Alex Khourdaji – Analyst
February 18th, 2020
Stakeholders saw great potential for the Cannabis 2.0 rollout as products offered higher margins than traditional cannabis flower products. Although the hype around these products started to surge the market was met with several hurdles in terms of supply chain, regulatory and technological difficulties, delaying the availability of products towards the end of 2019 to early 2020.
While Cannabis 2.0 products were federally legal, provinces had to establish their own rules on how these products should be regulated. This led to an untimely and irregular rollout throughout the country. Due to the bureaucracy involved for retailers to gain sale permits of Cannabis 2.0 products, many consumers had to purchase their products online. Stunning early growth as retailers is the industry’s leading point-of-sale.
The 2019/2020 vape crisis was also a significant concern for provincial lawmakers with provinces such as Alberta temporarily banning vaping products which eventually got lifted in February 2020. However, this was not the case for Quebec and Newfoundland and Labrador, which still hold vape bans in effect.
Alongside regional differences Health Canada, the nation’s health department, set a limit on approved dosages for products putting a 10mg THC cap on single packaged units of edibles. The THC cap pushed many experienced adult-use cannabis users away from purchasing edibles as they felt the THC cap was too low. Cannabis 2.0 beverages segment had a difficult start as taste, and technical difficulties with consistent dosage levels made the products unappealing towards consumers.
Although Canada’s Cannabis 2.0 rollout faced several difficulties, the demand and consumption for these products are beginning to take form. Sales of cannabis 2.0 products saw record sales in August 2020 reached approximately 1,400,000 units compared to 280,000 units in January 2020, reflecting growing consumer demand. Prohibition Partners expects that the Cannabis 2.0 segment will show the highest sales growth with sales projected to reach US$416 million by 2025.
It is no surprise that sales for these products are beginning to increase in Canada as the market begins to flourish with new innovative products meeting consumer preferences. There is substantial demand for Cannabis 2.0 products in Canada as 48% and 36% of Canadian consumers prefer ingesting cannabis, CBD or hemp in an edible or oil format surpassing the traditional flower format.
With the initial slow development in the market, Cannabis 2.0 products will start playing a larger role in the Canadian cannabis industry in the near future with the emergence of more innovative products and new consumers joining the nascent segment.
For more information regarding the US and Canadian cannabis market please download Prohibition Partners North American Cannabis Report Here.
Prohibition Partners North American Report takes a deep dive on the current social, economic, regulatory and health trends including:
- US 2020 Elections
- The Rise of SPAC’s
- The 2019/2020 Vaping Crises
- Federal Cannabis Reform
- Social Equity Programmes
- Canada’s Cannabis 2.0 Roll-Out
The North American report also includes sales forecasts of medical and adult-use cannabis in the US and Canada.