According to a new report from the Canadian Imperial Bank of Commerce (CIBC), the legal recreational cannabis market could be worth as much as $6.5bn by 2020, forecasting that 800,000 kilograms will be consumed annually.
By contrast, the Canadian alcoholic spirits market was valued at $5.1bn in 2017, whilst Canadian wine sales reached $7bn last year.
“We believe that by 2020, the legal market for adult-use cannabis will approach $6.5 billion in retail sales,” CIBC said. “For context, this is greater than the amount of spirits sold in this country, and approaches wine in scale.”
CIBC reveals that currently Canadians consume 60,000 kilograms of legal marijuana annually for medical purposes. However, the impending legalization of marijuana is expected to transform the market.
This is a key reason as to why a number of Canadian firms operating within the market have made significant investments in recent times, most namely with Aurora Cannabis’ $1.1bn acquisition of industry counterpart CanniMed.
However, despite this investment from private firms, CIBC estimates that provincial governments will hold the lion share of the legal cannabis market.
“The provinces will hold all the cards when it comes to distribution… In fact, we estimate that provincial governments will capture a stunning 70% of industry profits,” the report reads.