A new report shows that the recreational cannabis market in Canada grew only 4% over last year’s first quarter. The growth trend has been slowing down for several years.
The analysis from Zuanic & Associates, which examined retail data from Hifyre, shows the market growing at a much slower pace versus the mid-teens growth seen in 2022 and 2023.
Cannabis market fragmentation appears to continue despite industry consolidation. According to the report, in 2025 the top three cannabis companies will hold 27% of the market, down from 31% last year.
A number of midsized producers experienced strong growth, despite the market’s overall slowdown. Companies that have experienced double-digit growth in sales include:
- Auxly (32%)
- Cannara Biotech (+37%)
- Canopy growth (+28%)
- Weed me (+30%)
- Rubicon Organics (+30%)
In contrast, the market share of major players including Tilray Village Farms International Decibel experienced double-digit losses. The report suggests that this is more likely due to strategic changes than failures in the market.
The report stated that “for at least the two first companies, the loss of share is due to an increase in focus on sustainable growth,” adding that they are moving “away from the deep discount and value end” of the market.
Analysis also revealed a shift in format preferences among Canadian consumers. Flower sales declined from 38% to 36% during the first three months of 2024, but pre-rolls went from 30% to 32 % and vapes went from 17 % to 18 %.
The report was written by Pablo Zuanic.
Market concentration varies by segment. Five companies dominate the vape market with 57%, while the five largest flower producers hold only 49%, and the three biggest pre-roll manufacturers just 34%.
Retail flower price has largely stabilised, at C$5.09 per gram during the first quarter of this year compared with C$4.89 one year before. Zuanic noted that pricing strategies differed by company. Premium producers such as Cannara ($8.24/gram), Rubicon ($8.30/gram) and Aurora ($7.68/gram) had significantly higher prices than the average for their category.
Organigram’s market share was 11.6%, despite the newly acquired Motif Labs. Tilray, on the other hand, fell nearly two percentage points from last year to 9.1%, and Village Farms dropped 1.8 points to 6.2%.
Exports are helping to stabilize the domestic price.
Zuanic determined that Canada’s marijuana market, even though it has legalized recreational use for six years and counting, is underdeveloped in comparison to other U.S. state markets on a pro-capita basis. The report estimates Canadian recreational per capita spending at approximately $100, significantly lower than states like Michigan (>$300) and Colorado (>$200).