Canada's cannabis market is seeing a chilling stagnation, with 2024 showing nearly zero growth in consumer sales—a stark contrast to the double-digit gains of previous years.
Amid this slowdown, certain products capture consumer interest, even as prices stabilize and competition intensifies. In his latest analysis, senior analyst Pablo Zuanic of Zuanic & Associates explores what's still selling in a market haunted by stagnation and shifting dynamics.
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Flower Segment: Stabilized Prices And Market Fragmentation
The flower segment remains essential to Canada's cannabis sales, though dynamics among top players are shifting. Village Farms (NASDAQ:VFF) leads with a 15% share, though down from 17.4% in Q2 2024, followed by Tilray (NASDAQ:TLRY) at 12.8%, Organigram (NASDAQ:OGI) and Cronos (NASDAQ:CRON) at 10.8% and 6.1%, respectively.
Mid-tier players include Auxly (OTC:CBWTF), Canopy Growth (NASDAQ:CGC), and Cannara Biotech (OTC:LOVFF), each with 2-5% shares.
Average flower prices stabilized at CAD 5 per gram ($3.70), up slightly from CAD 4.80 last year, though individual prices vary slightly by producer.
Pre-Rolls Gain Ground, With Decibel Leading In Infused Joints
Pre-rolls have reached parity with flower sales, each making up 35% of the market, reflecting a shift in consumer preferences. Decibel (OTC:DBCCF) holds a 10.8% share of this segment, followed by Tilray at 8.5%, Organigram at 6.4%, and Village Farms at 5.4%.
Subcategory breakdowns show joints leading with 55% of sales, while infused joints make up 27%. Decibel, once a leader in infused joints, saw its dominance decrease from 55% in Q3 2023 to 38% in Q3 2024.
Mid-range pre-roll players include BZAM with 4.2%, Weed Me (private) with 3.9%, and Auxly with 3.3%.
Vape Segment: Motif Labs Dominates 510 Cartridges
Vapes now comprise 16% of the Canadian cannabis market, led by Motif Labs with a 20.6% share, followed by Auxly at 12.9%, Decibel at 9.7%, and Cronos at 7.3%. The 510 cartridges, particularly in 1ml and 1.2ml formats, dominate vape sales with 74% of the market, underscoring their popularity.
Disposables and live resin cartridges have smaller shares, with closed-loop systems representing 2% of sales. Tilray and Cannara also hold smaller but significant shares in this segment, at 4.9% and 3.4%, respectively.
International Ventures: The Next Growth Frontier?
While the domestic market stagnates, Zuanic notes a shift in investor focus toward companies with international strategies, especially given potential U.S. regulatory reforms.
"Canadian LPs are positioning for U.S. entry and European expansion, focusing less on local sales growth," he explains, suggesting that global ventures could provide critical revenue streams as companies seek growth beyond Canada's limited market.
