During the pandemic, cannabis sales skyrocketed, particularly among the Gen Z crowd whose consumption increased 137%. But Millennial men still dominate the cannabis market in the province, according to new data from Headset on Ontario cannabis consumption habits.
“Ontario is one of the most exciting cannabis markets to watch as it expands with new retailers, brands, and products,” writes the Headset report, referring to a burgeoning trend in the province.
As bureaucratic as the retail rollout has become in Ontario, the province saw an explosion of new cannabis retail stores popping up from Kingston to downtown Toronto.
In March 2021, 527 pot shops were open for consumers, but by December of the year, the figure ballooned to 1,291 stores. Easier access combined with a dearth of social activities equals a busy time for cannabis retailers and the OCS.
That retail growth has led to a surge in cannabis sales among various demographics. Across the board, sales from men in Ontario have increased 75% from November 2020 to November 2021, and sales from female consumers have grown 58% in the same time period.
“We saw how boredom, anxiety and a boost in cannabis retail rollout led to more Canadians consuming cannabis,” says Rishi Malkani, Partner, M&A Advisory, Cannabis Leader at Deloitte Canada.
“And what also helped was cannabis being declared an essential service, and curbside pickup allowing consumers to access the product during lockdown periods.”
Both the middle-aged and the younger set have clamoured to legal weed, as Headset’s report found. Intriguing data points in Ontario include:
- Gen Z is the fastest growing cannabis consumer group, as sales to their cohort more than doubled (137%) between November 2020 and November 2021.
- Baby Boomers turned to cannabis, too, between June and November 2021, as cannabis sales to that group close to doubled.
- Millennial men enjoy their raw bud, spending $147 million on flower between June-November 2021, or 37% of the total flower market in Ontario.
- The category of younger men is growing the fastest, increasing their spending by 152% from 2020 to 2021 in the flower category. And young women are taking to legal weed as well, as cannabis sales to their demo grew 130%.
- Those women are also enjoying their flower more than their west-coast counterparts. Gen Z females in Ontario are spending much more of their wallet share on flower (48.2%) than in Alberta (42.6%) and California (33.9%).
This Ontario data echoes what we’ve seen in the US: Gen Z consumers saw the fastest cannabis-consumption growth during the pandemic, “driven by how many were turning 21, the age at which cannabis can be legally purchased, where allowed. Destigmatization plays a role as well,” as NBC News notes.
Legal cannabis sales finally compete with illicit market
In Ontario, the tide may also be turning more towards legal sales compared to black market sales. The legal market was responsible for 19% of cannabis sales by the end of 2019 and 44% at the end of 2020, but now that figure has reached 54%.
Thing is, what’s keeping some consumers firmly in the illicit market? Pricing.
As a Deloitte Canada survey found, three-quarters of Canadians who prefer buying their weed from the black market say they are instigated by lower prices compared to the legal market.
A key driver for Millennials, especially, to ramp up their legal consumption habits is their deep experience in the space. “They were probably users of the illicit markets for so long, and they are well educated on the product,” says Malkani.
“And they may want to keep buying flower because they grew up with that format, while newer consumers may experiment more with non-combustible formats.
But during the pandemic, Headset data found that flower purchases slumped among all age groups, including Gen X and Baby Boomers, in terms of wallet share, while the only format to enjoy an average of a 5% increase across the board were pre-rolls. (Did we all get a bit lazier during the pandemic?)
As for what’s ahead, Malkani predicts the increase in M&A activity in Canada will cause prices to be more competitive, and more variety should be available to consumers. “And we should see more concentration into premium products because it’s not just about a volume game any longer,” he adds.