Ontario Legal Sales Reach Turning Point

Stephen Andrews
19 Dec 2021

A report from the Ontario Cannabis Store says that 54.2 percent of pot purchases in Ontario in the period between July and September were attributed to legal retailers. Since the start of legalization in Canada, this is the first time that legal retail outperforms illicit sales in the province.

Ontario's provincial pot distributor said sales conducted through legal channels topped $394 million for the quarter, up from $204.3 million from the same period last year. Retail amounted to a record 56 million grams of cannabis. 

In 2018, the first year when Canada adopted legislation for the recreational use of cannabis, only 5.4 percent of pot purchases were linked to legal retailers. That number climbed to 19 percent in 2019 and reached 44.1 percent at the end of 2020. 

Authorities in Ontario have put tremendous efforts to downscale illicit sales by slashing product prices in legal shops and raiding unlicensed retailers.

Statistics Canada collects self-reported data from marijuana consumers to aggregate the ratio between legal and illegal pot sales. Some unregulated purchases may go unreported, however, this data is the best bid to conclude that the legal market in Canada has finally reached a long-awaited turning point.

"When it comes to the unregulated market, [sales] are a difficult number to pinpoint, but assuming the reporting is true, it's not hard to believe," said Jennawae McLean, the co-founder of Calyx + Trichomes, a cannabis store chain in Kingston, Ont. 

McLean also pointed out that the number of cannabis shops in Ontario "really just completely exploded" over the last two years. 

Roughly half of Ontario shops have opened after March this year. Until then, the province had 527 pot shops across its 122 regions. 

The Ontario Cannabis Store confirmed the number of shops rocketed by 46% April through June, while sales went up 18% for the same period. 

By the end of summer, cannabis retailer 6 of Spade took the honors of opening the 1000th store in the province. 

At year-end, Ontarians can supply a stash of legal pot from some 1,115 licensed retailers provincewide. They can now order weed via Uber Eats, too.

The recent sales figure attributed to the legal market may represent a big win for Ontario, however, the intense clustering of shops in cities like Ottawa has raised concerns if vendors can survive. 

Experts say the rapid growth will likely result in some retailers facing harsh competition and closing down due to a crowded marketplace. 

Those closely following the local market warn of consolidation of brands where larger chains grow and gobble up smaller players, especially in attractive areas and locations.

Ontario's market right-sizing may be on its way, and whether this is something to affect legal sales, we'll find out soon!

Stephen Andrews