Recreational Cannabis

The promise of an undefined market.

The promise of an undefined market

With legalization in Canada and other North American jurisdictions, the cannabis market is transforming itself from purely medical to a combination of both medical and recreational. Currently, this new retail landscape lacks dominant players. An entire marketplace needs to be imagined – and that means opportunity for those with capital, insight and discipline. Each year, people spend billions in adjacent “wide moat” markets. As the legal cannabis market opens up, many will redirect their recreational spending toward a variety of innovative products that lack the harmful effects of alcohol and tobacco.

"Wide Moat" use and spending

  • Recreational use
  • 50% adult penetration
  • $45–200 monthly spend
$200 billion
  • Recreational use
  • 17% adult penetration
  • $40–80 monthly spend
$100 billion
  • Recreational use
  • 50% adult penetration
  • $80–100 monthly spend
$35 billion
  • Recreational and medical use
  • 20% adult penetration
  • $50–500 monthly spend
$500 billion

Winners in this emerging market will be those who are bold enough to cut through stereotypes and disciplined enough to approach opportunities methodically.

Comparative effects of consumption

Cannabis Alcohol
Recorded Deaths per Year
Many alcohol-related deaths are related to depressant effects on respiratory centres in the brain – effects cannabis does not have.
0 4,258
Number of Hospital Stays
Alcohol leads to significantly more primary diagnoses of mental and behavioural disorders compared to cannabis use.
1,500 19,617

A better alternative

  • 82% of cannabis users reduce alcohol consumption, with 12% replacing it altogether
  • 73% of cannabis users who smoke reduce tobacco use, with 13% eliminating it entirely

Today in Canada, one in five people already enjoy cannabis, and the average user is educated, fully employed and has disposable income. To engage this valuable demographic, companies will need more than entrepreneurial spirit and knowledge of cultivation, crop yields and quality. To attract and retain consumers over the long term – to scale operations that can take full advantage of this new asset class – companies will need to understand complex systems and supply chains, regulatory frameworks that vary by jurisdiction, and the fundamentals of retail science.