Cannabis store sales plunged in the Quebec border city of Gatineau after the province raised the legal age for buying marijuana from 18 to 21 in January 2020, according to an analysis of data provided by Statistics Canada.
Sales in Gatineau reached an all-time high of 1.83 million Canadian dollars ($1.4 million) in December 2019. The next month, in January 2020, the legal age rose to 21, the highest in Canada. Sales dropped that month to CA$1.69 million and even further in February, to CA$1.57 million.
By January 2021, sales had collapsed to less than CA$1 million, almost 50% off the peak from a year earlier.
By comparison, sales across Canada rose 91% in the same period.
Policy experts and business sources say Gatineau’s drop might stem from a number of factors acting in concert to drive consumers back to the illicit market or across the border to neighboring Ottawa, Ontario, which has fewer restrictions on the sale of regulated marijuana.
Another factor may be a stabilized supply and improved selection of cannabis vapes and edibles in Ontario last year, which may have lured shoppers from Quebec, where their sale is remains banned.
Michael Elkin, business development consultant at CannaBrokr in Montreal, said Quebec consumers are crossing into Ontario “in hordes.”
“As a Quebecker, not having access to ‘Cannabis 2.0’ products makes it worthwhile for me to cross over the border into Ontario,” he said.
Ottawa had three stores open as of Jan. 1, 2020. That total rose to 12 by the end of the year.
The Société québécoise du cannabis (SQDC) operates a lone government-owned and -operated store in Gatineau.
A spokesperson for the SQDC declined to comment.
Ottawa’s gain?
Gatineau’s loss appears to be Ottawa’s gain – at least when it comes to regulated retail sales.
Quebec’s decision to raise the cannabis consumption age to 21 is all the more puzzling, experts say, given that the province has the lowest consumption age in the country for alcohol, at 18.
The policy has the effect of driving Ontario’s teenagers into Quebec to buy alcohol legally, while Quebec’s youth appear to be crossing into Ontario to buy cannabis legally, Jason Childs, associate professor of economics at University of Regina in Saskatchewan, told Marijuana Business Daily.
“It’s going to push them to either the illicit market or across the border. You squeeze the balloon in one place, the air is going to go somewhere else,” he said.
“You’re seeing anticipation of the age change, and you’re seeing a much more vibrant market on the Ottawa side, which is pulling people out of Gatineau.”
While cannabis sales in Gatineau collapsed after the legal age increase, sales in Ottawa almost doubled. Though Ottawa’s rise stems mostly from more cannabis stores opening in 2020, part of the jump is thought to be attributable to Quebec shoppers crossing the border.
Ottawa’s legal cannabis stores sold CA$4.58 million worth of products in December 2019, and that total rose to almost CA$8 million in January 2021, the Statistics Canada data shows.
Products, prices
Another factor that might be driving Quebec’s cannabis consumers into Ontario is better product selection.
In 2019, Quebec’s monopoly marijuana retailer – Société québécoise du cannabis (SQDC) – said it would not carry cannabis vaporizers “in the light of many health problems.”
Quebec also bans “sweet or savory edible products,” including marijuana-infused chocolates, as well as all topical cannabis products.
Ontario has no such restrictions.
“Gatineau residents who want to buy vapes and edibles are likely shopping in Ottawa. Vapes in particular are a popular product format, second only to dry cannabis,” said Michael Armstrong, a Brock University business professor who analyzes Canada’s legal cannabis market.
Armstrong also said price might be a factor.
“I suspect it also partly represents a reversal of earlier flows the other way … Ottawa residents who previously shopped in Quebec but now are shopping nearer to home,” Armstrong said.
“During legalization’s first year, agency markups were much lower in Quebec than in Ontario. That meant retail prices there were much lower, too: under $8/gram average for SQDC but over $10 for OCS (Ontario Cannabis Store).
“During legalization’s first year, agency markups were much lower in Quebec (23%) than in Ontario (79%). That meant retail prices there were much lower too: under $8/gram average for SQDC but over $10 for OCS.”
He said the OCS started lowering prices in Year Two, which might have had the effect of keeping some consumers in Ontario who had previously crossed into Quebec.
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at matt.lamers@mjbizdaily.com.
