“COVID-19 has now brought about serious doubt”
One of Canada’s largest banks trimmed almost a billion dollars off this year’s forecast for adult-use cannabis sales, mostly due to issues arising from a slow roll-out of regulated stores in key provincial markets as well as shuttered locations because of the COVID-19 pandemic.
CIBC Capital Markets, the investment banking subsidiary of the Canadian Imperial Bank of Commerce, sees recreational cannabis sales hitting 2.5 billion Canadian dollars ($1.8 billion) this year – much lower than its previous CA$3.4 billion estimate.
That is still more than double last year’s CA$1.2 billion in sales.
Its forecast for 2021 was lowered to CA$4.1 billion, down from previous expectations of a CA$5.5 billion market.
“The catalyst for the Canadian cannabis market in 2020 was obvious: a wave of stores in Ontario – and to some extent Quebec and British Columbia – was set to propel the industry,” analyst John Zamporo wrote in a report for clients.
“COVID-19 has now brought about serious doubt as to when this might occur. Even once conditions allow more freedom of movement, it will take time for regulators to work through the backlog of store authorizations. And even then, we suspect some would-be market participants will be skittish on deploying significant capital to open stores.”
The forecast is exclusive of medical sales.
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