BC’s legal cannabis sector faces challenges and opportunities in 2023

BC’s legal cannabis

The cannabis industry in British Columbia has seen significant growth and development since the legalization of recreational cannabis in 2018. However, the market also faces some hurdles and uncertainties as it enters its fourth year of operation. Here are some of the key issues and trends that shape the cannabis landscape in BC in 2023.

Legal sales increase but plateau in Q3

According to the BC Liquor Distribution Branch (LDB), the value of legal cannabis sales in BC reached $670 million in 2022, up from $550 million in 2021 and $300 million in 2020. This shows that the legal market is gaining ground and attracting more consumers away from the illicit market. However, the growth rate seems to have slowed down in the third quarter of 2023, as the LDB reported a slight decrease in sales compared to the previous quarter. This could indicate that the market is reaching a saturation point or facing some challenges in meeting consumer demand and expectations.

Some of the factors that could explain the plateau in sales are:

  • Jurisdictional issues: The provincial and municipal governments have different regulations and policies regarding the licensing, zoning, and taxation of cannabis businesses. This creates confusion and inconsistency for the industry and the consumers, and may limit the availability and accessibility of legal cannabis products in some areas.

BC’s legal cannabis

  • Complex supply chain: The LDB is the sole wholesale distributor of non-medical cannabis in BC, and it sources its products from licensed producers across the country. The LDB then sells the products to licensed private and public retailers, who sell them to the consumers. This supply chain involves multiple steps and intermediaries, which may increase the costs and reduce the efficiency and quality of the products.
  • Price gap: The legal cannabis products are subject to various taxes and fees, such as the federal excise tax, the provincial sales tax, the LDB markup, and the municipal business license fee. These add up to the final retail price, which is often higher than the price of the illicit products. According to Statistics Canada, the average price of legal cannabis in BC was $10.46 per gram in the third quarter of 2023, while the average price of illicit cannabis was $5.59 per gram. This price gap may discourage some consumers from switching to the legal market, especially those who are price-sensitive or loyal to their illicit suppliers.
  • Packaging restrictions: The federal Cannabis Act and the provincial Cannabis Control and Licensing Act set strict rules for the packaging and labeling of cannabis products, such as the size, color, font, and content of the information and warnings. These rules are intended to prevent the appeal and promotion of cannabis to youth and to inform the consumers about the risks and harms of cannabis use. However, some industry stakeholders and consumers argue that these rules are too restrictive and limit the ability of the legal products to differentiate themselves from the illicit products and to communicate their unique features and benefits.

Industry seeks more support and innovation

The cannabis industry in BC is not only facing challenges, but also opportunities to grow and improve. The industry is calling for more support and innovation from the government and the private sector, such as:

  • Increased enforcement: The industry urges the government to crack down on the illegal cannabis operators, such as unregulated producers, unlicensed retailers, and illicit online sellers. These operators pose a threat to the public health and safety, as well as to the viability and competitiveness of the legal industry. The industry also asks for more clarity and transparency on the provincial expenditures and revenues related to the enforcement and regulation of cannabis, and the allocation of the federal excise tax transfers to BC.
  • Financial services: The industry seeks more access and inclusion to the financial services and products that are available to other legal businesses, such as bank accounts, credit cards, loans, and investments. The industry faces difficulties and discrimination in obtaining these services and products, due to the stigma and risk associated with cannabis. The industry hopes that the provincial and federal governments and regulators can work with the financial sector to overcome these barriers and to recognize the legitimacy and potential of the cannabis industry.
  • Product diversity and quality: The industry strives to offer more product diversity and quality to the consumers, in order to meet their needs and preferences and to compete with the illicit market. The industry is exploring new and innovative products, such as edibles, beverages, concentrates, and topicals, which were legalized in 2019 but have not yet gained a significant market share. The industry is also investing in research and development, quality assurance, and consumer education, to ensure the safety, efficacy, and satisfaction of the products.

Cannabis at four: A maturing but evolving market

As the cannabis industry in BC approaches its fourth anniversary of legalization, it is clear that the market is maturing but also evolving. The industry has achieved remarkable growth and development, but also faces some challenges and uncertainties. The industry needs more support and innovation from the government and the private sector, to overcome these challenges and to seize the opportunities. The industry also needs to adapt and respond to the changing consumer demand and expectations, as well as to the emerging trends and issues in the cannabis landscape. The cannabis industry in BC is not a static or stagnant market, but a dynamic and diverse one.

By Ethan Mitchell

Ethan Mitchell is the visionary founder of CBD Strains Only, a leading online platform dedicated to providing premium CBD products and information. With a passion for holistic wellness and a deep understanding of the benefits of CBD, Ethan's mission is to empower individuals to enhance their well-being through high-quality CBD strains.

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