Canada’s legal cannabis market needs 2 years to stabilize: analyst

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Canada’s legal cannabis market needs 2 years to stabilize: analyst
WATCH ABOVE: Supply shortages caused cannabis prices to spike in parts of Canada following legalization on Oct. 17 – Oct 21, 2018

Canadians should expect legal cannabis prices to fluctuate for roughly two years, according to an analyst tracking the market price for marijuana.

Brad Martin, director of Calgary-based Cann Standard, collects public price listings for cannabis and aggregates the numbers to establish an average.

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“I think about two years will be the time span (for prices to stabilize),” Martin said.

He used legalization in Oregon, where supply was initially low and prices were high, as an example. A period of over-supply and price compression followed, he said.

“Of course, new product types are coming in within that two-year window so it will be hard to tell,” Martin said, referring to items such as edibles.

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The lowest price available for a single gram of cannabis on Oct. 17 ranged from $5.25 in Quebec to $13 in Saskatchewan and $13.13 in the Northwest Territories.

Given supply shortages, the broader economic impacts of selling cannabis will be radically limited, according to Jason Childs, associate economics professor at the University of Regina.

“I think we’re going to see people dabbling in the legal market,” Childs said.

He predicted an initial spike in usage followed by a period of tapering off, though it’s unclear at what level the fluctuations will end.

“I don’t see this as having a huge, transformational impact right away,” Childs said.

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People should instead be looking four, five or even 10 years out to when the legal market is established, according to Childs.

Edibles and social drinking of cannabis beverages also have the potential to dramatically alter the industry, he said.

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“This is not going to be an overnight shift. This is going to be a slow-moving shift,” Childs said.

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