With Canada poised to legalize recreational weed, companies are scrambling to amass customer insight and ready themselves for the onslaught of buyers projected to flood the marketplace. Thanks to prohibition, the North American cannabis landscape is the proverbial Swiss cheese of information—one of the biggest holes being the lack of consistent data focusing on the modern consumer.
A new report, issued by Deloitte on Tuesday (June 5), surveyed 1,500 current and prospective consumers across the country between March 6 to 20. It aimed to construct an image of the post-prohibition cannabis user and flesh out their expectations of the industry come summer. Looking at the Canadian cannabis landscape it suggests legalization will attract an older, more educated recreational user.
“What’s important is the timing. The last study was done a couple of years ago and so we wanted to update the study to provide Canadian organizations with the fact-base to help prepare for the new legal industry,” says Jayana Darras, an audit and assurance partner at Deloitte Canada, in a phone interview with the Straight.
The report, which predicts a 35 percent rise in overall consumption once cannabis is legalized, projects the industry will generate up to $7.17 billion in sales by 2019. Recreational channels will account for around $4.34 billion, while up to $1.79 billion will come from the medicinal market, and $1.04 billion will still be generated by illicit sales.
A new post-prohibition consumer
Collected by way of an online survey, the data paints two very contrasting depictions of the existing and post-prohibition cannabis user.
“The study divides it [consumers] into two: The current cannabis user, which we would call the ‘risk-taker’, and the likely cannabis user, which we’re calling the ‘conservative experimenter’,” says Darras.
The current risk-taker is described as young consumer (18-34), ingesting multiple times a week with, at most, a high school or college-level education. Current consumers are also noted as having less concern for potential health and safety risks, with little regard for ‘skirting’ the law.
“The conservative experimenter is older, between 35 to 54, and more likely to consume less than once a month, so a more recreational user,” she says. Although, 74 percent of these future consumers report to having had prior experience with recreational cannabis and 41 percent have consumed in the past five years, meaning these are not to be confused with first-time users. It is also noted that this type of consumer is not likely to be an online influencer and is more concerned with family interests.
A shift to the legal landscape
As Bill C-45, the Cannabis Act, navigates the hurdles of Senate committee hearings, some argue the proposed regulations won’t be enough to pull consumers away from illegal producers. Deloitte’s findings indicate that might not be the case.
Current consumers are expected to transition nearly two-thirds (63 percent) of their purchases to legal channels, which bodes well for the government’s goal of eradicating the black market. Respondents say they are swayed by the potential for higher quality-assurance (55 percent), a broader range in price points (54 percent), variety in product potency (47 percent), and stricter safety regulations (41 percent).
“Legalization alone won’t persuade most current cannabis consumers to completely abandon their existing suppliers,” the report says.
“But our research suggests the right mix of quality, price and safety could just do the trick.”
Things like familiar brand names, however, seem to boast little in the way of pulling current consumers away from their illicit channels. The report says only 16 percent of existing users say a company they recognize would persuade them to completely move to legal cannabis outlets.
A demand for edibles
As it stands, the government intends to prolong the introduction of cannabis-based edible products into the market until a year after federal legalization. Instead they are focusing current efforts on developing regulations for dried flower, seeds, and select oil products.
Despite the delay, more than half of the respondents (51 percent) say they are interested in purchasing products like baked goods, chocolates, and gummies, all infused with cannabinoids. This comes as no shock as inhalation is not the preferred ingestion method for many users, but it will also become increasinly difficult to smoke weed in many regions planning to impose harsh restrictions on public consumption.
Currently, the data found around 14 percent of existing consumers ingest edibles, and that number is projected to rise to 18 percent after legalization, while six out of 10 likely consumers are expected to also want access to edible products.
Set standards and high expectations
Throughout the report, Deloitte observes several indicators from the data urging retailers at both brick-and-mortar shops and online retail platforms to prepare for consumers with preset expectations matching that of existing industries.
They suggest online retailers prepare to provide incentives like free shipping and fast delivery. The report also says customers are looking for assurances that their digital data is private and protected. Physical retail locations, on the other hand, are encouraged to equip their budtenders with strong product knowledge, display clear pricing, and maintain convenient hours.
Much like that of any other industry, the data shows consumers are likely to be drawn to standardized, professional experiences.
“In time, we expect legalization will legitimize consumption and diminish the stigma that surrounds it today. After all, we’ve been here before—and we’ve shown that we have the maturity to develop strong, thriving industries based on tightly regulated, controlled substances such as beer, wine, and spirits,” the report concludes.
“It was not all that long ago that these were regarded in a vastly different light. In our view, cannabis will prove little different.”