canadian government releases monthly retail sales data for both cannabis and alcohol (beer, wine, and liquor), which provides a better understanding of whether cannabis has had an impact on alcohol sales. Alcohol sales have been growing steadily despite the introduction of legal recreational cannabis sales in late 2018. Since January 2020, monthly alcohol sales have grown by C$186M to C$2.24B. Meanwhile, monthly legal cannabis sales have grown by C$159M to reach C$313M. Looking at sales in 2021 alone, alcoholic beverage sales were flat from January to May, while cannabis sales increased C$33.7M per month.

Going forward, Cannabis Benchmarks believe cannabis sales will continue to grow while alcoholic beverages will also increase, but not at the same pace. Consumers have a finite amount of money to spend in this category, and increased accessibility and education around cannabis may lead to larger proportional expenditures for the newly legal intoxicant. Indeed, this is occurring already. As shown in the chart above, cannabis sales are starting to represent a larger portion of the total dollars spent on alcohol and cannabis. Currently, cannabis’ share stands at 12.3% of the total spend of the combined categories.

Our current forecast for cannabis sales projects monthly spending to reach C$433M by the end of 2021. If we assume an average annual alcohol sales growth of 1.5% each year, we can expect monthly alcohol sales to reach C$2.33B by the end of the year. At those levels, cannabis sales would grow to represent 15-16% of the total spent on the two categories.

Source: Canada Cannabis Spot IndexCannabis Benchmarks

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