Legalization 2.0 Brings in $4M For a Canadian Store

Legalization 2.0 saw edibles, vaporizer products, and cannabis extracts hit the Canadian market. For one store, this amounted to an increased $4.3 million in revenue.

When Canada legalized cannabis in 2018, it made the unique decision to legalize only raw flower, that is, cannabis buds themselves, rather than the full gamut of cannabis extracts and edibles.

The decision was considered a controversial one, particularly given the higher profit margins that come along with value-added cannabis products like oils, vaporizer products, and edibles.

Then, throw in a lack of stores, lack of available supply and high prices, and Canada had the perfect storm for a pretty slow rollout of their legal cannabis industry.

Though Canada's legalization of cannabis was a somewhat staggered trial run, in that the country would legalize the extended range of cannabis form factors just one year after it's initial legalization; on October 17th, 2019. From this day, cannabis stores could put in their notice to Health Canada, to notify them that they wished to sell the new range of cannabis products. Cannabis producers were required to provide 60 days' notice before they added new products to the shelves, so it wasn't until December that Canadians were able to get their hands on a wider array of products.

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Now, onlookers eagerly await to see how Canada's legalization 2.0 has been going, as very little information has been currently released – That is, until recently.

Recently, the aptly named 'Ontario Cannabis Store' announced that it had generated roughly $4.3 million in sales from cannabis derivative products such as vaporizers and edibles during January. $3.77 million of the profits came from vape-related products and $569,000 generated from sales of edibles for the month of January. 

While The Ontario Store is just one slice of the total Canadian cannabis market, it gives a useful insight into the potential financial benefits that legalization 2.0 could provide to both store owners and the government alike.

"Every new product we introduce, every price drop we make and every authorized retail store that opens strengthens the legal marketplace," commented Cheri Mara, chief commercial officer at the Ontario Cannabis Store. 

The Ontario Store's January sales figures came from 54 different vape products and 24 brands of edibles. 

"$3.7 million in vape sales is pretty good. Ontario cannabis sales overall were about $33 million last month, so we're getting a good 10 percent bump from just vape products," said Michael Armstrong, professor of operations management at Brock University. 

The fact that the Ontario Cannabis Store generated an extra 10% in revenue simply from vaporizer products suggests that we may see a similar increase in overall sales Canada-wide when results become public.

Additionally, the added sales revenue may continue to increase after Canada alleviates some of the teething issues already occurring with Legalization 2.0, as the Ontario Cannabis Store indicated that they were experiencing a shortage of edible products, with licensed producers were unable to meet demand. 

Moreover, the store had not yet begun selling cannabis beverages and topicals, which may further increase profit margins once they're added to the mix.

Though all of these hindrances to sales may have been dwarfed by a much more prominent issue, which was the vaping crisis of 2019 that sent vape revenues, as well as consumer confidence around vaporizer products plummeting worldwide. BDS Analytics and Arcview Market Research stated that the US cannabis industry experienced a staggering $41 million decline in vape sales by the end of 2019. It's highly likely the same occurred in Canada, particularly given that many areas across the nation enacted vaping bans.

That said, the 10% increase in revenue experienced by the Ontario Cannabis Store could have been hampered themselves due to this decrease in consumer confidence in vaporizer products and may continue to rise as fears subside.

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Louis O'Neill
Louis O'Neill

Louis is a writer based in Sydney with a focus on social and political issues. Having interviewed local politicians and entrepreneurs, Louis now focuses on cannabis culture, legislation & reform.

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