Mona Zhang, states cannabis policy reporter at POLITICO Pro joins Cheddar News to discuss major factors that caused Canada's retail marijuana sales to drop last year. 

Between Bells

Canada’s Retail Marijuana Sales Decline in 2021

Welcome back everyone to Between Bells. I'm Chloe Aiello retail prices for Canadian recreational cannabis products fell across the board last year, prices also declined for every Canadian cannabis product category during the third full year of the country's evolving adult use marijuana market. Joining me now to discuss is Mona john's States cannabis policy reporter for politico. Mona. I'm so excited to be able to interview you about this. Welcome to the show. So as I mentioned, these prices are dropping kind of across the board. What's driving this drop in prices? Well, thank you so much for having me. It's great to be here. Um I think what we're seeing in terms of the drop in prices is just really reflective of the Canadian market maturing. You tend to see this in any sort of um new cannabis market, whether it's Canada or the U. S. State. Um At the outset of the market, you have really high prices and really limited supply. And as that market matures you see prices start to decline. Um I do want to add, however, these are retail prices that we're talking about. So they're not necessarily reflective of the wholesale market. So it could also be a reflection of producers sort of shifting their strategy. Maybe trying to become more competitive and accepting some lower margins in some areas and which products are we seeing the biggest decline here and what exactly does that mean? Yeah. Well we've seen concentrates and Vape pens declined the most, you know, according to headset, a cannabis analytics firm. Uh They saw a 35% drop in 2021. Um And then topical followed that at 30% capitals and pre rolls declined by about 20%. But every product category across the board declined in price is um I think, you know, consumer behavior is shifting. I think producers are also becoming, you know more efficient with their production. So I think there are a lot of factors contributing to these declines. And we know it hasn't exactly been an easy ride for those cannabis companies operating in Canada. So how exactly is it that they're staying afloat in this challenging market? Um In recent months? I think you've seen a lot of the Canadian companies shift their strategies. Um I think there's sort of like two ways you can go about competing in the market as it's become more competitive. You either focus on the sort of like niche craft cannabis area or you focus on delivering large amounts of products, large quantity of products at very very low prices at a large scale. So I think we've started to see a lot of producers shift to the sort of like large scale cheap product strategy. And I think that is partially reflective of the challenges and focusing on the on the niche market, on the craft cannabis market, especially as, you know, consumers in this area are not exactly that's sophisticated yet. You know, we have seen Canadian cannabis companies angling for exposure to the U. S. Market with of course varying degrees of success considering how restrictive it is for a publicly traded Canadian company to enter into the US basically they can't write. Um But you know compared to companies that are already operating here in the United States, what kind of a disadvantage or what's the kind of difference in in uh potential here that we're seeing from these companies operating in Canada versus the U. S. Which is a significantly bigger market. Yeah I mean as you say Canadian companies, they're really limited in what they can do here in the US because the federal prohibition um A lot of these major Canadian companies do trade on stock exchange, stock exchanges in the US like you know new york stock exchange NASDAQ US cannabis companies can't trade on those on those exchanges. Um and because they trade their they can't exactly sell marijuana in the US. So a lot of them are trying to build brands in the US but not through selling marijuana, you have till race sort of launching these beer brands. You know canopy growth which is one of the largest Canadian companies. They are getting into the hemp CBD market um that you know they have partnerships with celebrities like Martha Stewart with the CBD products. So you know they're trying to find ways to build brand names in the U. S. Without actually selling marijuana. Um But I think that they do have a leg up on american operators as far as the international markets are concerned, a lot of the Canadian companies have been able to export medical cannabis products to european markets for example. No, I do have some more questions about the US but I want to ask you one final question about Canada here. It's been really interesting watching the roll out of this market being that of course Canada was one of the first G20 countries to legalize adult use cannabis. So from your perspective, should other countries looking to follow in its footsteps, be taking notes on what's happening here? Yeah, I think Canada offers a really great example for other countries looking to legalize marijuana. I think um you know, the U. N. Single Convention on narcotic drugs is a big limiting factor for countries who are considering this policy, but I think Canada is a signatory to these treaties and they've shown that they have pursue this policy and you know, nothing really has happened at least on the international front. So I think they can offer an example and in terms of like a path forward of how other countries can pursue legalizing cannabis. Now shifting gears here to the US obviously in the aftermath of biden's remarks on the completion of his first year in office. You know, I think marijuana moment, it was noted that he hasn't really come, you know made good on any of his pledges when it comes to cannabis? No decriminalization. He hasn't legalized medical cannabis. What's your assessment of the administration's actions so far and looking ahead to the future? What do you anticipate could come before the midterms coming up here? Um, I'm not surprised that biden has not taken any action on cannabis. He was not really, I mean, he was really behind other Democratic candidates in the primary field in terms of his stances on this topic. You know, he has said that he wants to grant clemency to people who are incarcerated for cannabis. And typically you see presidents really exercise their clemency powers at the end of their terms. So, um, I'm not surprised he hasn't done anything yet, you know, going into the midterms, I I think there are a couple of ways the midterms could impact cannabis policy at the federal level. You know, it could push democrats to move on certain cannabis related legislation because it is such a popular topic and they could potentially campaign on it in the midterms at the same time. I don't anticipate any sort of like comprehensive federal reform happening anytime soon just because of the challenges in the Senate with the filibuster. Um, and you know, maybe the midterms will prompt schumer to finally introduce his legalization bill. Um, but you know, fearing some sort of, you know, Republican gains in Congress, it could push democrats to move on legislation whether that legislation actually gets passed is a separate question. And I think it's pretty doubtful, interesting stuff Moana and we're all gonna be watching that super closely. Thank you so much for joining us today. That's Mona Zhang states cannabis reporter for politico pro.