Premier Doug Ford and the Ontario PC government have confirmed that cannabis will be sold in privately owned stores in Ontario. A government-owned retailer, the Ontario Cannabis Store (OCS), will operate as an online store for consumers and as a wholesaler of cannabis to approved retailers.
This change in Ontario will provide private retailers with a potential customer base of over 4 million adults with varied consumption habits, making Ontario the most lucrative market for cannabis brands.
As legalization continues to roll out in Ontario, here are another three key things to know.
- Expect Strong Growth in Consumption Post-Legalisation
Our Canadian Cannabis Study shows that Ontario is home to 2.4 million current users of cannabis, and another approximate 1.8 million Ontario residents show some likelihood to try cannabis post legalisation.
To gain an idea of the market size in Ontario post legalisation, we’ve applied our current consumption and spending data to potential consumers. By projecting the average amount spent and quantity purchased by current users on to potential users, we estimate that cannabis sales in Ontario alone could be as high as $3.3 billion. Ontario’s closest, yet very distant, competing province, British Columbia, shows a potential market size of $1.3 billion, just over a third of Ontario’s estimate.
- A Mixed Retail Model Will Work Well in Ontario
Our data shows that among current cannabis users in Ontario, a mixed retail model would be a fitting approach. There’s nearly an equal preference among current users to purchase cannabis from a government run dispensary or a private dispensary. Fourteen percent of current users would still prefer to acquire cannabis from “family” or a “friend”, which we equate to the black market; however, this preference is likely to change if users have easy access to a dispensary that provides a quality retail experience.
Among potential users, there is a much stronger preference to acquire cannabis from a government run dispensary. This is likely due to greater trust and credibility among potential users for products available through government run dispensaries. However, private dispensaries can convert these potential users by positioning themselves as providing high-quality products that meet and exceed regulatory standards.
- Key Opposing Concerns Can be Alleviated with Regulation and Education
Forty-four percent of all Ontario adults oppose the idea of cannabis retailers being allowed to operate in any commercial area. Obviously, current and potential users of cannabis are much more likely to feel otherwise.
Cannabis retailers will have their work cut out for them when setting up shop in certain neighbourhoods across Ontario. Two key concerns among those who oppose the idea of cannabis retailers being allowed to operate in any commercial area are: a concern about increased violence and crime, and cannabis being viewed as a “gateway drug” that leads users to other more harmful drugs.
While there are these strong concerns among a segment of Ontario residents pre-legalisation, substantive government regulation and cannabis education will be key to moving this opposing faction into either supporting the cannabis industry, or eventually becoming indifferent to it.
Vividata provides essential consumer intelligence to a wide range of companies including media agencies, media companies and advertisers in Canada and around the world. Offering the largest syndicated study in Canada, Vividata is the go to source for demographics, attitudes, life events, media, purchasing and brand preferences.
Vividata recently completed its first cannabis study, leveraging our unparalleled awareness of consumers and putting their opinions at the forefront. This study offers crucial research with a consumer centric view of the cultural sea change surrounding cannabis legalisation.
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