Home Shares & Financial Canada's cannabis legalization has contributed $43,5 billion to national GDP

Canada's cannabis legalization has contributed $43,5 billion to national GDP

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2022-02-26-Canada's cannabis legalization has contributed $43,5 billion to national GDP

According to a report by Deloitte Canada, since Canada legalized recreational cannabis in 2018, the industry has contributed $43,5 billion to Canada's national GDP.

The industry has generated $11 billion in revenue and $29 billion in capital expenditures nationwide. In addition, the adult recreational cannabis industry has created 98.000 jobs and put $15,1 billion in the state treasury.

Little diversity in cannabis industry

However, not much has changed in terms of diversity within the industry. Before legalization, almost all federally recognized cannabis producers were run by white men. Deloitte surveyed 700 directors and executives of more than 200 companies. It found that 72% were white males, 14% were males who belonged to minority groups, 12% were white females and 2% were females who belonged to minority groups including South Asian, East Asian, Indigenous, Arab, Hispanic and Black individuals .

This is consistent with a 2020 study conducted by the University of Toronto and the Center on Drug Policy Evaluation, which found that cannabis industry leaders are predominantly white (84%) and males (86%), despite minority groups being disproportionately negatively impacted by cannabis prohibition in Canada, the United States and elsewhere. For example, through extremely severe penalties for minor offences.

The authors of the Deloitte report recommended that both governments and cannabis companies should take action to improve diversity, equality and inclusion in the sector. However, Deloitte's analysis shows that there are still opportunities for the Canadian cannabis industry to make a greater social contribution and tackle its significant environmental footprint.

Legal cannabis industry is a big success

Overall, the report concludes that from a economic perspective, it seems clear that the cannabis industry is a huge success with a market that will continue to grow. MJBizDaily reported a study by ATB Capital Markets showing that cannabis sales in Canada could reach $2022 billion by 3,8, which would be 19% more than the estimated 2021 figure.

When Canada legalized cannabis for recreational use, supply was minimal. For example, Ontario, with a population of about 14 million people, initially allowed only 25 pharmacies. In addition, consumers complained about the difficulties in accessing legal cannabis due to the high prices. Then there was oversupply. Producers grew tons of cannabis that exceeded demand. The industry also struggled with fragmentation, price competition and store saturation.

800 cannabis companies

There are currently more than 800 companies licensed to sell or process cannabis in Canada. According to some industry analysts, the excess supply contributed to the oversupply of cannabis in the market. While that figure may also demonstrate a successful transition from the illegal to the legal market, some experts view the current state of the industry as unsustainable and leading to heavy consolidation. BNN Bloomberg reports more than 2.000 legal cannabis stores across the country have helped erode the illegal market, which now operates online.

Interestingly, the market share of the largest Canadian companies is declining, while smaller companies are gaining, despite mergers and acquisitions (M&A) and record sales in 2021. MJBizDaily also reported a Hifyre analysis showing that the top five licensed producers in August 2021 had less than 40% of the Canadian market, while producers accounted for more than half of all retail sales the previous year. The nine largest cannabis producers accounted for nearly 80% of the market in 2020, but that dropped to a combined 62% in 2021, leaving the market fragmented and highly competitive.

Read more Forbes.com (Source, EN)

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