One of the largest banks in Canada, Canadian Imperial Bank of Commerce, has slashed almost a billion dollars off its 2020 forecast for adult-use cannabis sales.
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. Previously the bank had estimated CA$3.4 billion estimate.
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 to 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 report notes that “improvements on product breadth, pricing and availability have driven sales somewhat, but the lack of a more fulsome physical retail presence will limit upside, as consumers continue to show preference for buying in person.”
“Without meaningful store growth, we believe the per capita consumption in Canada will remain below U.S. states with greater store penetration,” the report also reads.
