The number of Canadians using cannabis was already on the rise in 2017, before the legalization of recreational pot last month, a Statistics Canada report shows, and at least one bank sees potential for LP revenue on three continents to reach nearly $200-billion by 2025.
In its recently released 2017 Canadian Tobacco, Drugs, and Alcohol Survey, StatsCan said that 15 per cent of Canadians reported using cannabis in the past 12 months.
The report, which gathered data in 2017 from more than 16,000 residents aged 15 and older, revealed that 4.4 million people in Canada had used cannabis in the past year, with males accounting for 2.7 million of these and female at 1.7 million. This was up from a total of 3. 6 million in 2015 and 3.1 million in 2013.
Of those who reported using cannabis in the past year, 1.6 million said it was for medical purposes, double 2015 figures, while 1 million said they consumed it on a daily or almost-daily basis, the report showed.
“The data highlights that about 25 per cent of cannabis users across the country spent more than $250 during the past three months, which equates to an annual spend of over $1,000. About 10 per cent of users spent more than $500 ($2,000 annually) in the past 3 months, with 3 per cent spending over $1,000 ($4,000 annually),” AltaCorp Capital Research said in a note.
“New form factors, particularly edibles, vapes and beverages, which eventually will be made legal, are likely to attract non-users who were deterred from using cannabis due to aversion to smoking.”
BMO Capital Markets, meanwhile, pegged the cannabis market value in North America, Latin America, and the European Union to potentially reach $194-billion in seven years.
“We believe current valuations for Canadian LPs are elevated when only the Canadian cannabis opportunity is considered,” BMO said in a report, adding that if investors consider potential U.S. federal legalization and broader EU legalization, the resulting valuation could prove opportunistic.
BMO noted its analysis was done under the limits of its two-year EBITDA forecasts that reflect opportunities in Canada.
For Canada, BMO forecast potential revenues for medical cannabis to LPs will reach $2.8-billion in seven years, up from $600-million now, while it could reach $3.1-billion for adult recreational use for a total of $5.9-billion.
In the United States, BMO estimates LP revenue could reach US$14-billion for medical cannabis and US$38-billion for adult use. In the EU, it could rise to €20-billion for medical and €45-billion for adult recreational use. Potential revenues from medical cannabis for LPs could reach $22-billion in Latin America.
Earlier this week, Mexico’s Supreme Court ruled that an absolute ban on recreational use of marijuana was unconstitutional, effectively leaving it to lawmakers to regulate consumption of the drug, potentially raising the prospect for legal recreational cannabis there.