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Canada Weed Industry Growth and Revenue: Expectations vs Reality

Legalizing marijuana in Canada last October has opened up the country to a multi-billion dollar cannabis market that will benefit businesses, investors, and 420 consumers.

As the second and largest country to legalize weed, Canada stands to reap the rewards of legal recreational marijuana. Unlike the United States of America, where the federal government outlaws marijuana, but many states allow for medical and/or recreational use, Canada took a national approach.

In an effort to prevent stifling the industry, Canada legalized weed across the entire nation, opening up the Canada weed industry to things like inter-province shipping, online ordering of weed, postal delivery, and investment opportunities.

Because of this, it’s safe to say Canada is going to set the stage for the rest of the world that is patiently watching how they’ll conduct business and manage revenue.

In fact, Colin Busby, a research director at the Canadian-based Institute for Research on Public Policy has this to say: “A lot of countries are going to be looking at Canada and their ability to make this a success.”

Medical Marijuana in Canada

Up until now, Canada has had a strong, well-established market for medical marijuana. Legal since 2001, many Canadians have enjoyed the benefit of having a medical marijuana card.

But 420 consumers with a medical marijuana card aren’t the only ones that have been profiting.

Statistics claim that on average, Canadians spend a whopping $4.4 billion US dollars a year on marijuana. But that was when recreational weed was still illegal and black market dealers were making big bucks.

In fact, of that $4.4 billion, it’s estimated that only $570 million was being spent legally on medical marijuana.

That means there was plenty of profit to be made off legalizing recreational marijuana and attempting to wipe out the black market – and Canada knew it.

Still not convinced?

Check out these startling statistics:

  • In 2017, approximately 4.9 million Canadians consumed 20 grams of weed or more, spending upwards of $5.6 billion
  • With legalization, those numbers are not necessarily expected to climb (experts claim by 2022 $5.5 billion will be spent on marijuana) but the difference will be that that money will be spent legally, helping businesses, investors, and the country as a whole
  • According to a survey performed by Deloitte, 63% of Canadian cannabis users planned to hit the brick-and-mortar shops and buy recreational weed once legalized
  • The Deloitte survey also found that 420 consumers were willing to pay more for their legal weed ($8.98/gram as opposed to the black market rate of $8.24)

To say that the hype surrounding the Canada weed industry is misdirected is a mistake.

What’s in It for Investors?

Despite the Canada weed industry being in its infancy, Canadian investors have a lot to gain if they play their cards right.

Sure, concentrated THC and vaping pens still have restrictions on them as Health Canada continues studying their health effects. And advertising and marketing rules are still pretty strict.

But even Canopy Growth, the world’s biggest pot producer, is gearing up to release their new products (including vape pens, beverages, and edibles) when they become legal *hopefully* later this year.

And with to the top 12 Canadian marijuana companies accumulating a net worth of nearly $42 billion, now is as great a time as ever for investors to get involved in the cannabis industry.

In fact, investors looking to profit off Canadian’s legal weed industry should take heed from those already profiting, instead of listening to the critics:

  • Canopy Growth: shares were up were up 5.57% to $48.69 a piece as of closing February 14, 2019. This was right after officially announcing for the first time that their third-quarter revenue toppled Wall Street’s expectations. Adding to that, the cannabis producer claimed it generated 283% more revenue year-over-year thanks to recreational weed legalization. Wall Street analysts estimated they’d generate $59.2 million. Canopy Growth raked in an impressive $73.6 million.
  • Constellation Brands: Fortune 500® company Constellation Brands, makers of Corona beer and Svedka vodka, closed its deal with Canopy Growth in November for $4 billion. As a leading international producer and marketer of beer, this company operates in the U.S., Mexico, New Zealand, Italy and Canada and has a lot to lose if a deal this big goes bad.
  • Altria: tobacco-market leader Altria bought a 45% stake in Cronos in December, which is estimated to be valued at $1.8 billion. They also have the option to take the majority stake in the future if they want. Not only does this help Altria expand beyond the tobacco cigarette market, it helps Cronos maintain its position as a leading producer and distributer of marijuana in Canada.

As you can see, there are some big players forming long-lasting (and very expensive) relationships with major marijuana companies. If they thought for a minute this hype wouldn’t pan out in the future, you can bet they would never invest this kind of dough in the cannabis industry.

Expectations for Canada’s Marijuana Industry

15.4% of the Canadian population admitted to using medical or recreational marijuana in the last three months, which shows early promise for this new industry.

On top of that, the “State of the Legal Marijuana Market” report, released by Arcview Market Research and BDS Analytics, show that Canadians spent $1.6 billion on legal cannabis in 2018 (which was only legalized starting midway through October).

This is significant because despite pushing the legalization of recreational marijuana from June to October of 2018, Canada still managed to increase spending from $755 million to $1.6 billion.

Though only time will tell just how successful Canada’s bold move to legalize weed will be, there’s no denying that Canada is on track to become a global powerhouse in the cannabis industry.

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