Retail Cannabis Sales in Canada Decline in September, Ontario Largest Laggard

Statistics Canada released the latest monthly data for retail cannabis sales in the country this morning. The latest data, which is for the month of September 2019, shows month over month declines from August sales figures. A total of five provinces saw a monthly increase in sales, while five provinces and two territories saw declining figures.


Across Canada, $122.9 million worth of cannabis was solid to consumers during the month of September, a decline of 2.4% on a month over month basis from August’s sales figures of $125.95 million. While still being the second highest month since legalization for sales, the declining data is certainly a disappointment given the strong increase in sales that August had posted.




Of all the provinces, New Brunswick sales declined the most on a monthly basis, with sales being down 39.9%, declining from $5.37 million to $3.22 million. The Northwest Territories was the largest decline of all regions overall, dropping 53.4% on a month over month basis to $0.15 million in sales. In terms of dollars, Ontario was the biggest decline, decreasing $1.98 million, from $33.77 million to $31.78 million.


The decline in sales on a month over month basis, while relatively small, may be the first signs of a cycle forming in terms of cannabis sales in Canada. With the summer months over and winter well on its way across the country, Canadians may be less likely to step out into the cold to light up. Oncoming product formats may seek to change that cycle near the end of the year and into 2020, however that data will take time to be compiled by StatsCan, leaving many wondering the fate of the Canadian cannabis market in the interim.

geess
ya think maybe it has anything to do with the simple fact everyone can grow at least 4 pounds in their back yard over the summer? lol

Legal recreational cannabis sales declined across the country in September, with New Brunswick charting one of the largest month-over-month drops, according to the latest data from Statistics Canada released Friday morning.

Approximately $123 million in legal adult-use cannabis was sold across Canada, down 2.4 per cent from $126 million in sales in August.

New Brunswick — the province that is looking to sell its retail weed business to the private sector because of compounding losses — sold 40 per cent less cannabis in September than it did the previous month, according to Stats Can data. The province took in just $3.3 million from cannabis sales in September, compared to $5.4 million in August.

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Ontario, meanwhile, saw a six per cent decline in cannabis sales from August, bringing in $31.8 million compared to $33.8 million the month before.

September recreational cannabis sales increased by 4.7 per cent in Quebec, where there are currently 28 legal retail stores in operation. Cannabis sales could take a hit in Quebec in 2020, given that as of Jan. 1, Quebecers under 21 will not be legally allowed to purchase or consume cannabis. Moreover, Quebec has banned the sale and consumption of cannabis edibles which was made legal across the country in October.

“In my view, part of the September sales drop was due to the 30 day month compared to August’s 31 day month. Most cannabis stores are open seven days a week,” wrote Chris Damas, author of The BCMI Report in a note to clients.

“The other aspect could be a ‘back to school’ phenomenon. People were on summer holidays in August, and consumed more cannabis,” he added.

Damas’ analysis of Friday’s data showed that provinces with private cannabis stores saw sales decline by one per cent, while provinces with mainly government stores saw sales decline by 5.3 per cent.

Sentiment towards the pot sector has turned bearish over the last one month, as major licensed producers struggle with declining revenue and growing inventory and the looming prospect of further price drops. Although Friday’s data showed a drop in overall sales from cannabis stores, it is unclear how much of that drop is due to pricing adjustments by retailers.

Statistics Canada data showed that for the first time, the average cost of a gram of cannabis fell 6.4 per cent in the third quarter of 2019, although pot obtained on the illicit market is still significantly cheaper.

Industry participants are, for the most part, casting blame on the Ontario government for not opening more stores across the country’s largest province, in tandem with growing supply. On Thursday evening, Ontario premier Doug Ford hinted that the province would move towards an open allocation system of stores “eventually” but declined to specifically state what that timeline would look like.

“Yeah, I think that’s eventually what the goal is, right, to open it up to the market and let the market dictate,” Ford said. “It’s like any business. Some people will be successful and some won’t.”

Canadian Cannabis Retail Sales Flash Warning With 3% Drop In September

Following six solid months of consistently hitting record new highs, legalized cannabis sales in Canada hit a patch of black ice. StatCan’s latest monthly report on retail trade sales by province included a startling number for the struggling industry, as the month of September saw an overall 3% drop in sales.
A brand new industry with such strong growth trends shouldn’t be seeing declining sales. A decline in sales tells us demand for the current products on the market (flower and diluted oil) have been met. Increasing sales will be harder to come by without the rollout of new products.
StatCan’s reported retail sales are down to $122.92 in September from a record-high of $125.95 million in August.
September sales are still higher than those reported in July, but this marks the first recorded decline in a market that is being pitched as hyper-growth by cannabis management teams. The only way stock multiple in the sector make sense right now is if revenue growth can continue at 100%+ a year.
Although Quebec, Saskatchewan, Manitoba, Alberta, and British Columbia continued on a slight upward trajectory in sales, every other province and territory fell, contributing to the 3% overall nationwide reduction.
The largest decline by far was in New Brunswick where retail sales fell 40% from the month before. We will be looking for a good explanation for such a huge fall in demand.
Canadian Cannabis Retails Sales by Month



Source:Statistics Canada
Despite stock prices taking off just after legalization last October, extremely aggressive investor growth estimates have failed to materialize in the overall legalized industry, with stock prices across the board plummeting since April.
Although several major licensed producers have seen increased revenues in their Q3 financial reports, most are still not profitable and are running low on cash.
In light of poor balance sheet numbers, cannabis companies have begun looking for ways to reduce costs and begun trimming workforce numbers, delaying or entirely stopping construction projects, and significantly slowing down or re-tooling acquisition deals.
Major licensed producers are now looking towards the launch of so-called “cannabis 2.0” products as a means of bringing in extra revenue in the coming months.
Now that Health Canada regulations have arrived, a variety of newly legalized edibles, vapes, and infused beverages are due to start hitting shelves in late December.
The fate of that latter category — once seen as a major money maker — remains up in the air, as the pace of new collaborations between the industry and major beverage companies has significantly slowed in the last nine months.
Grizzle is currently looking into the potential of cannabis 2.0 products to save the profitability and growth of the industry and will be reporting our findings shortly.