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In a recent report, Pablo Zuanic of Zuanic & Associates analyzed trends in Canada's recreational cannabis market through May 2024.
The report highlights a deceleration in market growth and notable shifts in sales dynamics among leading licensed producers (LPs).
The report points to a significant deceleration in Canada's recreational cannabis market. Official data from Statistics Canada shows a mere 2% year-over-year (YoY) increase in recreational sales in the first quarter of 2024, a decline from 11% YoY growth in the previous quarter. However, Hifyre scanner data suggests a potential rebound, with 7% and 10% YoY growth projected for April and May, respectively.
Among the top five LPs, Village Farms International (NASDAQ:VFF), Organigram Holdings (NASDAQ:OGI), and Cronos Group (NASDAQ:CRON) saw double-digit sales growth from January to May 2024, while Decibel Cannabis Company (OTC:DBCCF) and Tilray Brands (NASDAQ:TLRY) experienced declines.
Specifically, Tilray's sales fell 17% YoY during the March-May period, whereas Village Farms grew by 41%, OGI by 24%, and Cronos by 34%. Village Farms now holds an 8.6% market share, up from 6.8% in the fourth quarter of 2023.
Village Farms International has significantly increased its share in the flower category, from 10% in the first quarter of 2022 to 16% in the first quarter of 2024. Decibel Cannabis Company leads the pre-roll segment with a 14% market share, up from 5% two years ago.
On a proforma basis (including HEXO and Redecan), the biggest segment share loser in pre-rolls has been Tilray, with its share down to 11% in 1Q24 from approximately 24% in 1Q22. Canopy also dropped by 6 points over the same period.
In the vape category, Motif Labs has emerged as a leader, growing its share from 3% in the first quarter of 2022 to 20% in the first quarter of 2024. Auxly Cannabis Group (OTC:CBWTF) is down from 19% to 10%, and Tilray also shed a share from 17% to 6%.
The three-month data through May shows that flower remains the largest category, accounting for 37% of sales. This is followed by pre-rolls at 31%, vape products at 16%, concentrates at 5%, edibles at 5%, beverages at 2%, and oils at 2%. Zuanic notes that "compared with the US market, pre-roll over indexes in Canada, while vape under indexes."
For context, the flower segment was 41% of sales in the first quarter of 2023, down from 48% in the first quarter of 2022 and 57% in the first quarter of 2021. Pre-rolls have grown from 17% in the first quarter of 2021 to 27% in the first quarter of 2023. Vape products have shown a steady increase from 14% in 2021 to 16% in 2023. Edibles have remained relatively stable, while concentrates have seen slight growth over the same period.
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Between the #6 to #14 LPs, Motif Labs, Cannara Biotech (OTC:LOVFF), and Ayurcann (OTC:AYUR) have shown robust growth. Rubicon Organics (OTC:ROMJF) also reported gains. On the other hand, companies like Canopy Growth Corporation (NASDAQ:CGC), SNDL Inc. (NASDAQ:SNDL), and Aurora Cannabis (NASDAQ:ACB) have faced challenges with their market shares either declining or remaining stagnant.
Photo: AI-Generated Image.
Posted In: ACB AYUR CBWTF CGC CRON DBCCF LOVFF OGI ROMJF SNDL TLRY VFF
