Are Cannabis Sales Slipping?

Are cannabis sales across North America slipping? There is a prevailing theory that the government’s COVID lockdowns led to increased cannabis use. Some expect lower sales now that life is more or less returning to normal. People are going back to work, back outside, meeting their friends. Yet, the causal connection isn’t so evident. After all, why wouldn’t people enjoy cannabis outdoors as well as indoors? With friends and alone? Another theory is that inflation is the cause. As more money in the economy causes prices to rise, consumers scale back on their purchases of nonessential items. And for many, that includes cannabis.

Cannabis Sales Peak in 2021

Across the board, in both legal American states and in the Canadian market – cannabis sales peaked in May 2021, then began a steady decline in August. And it’s been consistent ever since. With one exception in December, when sales rose for the holiday season.

Cannabis data analytics firm BDSA found 2022 to be off to a slow start. In January, California reported sales 12% lower than the previous year. Yet, BDSA doesn’t think the trend will hold.

“Though most legal cannabis markets saw sales soften in the second half of 2021, the global cannabis market is expected to see brisk growth in 2022, driven by strong sales in new and emerging markets in the U.S., steady growth in Canada and international markets led by Mexico and Germany,” BDSA chief commercial officer Jessica Lukas said in a statement.

Lower Revenue Across the Board

Canadian licensed producer Tilray also suffered from lower sales. Tilray’s revenue declined 16.6% from September to November 2021. Gross sales fell 28.8% to $49.5 million and medical cannabis sales declined 5.3% to $7.9 million. Cannabis sales accounted for only 37.9% of the company’s revenue. Down from the previous quarter, when cannabis accounted for more than 40% of revenue.

When we look at the percentage change in total sales from the same month last year, we see downward trends. Alberta is down 2%, Colorado is down 8%, Maryland is down 4%, Nevada is down 14%, Oregon is down 10%, Washington is down 7%. But then outliers, like Ontario, are reportedly up 60%. But that could be offset by the number of retailers in Ontario. Once the market stabilizes, the oversaturation of shops will likely reverse itself, bringing down revenue with it.

Is Inflation to Blame?

Cannabis sales could be suffering from the consequences of central bank inflation. Consumers are buying less because the purchasing power of their money doesn’t go as far as it once did. Cannabis prices could also be finding an equilibrium after a bizarre start. For many consumers, their first foray into the legal cannabis market came during the pandemic. They were under house arrest and receiving cheques from the government. So it’s plausible that new cannabis markets coinciding with the pandemic caused higher than average sales.

Long-Term Cannabis Sales

Next month likely won’t offer any insights into long-term cannabis sales. Like the holidays in December, expect April sales to be skewed by 4/20 celebrations. Every year on and around April 20th, cannabis sales surge. Customers enjoy discounts, and certain categories of goods become more popular, like edibles. This year’s decline in cannabis sales will temporarily reverse next month.