Deloitte pegs market for alternative cannabis products at $2.7 billion

- thegrowthop.com Posted 6 years ago
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The market for alternative cannabis products such as drinks, edibles and topicals could be worth as much as $2.7 billion annually, according to a new report from Deloitte published Monday.

With the second wave of legalization approaching this October, the report, titled Nurturing New Growth: Canada Gets Ready for Cannabis 2.0, concluded that the edibles market alone could be worth $1.6 billion, with an additional $529 million coming from cannabis-infused beverages.

The report was careful to offer a caveat, noting that growth would take time.

“There will be missteps, delays, and frustration,” it said. “This is to be expected in an industry that just launched.”

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As an example, it noted that some preferred edible or alternative formats might not be available immediately after legalization in October.

“(Growth) will be easily north of 24 months,” said Jennifer Lee, the global cannabis practice leader at Deloitte. “This is going to be a very profitable industry, but if you expect to make money overnight, it’s not going to happen.”

The report takes note of Canada’s advantages in the global industry, including government support and access to capital markets, but urges Canada to continue to innovate in the face of other nations’ evolving legislation.

The alternative market comes on top of the $7 billion industry that was legalized last year. Lee herself was surprised by the strong consumer demand.

“When we add it all up and it came up to a $10 billion industry, that’s not something to overlook,” Lee said.

That global market is estimated to be worth US$100 billion, according to Deloitte’s analysis of legalization and market opportunity, and is expected to double in the next five years to US$194 billion.

“I believe we only have 18 to 24 months to continue that leadership,” said Lee. “It’s going to quickly become the Europeans or the Americans and I’m bullish on both.”

It’s going to quickly become the Europeans or the Americans and I’m bullish on both.

Jennifer lee, global cannabis practice leader, Deloitte

For the third annual report, Deloitte surveyed 2,000 Canadians across every province between Feb. 26 and March 11. They also interviewed more than 35 stakeholders in the Canadian cannabis industry.

Their results showed that the legalization of edibles was highly unlikely to cannibalize on the sales of traditional marijuana products.

“Fewer than one in five current or likely respondents say their edible spending would replace spending on other products,” the report concluded. “Nearly half say they’ll buy edibles as well as the products they’re already buying.”

The same applies to cannabis-infused beverages, with 44 per cent of current consumers and 53 per cent of likely consumers saying they will buy beverages in addition to other cannabis products.