The legal cannabis market has seen a steady increase in sales in the past two years, with cannabis extracts being the fastest-growing product category. According to data from Statistics Canada and Health Canada, cannabis sales reached $3.4 billion in 2023, up from $2.6 billion in 2022. Cannabis extracts, which include products such as oils, edibles, concentrates, and vapes, accounted for 46% of the total sales in 2023, up from 36% in 2022.
What are Cannabis Extracts and Why are They Popular?
Cannabis extracts are products that are derived from the cannabis plant by using various methods of extraction, such as CO2, ethanol, or butane. These products have higher concentrations of cannabinoids, such as THC and CBD, than dried cannabis flowers. Cannabis extracts can be consumed in different ways, such as ingesting, inhaling, or applying topically.
Cannabis extracts have become more popular among consumers for several reasons. First, they offer a more discreet and convenient way of consuming cannabis, as they do not produce smoke or odor. Second, they provide more precise and consistent dosing, as they are labeled with the amount of cannabinoids per unit. Third, they cater to different preferences and needs, as they come in various forms, flavors, and potencies.
How Did the Pandemic and Regulations Affect Cannabis Extracts Sales?
The COVID-19 pandemic and the changing regulations have also influenced the demand and supply of cannabis extracts. On the demand side, the pandemic has increased the stress and anxiety levels of many people, who turned to cannabis products for relief. According to a survey by Statistics Canada, 34% of cannabis users reported increasing their consumption during the pandemic, with edibles being the most preferred product. On the supply side, the pandemic has disrupted the production and distribution of cannabis products, leading to shortages and delays in some markets.
The regulations around cannabis extracts have also evolved over time, affecting the availability and variety of products. In October 2019, Health Canada introduced the Cannabis 2.0 regulations, which allowed the legal sale of cannabis extracts, edibles, and topicals. However, these products were subject to strict rules, such as limiting the THC content to 10 mg per package for edibles and 1000 mg per package for extracts. In December 2020, Health Canada amended the regulations, allowing the sale of cannabis beverages with up to 5 mg of THC per container. These changes have enabled the cannabis industry to offer more innovative and diverse products to consumers.
What are the Challenges and Opportunities for Cannabis Extracts?
Despite the impressive growth of cannabis extracts sales, the sector still faces some challenges and opportunities. One of the main challenges is the competition from the illicit market, which offers cheaper and more potent products. According to Statistics Canada, the average price of legal cannabis extracts was $48.24 per gram in 2023, while the average price of illegal cannabis extracts was $27.48 per gram. The legal market also suffers from the lack of consumer education and awareness, as many people are unfamiliar with the different types of extracts and how to use them safely and effectively.
One of the main opportunities for cannabis extracts is the expansion of the medical market, which has a higher demand for products with higher CBD content and lower THC content. According to Health Canada, the number of registered medical cannabis clients increased by 24% in 2023, reaching 377,024 by the end of the year. The medical market also offers more stability and loyalty, as medical cannabis users tend to consume more frequently and consistently than recreational users.
Another opportunity for cannabis extracts is the international market, which is expected to grow significantly in the coming years. According to BDSA, a market intelligence firm, the global legal cannabis market is projected to hit $58 billion in 2028, with the U.S. and Canada accounting for 79% of the total sales. However, the international market also poses some challenges, such as the varying and evolving regulations, the cultural and social stigma, and the logistical and legal barriers.
Cannabis extracts are the leading product category in the legal cannabis market, as they offer more choice, convenience, and quality to consumers. The cannabis industry has adapted to the changing consumer preferences, the COVID-19 pandemic, and the regulatory environment, by offering more innovative and diverse products. However, the industry also faces some challenges, such as the competition from the illicit market, the lack of consumer education, and the uncertainty of the international market. The future of cannabis extracts will depend on how the industry can overcome these challenges and seize the opportunities.
