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Study Finds ‘Substantial’ Variation in Canada’s Cannabis Access By Region

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While cannabis legalization has obviously increased accessibility of the plant in the regions it’s now allowed, a study published in the journal Drug and Alcohol Review found that, two years into legalization, access to cannabis is highly variable across Canada.

The researchers found that privates and territories boasting private retail models had more stores, longer hours and greater store growth than those regions with public models. The data was collected for all legal cannabis stores in the country across five total time periods following the country’s cannabis legalization in October 2018, in order to recognize the difference in public versus private operations, absolute and per capita store numbers, operating hours and store access across neighborhoods.

Two years after Canada’s legalization of cannabis, there were a total of 1,183 total legal cannabis stores open across cannabis, with a wide variation between jurisdictions across retail stores, the lowest store per capita reflected in Quebec and Ontario (0.6 and 1.5 respectively per 1000,00), with the highest in Alberta and Yukon (14.3 per 100,000 in both). 

Those jurisdictions with private retail models also had more stores (4.8 versus 1.0 per 100,000), held a higher number of median weekly hours (80 versus 69) and experienced more store growth over time, compared to public models. There were 1.96 times more cannabis stores within 1,000 meters of the lowest, compared to the highest income neighborhoods, after adjusting for confounders.

The research concludes that access has clearly increased, but there is a huge range in access between jurisdiction, with evidence of concentration in low-income neighborhoods. The study also notes that the disparity could contribute to “disparities in cannabis use and harms” and that the legal market remained “immature” in many regions of Canada two years into legalization, which further makes it difficult to draw conclusions about the impact of legalization.

Variation in Canada Cannabis

The researchers chatted more about the results in a press release with EurekAlert:

“A lot of studies to date have looked at cannabis use in the year following legalization, not seen very dramatic changes, and concluded that legalization really doesn’t have much of an impact on cannabis use and related health outcomes,” said Dr. Daniel Myran, a postdoctoral fellow at The Ottawa Hospital and the University of Ottawa Department of Family Medicine. 

He continued, “What our data suggests is that we should not really have expected major changes right after legalization because of market immaturity. I anticipate that it’s only now that the market is taking off that we will see the potential impacts of legalization on cannabis use and related health outcomes.”

And while legal regions throughout the United States continue to smash sales records, Canadian cannabis companies are still having trouble turning profits, according to the country’s earnings as outlined by Market Watch.

Three Canadian cannabis companies reported their quarterly earnings from two weeks at the end of July and beginning of August, and all produced net income, but in each case, it was because of non-cash gains that indicate they are not yet sustainably profitable. Two of those three also missed revenue consensus estimates, while the country’s market continues to feel the pandemic’s impact on physical stores, with increasing competition creating pricing pressures.

“There needs to be a sense of caution when looking at Canadian cannabis companies relative to their U.S. counterparts who are very profitable and continue to grow,” said Korey Bauer, chief investment officer and portfolio manager of the Cannabis Growth Fund from Foothill Capital Management. “Valuations look much better in the U.S. at these current levels.”

The numbers additionally remind investors that the sector still has a long way to go before it starts making money, and in addition to the data surrounding accessibility, that the country will likely need to continue evaluating the scope of businesses within the country, how citizens can access the newly legal substance and how these conversations come into play when looking at turning profits moving forward.

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