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Cannabis use likely higher than stats suggest

Cannabis use likely higher than stats suggest

Posted on: 1/31/2018 | Author:  ATB Financial's Economics + Research Team

In anticipation of Canada’s legalization of cannabis this year, the country’s second largest cannabis producer is buying one of its rivals. Aurora recently agreed to buy CanniMed Therapeutics Inc for $1.1-billion. This is big money and big news for the industry, but the pricetag is no surprise given Canadian consumption of the product.

In 2017, five million Canadians aged 15 to 64 spent close to $6-billion on cannabis for medical and non-medical purposes. This is works out to around $1,200 per consumer. The majority of household consumption (more than 90 per cent) was recreational in nature. That means the majority of what’s being produced and consumed is for non-medical purposes.

When compared to the consumption of beer, wine and spirits (sales of $22.3 billion in 2016) and household purchases of tobacco (sale of $16.0 billion in 2016), cannabis is a smaller sector. However, it’s easy to calculate and track the value of alcohol and tobacco consumption because both are regulated. There’s a good chance consumption of cannabis is even higher than the figures show.

Aurora is nearing the completion of an 800,000 sq. ft. high-technology greenhouse facility just outside of Edmonton, with the first bays completed in late 2017. According to the province’s inventory of major projects, it’s anticipated that Aurora’s first harvest will take place around the summer of 2018. Given the current rate of consumption, and Alberta’s agricultural prowess, it’s no wonder Aurora’s acquisition made headlines or that the company will have a facility of that size and scope operational in time for legalization.

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