The State of Cannabis in Canada

April 20, 2023
By Janessa Bishop 

It’s been over four years since cannabis became legal in Canada, and as the second country in the world to legalize recreational cannabis, many are following Canada’s journey with great interest. But what started as the great “green rush” in 2018 has faced many challenges over the past few years, including oversaturation of the retail market, consolidation of many large Canadian producers and public health concerns, to name a few.  

The industry has also been critical of the strict regulations around cannabis, calling for more action to combat the illicit market and reduce excise taxes, as well as increase consumer education and financial viability of the industry.  In September 2022, the government announced a legislative review of the Cannabis Act, which sets the rules and standards around production, distribution, sales, and importation and exportation of cannabis. The goal of this review is to address the ongoing needs of the industry while protecting the health and safety of Canadians.   

From a communications and marketing perspective, cannabis promotion can be challenging, and it’s a delicate balance between endorsing a product while balancing health and safety concerns. Many within the industry argue that “over-regulation” is crippling legal producers, leading to facility closures and layoffs across the country.   

Below are some of the key trends we’ve seen in the industry over the past few years:  

The illicit market continues to thrive 

Despite legalization, many consumers still turn to the black or grey market for products. According to Health Canada’s 2022 Canadian Cannabis Survey, 33 per cent of cannabis users still buy from illicit sources, at least occasionally. Though little research has been conducted as to why consumers continue to purchase from the illicit market, the underlying opinion is that illegal sellers can easily undercut costs of licensed retailers, and offer more product selection and potency, particularly when it comes to edibles (regulated edible products can only contain up to 10 mg of THC per package, while illicit products have no limits). The industry remains hopeful that the review of the Cannabis Act will help address the illicit market and start to crack down on illegal sellers.   

Product marketing remains highly regulated  

Cannabis promotion in Canada must adhere to strict regulations, aimed to help protect the health and safety of consumers, particularly youth. Every promotion must be behind an age gate, and only two types of promotions are allowed – informational, such as product facts (flavours, THC content, and cannabis strain), and brand preference. Brands cannot make any cosmetic or health claims in any product promotions or on packaging – even claims such as the effects of CBD on sleep are not allowed. Additionally, cannabis companies cannot engage in corporate sponsorships, are not allowed to be affiliated with or endorsed by any celebrities, are unable to run giveaways or contests related to the products and cannot leverage testimonials or endorsements. With many producers and retailers struggling to survive, it will be interesting to see whether the Cannabis Act review will amend any of these restrictions in the coming years.  

Despite legalization, cannabis consumption remains largely unchanged 

While many believed that legalization would cause a significant increase in cannabis consumption across Canada, recent Health Canada data tells a different story.  In 2018, Health Canada introduced the Canadian Cannabis Survey (CCS) to better understand how Canadians view and use cannabis. According to the CCS, cannabis use has steadily increased over the past four years, up from 22 per cent in 2018 to 27 per cent in 2022. However, frequency of daily or almost daily cannabis use remained unchanged, with 25 per cent of Canadians reporting using cannabis daily or almost daily in both 2018 and 2022. Monthly spending on cannabis in the past 12 months has also decreased slightly, from $73 in 2018 to $65 in 2022. Cannabis is still a relatively new industry, and not unlike alcohol and tobacco, will likely continue to face shifts in cultural and social acceptability before it becomes a more viable sector.  

What’s next for cannabis?  

After the introduction of edibles and cannabis-infused beverages, one logical next step in Canada’s cannabis evolution involves consumption of cannabis within restaurants and bars. This is already happening in the U.S., which opened its first cannabis consumption-friendly restaurant in California in 2019. Taking it a step further, Canadian cannabis advocates are also exploring the possibility of creating restaurants that serve cannabis-infused meals. This type of integration of cannabis into other lifestyle areas – food, beverage, entertainment or others – could broaden the consumption landscape and help an increasingly challenged market. The current regulatory environment, however, means Canadians likely won’t be seeing cannabis on the menu anytime soon.  


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