EY Report Projects Major Cannabis Spending Bump from Canadians

A new consumer data set projects that Canadian cannabis consumers will spend over C$1,600 a year on cannabis products by 2025.

On Tuesday (March 26), research and business firm EY announced that the average Canadian cannabis consumer’s spending on cannabis products will increase 30 percent by 2025.

The study is projecting an increase from C$1,263 annually from consumers in 2019 to C$1,652 by 2025.

The data indicates that the overall Canadian cannabis market will grow by 50 percent to reach C$11 billion in 2025.

EY projects that the supply of cannabis will top demand within the next five years.

According to the firm, if this prediction comes true, the average cost of wholesale dried flower will decrease to between C$4 and C$5.

In February,The GrowthOp reported on the average price of dried marijuana for each province in Canada.

In arguing against the notion that increasing costs for legal marijuana products pushes consumers towards the illicit market, Zachary Pendley, EY Canada cannabis real estate and valuation leader, said the consumer trend is due to the slower-than-expected rollout for retail.

“As the industry matures, access to product eases and higher margin derivatives come online, we’ll see a rise in consumer spending on legal cannabis,” Pendleysaid in a press release.

On the road to the legalization of recreational marijuana in October 2018, provinces were tasked with setting up retail models.

However, the process wasn’t smooth for every area, with Ontario and BC conducting slower rollouts for the markets. Ontario is still set to open its privatized retail market starting April 1, with some shops opening their doors later.

The study also projects that, by the year 2025, 20 percent of the total adult population will be cannabis consumers.

In addition, it indicates how consumption trends for different types of products are set to change.

Consumption splits from EY show dried flower will command a leading 46-percent market share, with extracts securing 37-percent of the market by 2025.

Edibles will only obtain a 12-percent share, and non-edible derivatives placed last with a 5-percent market share. Both are scheduled to become legal in Canada on or before October 17, 2019.

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Securities Disclosure: I, Bryan Mc Govern, hold no direct investment interest in any company mentioned in this article.