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Health Canada Cannabis Market Data period ending June 30, 2018

Health Canada reports cannabis market data for the period ending June 30, 2018. The numbers that caught our eye is the continued growth in the number of registered medical patients.



As the chart above shows, the number of registered patients continues to rise strongly. At the end of June 2018, the number stood at 330,758 patients, an increase of 11.5% over the 296,702 patients at the end of March 2018. The chart below shows the year-over-year growth rate has been slowing for several quarters but still remains at a strong 164% increase over June 2017.




The inventory data shows an industry scrambling to get ready for the legalization of recreational cannabis. Recall the original target date was early July 2018. In any event, the chart above shows the buildup in inventories measured in kilograms. The chart below illustrates that even through the initial recreational demand for dried cannabis is likely to be higher, the inventory of oils has been growing to a larger percentage of the total.



With the recreational market about to open up in Canada, we might be tempted to overlook the medical demand. We think this will be a mistake. The cost of medical cannabis to the user should be lower as more and more health plans cover use. In addition, we think medical cannabis should be treated the same as any other medicine, that is, not taxed. Finally, we believe the Canadian consumer is accustomed to paying higher prices for medicine. It all adds up to a market that could be more attractive for the producers in the medium to long term.

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