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Opinion

U.S. offers lessons for legalization

Jim Mone / The Canadian Press</p><p>Marijuana plants grow at LifeLine Labs in Cottage Grove, Minn. Canada has much to learn from the experiences of U.S. states that have legalized pot.</p>

Jim Mone / The Canadian Press

Marijuana plants grow at LifeLine Labs in Cottage Grove, Minn. Canada has much to learn from the experiences of U.S. states that have legalized pot.

Hey there, time traveller!
This article was published 8/9/2017 (650 days ago), so information in it may no longer be current.

If Canada’s experience with legal recreational marijuana parallels what is taking place in U.S. states, we have much to anticipate in terms of entrepreneurial ferment, job creation, wealth expansion and boosted tax receipts.

Legal recreational marijuana has been law in Colorado for three and a half years, and a little more than three years in Washington. Oregon staggered its rollout of recreational marijuana between 2015 and last year, Alaska and Nevada’s programs are up and running and soon to follow are Massachusetts, Maine and the cannabis behemoth known as California.

And in Canada, we are marching toward nationwide legalization.

Data from cannabis market research leader BDS Analytics show that even as the U.S. pot boom enters its fourth year, the marketplace continues to grow at a rapid pace.

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Hey there, time traveller!
This article was published 8/9/2017 (650 days ago), so information in it may no longer be current.

If Canada’s experience with legal recreational marijuana parallels what is taking place in U.S. states, we have much to anticipate in terms of entrepreneurial ferment, job creation, wealth expansion and boosted tax receipts.

Legal recreational marijuana has been law in Colorado for three and a half years, and a little more than three years in Washington. Oregon staggered its rollout of recreational marijuana between 2015 and last year, Alaska and Nevada’s programs are up and running and soon to follow are Massachusetts, Maine and the cannabis behemoth known as California.

And in Canada, we are marching toward nationwide legalization.

Data from cannabis market research leader BDS Analytics show that even as the U.S. pot boom enters its fourth year, the marketplace continues to grow at a rapid pace.

Year-to-date through May of this year, cannabis sales in Colorado, Oregon and Washington reached US$1.16 billion, which is 35.4 per cent ahead of last year’s sales. In most industries, growth of a handful of percentage points is considered a break-out-the-champagne triumph.

While sales overall boomed, growth was especially pronounced in a few categories, and we are wise to study sales trends in U.S. states to help understand what the Canadian cannabis marketplace might look like soon after joints, vape pens and brownies start being sold to recreational consumers.

The U.S. cannabis market falls into a number of categories, but the three dominant ones are flower (bulk cannabis sold by weight), concentrates (products such as vape pens, shatter and wax) and edibles — everything from refrigerated sodas to cherry pie.

Among the top three, flower sales dominate in all states. During the first quarter of 2017, flower captured 52 per cent of the broader cannabis market. Meanwhile, concentrates snagged 24 per cent of the market and edibles earned 12 per cent.

Flower’s dominance is impressive, but the other categories are muscling into its domain. During Q1 2016, for example, flower owned 60 per cent of the market.

The slow but steady increase of concentrates sales, at the expense of flower, could easily describe the Canadian marketplace once full legalization is in place. Edibles, while a strong cannabis market, have grown, but their market share between the states has tended to remain below 13 per cent. Meanwhile, concentrates’ market share grew from 14 per cent in 2014 to 24 per cent in 2017.

The market leader among concentrate styles is vape pens and cartridges. For the first quarter of 2017, for example, vapes expanded by 35 per cent. During Q1 of 2016, and excluding Oregon because concentrates were not sold through recreational channels until later in the year, growth was 27 per cent.

Meanwhile, flower sales do continue to boom. In Colorado, sales of flower during the first quarter of 2017 reached US$178.6 million, up 20.4 per cent from the same quarter in 2016 (all of the growth came from the recreational channel, where sales increased by 35.5 per cent; medical fell by 4.5 per cent).

In Washington, the trend for flower is even more dramatic, up 44.5 per cent during the first quarter of 2017 compared with the same quarter in 2016.

Canada’s experience with recreational marijuana will hinge, in part, on the regulatory framework. Laws can have immense impact on trends. In Washington state, for example, the state banned THC-infused candy when recreational sales first began in June 2014. The state eventually allowed candy, but sales of the category in the state today are far behind the market share for candy in Colorado.

Laws do matter, especially in an industry such as cannabis, which is likely to experience complicated and wide-ranging regulations regardless of whether the laws are being set in California or Canada.

We are eager to continue to engage with provincial and federal officials and industry stakeholders as Canada continues its progress toward full legalization next year. Based on what has flowered in the United States, we have much to look forward to in this blossoming industry.

Dan Kriznic is chairman and CEO of Invictus MD, a Vancouver-based company that invests in medical marijuana producers and ancillary businesses.

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