A Third of Canadian Pot Users Have Never Actually Paid For It

One-third of Canadians who say they have used cannabis in the last three months, also say that they have spent no money purchasing the drug, according to new data from Statistics Canada.

Approximately 4.6 million people — or 16 percent of Canadians aged 15 and older — have used cannabis in the last three months, but only 67 percent seem to have actually purchased cannabis, possibly implying that a significant number of people who consume cannabis are somehow freeloading from others who have paid for weed, or perhaps, not being truthful about their cannabis consumption habits.

Nearly one million Canadians — or 21 percent of weed users — say they spent more than $250 on cannabis in the second quarter of 2018, while another 25 percent spent up to $100, and the remaining 21 percent spent up to, but not more than $250 on cannabis or cannabis products. This pattern of spending appeared to be relatively unchanged from the first quarter of 2018, according to the National Cannabis Survey, an information gathering exercise conducted by Stats Canada to monitor exactly how cannabis use in Canada is changing in the lead up to recreational legalization.

As expected, those who consume cannabis more often, end up spending more, while those who said they consumed weed “infrequently” spent either very little on weed, or nothing at all. “Among cannabis users who said they only tried or used cannabis once or twice over the period of the last three months, more than 60 percent indicated they had spent nothing,” the survey said.

Large cannabis companies, with valuations that run well into the billions, are banking on a surge in recreational consumption post-legalization in order to reach and sustain profitability. Many of these companies, especially the large players like Canopy Growth, Aurora and Aphria, have spent millions of dollars in the last two years ramping up production ahead of legalization.

The real payout however will only become clear when a sustained pattern of demand for recreational cannabis can be established, perhaps months after legalization.

To date, there are approximately 250,000 consistent consumers of legal cannabis in Canada — but they’re part of the medical marijuana market, and barely generate enough in sales to justify the kind of investment big cannabis producers have stumped into production. A recent analysis by consulting firm Deloitte projects that Canadians will spend as much as $7.17 billion on cannabis in 2019, increasing their overall consumption by up to 35 percent once recreational weed is legalized. A CIBC report projects an even higher number — $10 billion might be spent on cannabis within a year of legalization, if demand patterns match those of Colorado.

Those numbers, however, are significantly higher than what Statistics Canada says Canadians spent on black market weed in 2017 — just $5.7 billion.

Indeed, if current data shows that only two-thirds of actually pay for their own weed, and let’s say we assume that all 67 percent of Canadians who pay for consumption spend $1000 each on weed in a year ($250 every three months, consistent with the Stats Can survey), that will only generate $3.08 billion, half of what Deloitte projects.

This discrepancy could come from the change in cannabis consumption patterns once the drug becomes legal across the country — for instance, 28 percent of people already consuming cannabis indicate they would probably increase their use. But Statistics Canada data for the past six months has shown that a vast majority of people — approximately 80 percent — are unlikely to even try cannabis, let alone increase their consumption of it, which calls into question the extent to which recreational demand for cannabis will translate into the kind of revenues that weed companies, and their investors, are expecting.

Follow Vanmala on Twitter