A high-level overview of the Ontario cannabis market

Introduction

The cannabis market is constantly adapting and evolving. With new markets opening every year, new brands emerging every week, and new products being released on a daily basis, there is never a dull moment when it comes to trying to understand how consumers are leading this dynamic market into maturity. Over time, we learn a bit more about each demographic group and how they vary from market to market. At the pace that we see regulations change, supply fluctuations as well as technological advancements, the cannabis industry is a whirlwind of opportunities for expansion and emergence of current and new solutions. Consumers find themselves at the benefit and mercy of all of these changes and are spending their money to inform the greater industry as to what they like.

Ontario is one of the most exciting cannabis markets to watch as it expands with new retailers, brands, and products. In this report, we will explore trends and behaviors of cannabis consumers in Ontario by analyzing different age groups and identifying growth and changes in spending habits of different cannabis categories year over year.

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Executive summary

When we look at age groups in Ontario, we notice some unique differences in cannabis shopping behaviors among the different groups. For example, when we compare November 2020 to November 2021, we see that all age groups are buying significantly more cannabis than last year. The Gen Z age group, however, is the fastest growing age group with sales more than doubling (137%) from November 2020 to November 2021. Looking specifically at Female consumers within the Gen Z age group and comparing them to their counterparts in the Alberta and California markets, we find that Gen Z Females in Ontario are spending much more of their wallet share on Flower (48.2%) than in Alberta (42.6%) and California (33.9%). When we focus on the Flower category in Ontario, we again see how quickly the Gen Z age group is growing, with Males increasing their spending by 152% on the Flower category between November 2020 and November 2021, and Gen Z Females growing 130% in the same time period.

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Methodology

Data for this report comes from real-time sales reporting by participating cannabis retailers via their point-of-sale systems, which are linked to Headset’s business intelligence software. Headset’s data is very reliable, as it comes digitally direct from our partner retailers. However, the potential does exist for misreporting in the instance of duplicates, incorrectly classified products, inaccurate entry of products into point-of-sale systems, or even simple human error at the point of purchase. Thus, there is a slight margin of error to consider.

In this report we examine sales in markets where Headset provides Insights data, mainly focusing on Ontario. In addition to Ontario, this report also includes some data from California and Alberta. We present all data in local currency and do not make adjustments for currency fluctuations.

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How are Males and Females spending on cannabis in Ontario?

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This first graph demonstrates some of the exciting growth that has happened in Ontario over the past year. Here we compare Female and Male cannabis consumers in Ontario from November 2020 to November 2021 and see how sales have grown. Collective Male spending has grown 75% from November 2020 to November 2021, and Female consumer spend has grown 58% in the same time period.

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Cannabis sales growth by age group in Ontario

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Next, let’s look at how different age groups are purchasing cannabis in Ontario. In this graph, we look at June-November and compare 2020 and 2021. Consumers in all generations are purchasing more cannabis compared to the same period last year. Gen Z is in the lead, with 171% year over year growth and nearing $150 million in sales. Millennials contributed just over $420 million in sales over the same time period, an increase of 79% over last year. Gen X accounts for slightly more sales than the incoming Gen Z age group, contributing $178 million in total sales from June-November 2021. Don’t count out the Baby Boomer generation! Although their collective sales make up the smallest amount purchasing among age groups, they grew at a slightly faster rate than Millennial and Gen X groups.

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Year over year cannabis sales growth in Ontario by age group

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Diving a bit deeper into customer age groups in Ontario, here we focus on sales for the month of November and compare 2020 and 2021. All generations demonstrate strong year over year growth. Millennials made up the largest portion of Ontario sales in November in both 2020 and 2021, but Gen Z has the strongest growth among all age groups. As customers in this group continually age into the market, their collective share of total Ontario sales is steadily increasing. Gen Z sales more than doubled from November 2020 to November 2021 with a 137% increase. The growth of Millennials, Gen X, and Baby Boomers was comparable showing growth rates of 55%, 63%, and 64% respectively.

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Cannabis category wallet share by age group

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Now, let’s look at the wallet share and spending contributions of these different age groups from June-November and compare 2020 with 2021. The Other category is an aggregation of smaller categories including Capsules, Oil, Tinctures & Sublinguals and Topicals.

As we have been seeing through the previous graphs, the Gen Z group seems to be one of the most dynamic age groups within the Ontario cannabis market. From 2020 to 2021, we see that Pre-Rolls have garnered an additional 5% of the Gen Z spend, reaching 20% in 2021. Flower sales dropped over 5% within the Gen Z wallet, and we can assume that a portion of Flower sales have transferred to Pre-Rolls. There’s a similar trend in the Millennial age group, as Flower spend has dropped by nearly 9% but Vapor Pens gained about 6% of share. The Gen X and Baby Boomer age groups are also trending similarly, although Pre-Rolls only gained about 4% share with Baby Boomers. Despite varying levels of change, we see that Flower is losing some wallet share across all generations in Ontario during this time frame.

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Category wallet share of Gen Z by gender

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Here, we look closer at the Gen Z age group and break it down further into Female and Male consumers within the group, looking specifically at June-November and again comparing 2020 to 2021.

There are a few differences between these two gender groups in the Ontario market. In 2020, we can see that Gen Z Males and Females spent roughly the same amount of their wallet on Flower, at 52.7% and 52.2%. Gen Z Males spent a bit more on Vapor Pens in 2020 (24.1%) compared to their Female counterparts (20.4%). On the other hand, Gen Z Females spent slightly more of their wallet on Pre-Rolls (16%) than Males (14.4%) in 2020.

From June-November 2021, Female Gen Z consumers increased wallet share to Vapor Pens by 1.4%, while Male consumers decreased their spending on Vapor Pens by .7%.

Gen Z Females in Ontario were spending 5.5% of their wallets on Edibles in 2020, almost double their Male counterparts (2.8%). Both Males and Females increased their spending on Edibles by roughly half a percent in 2021.

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Category wallet share of Gen Z Females

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As the fastest growing group in the cannabis industry, it’s valuable to examine the spending habits within the Gen Z age group to gain a better understanding of the emerging trends in the market. Here in this chart, we isolate the wallet spend for Gen Z Female consumers in 2021 (January - November) and compare Ontario to California and Alberta.

Interestingly, Flower sales seems to be owning a larger share of Gen Z Female wallet shares in Alberta and Ontario than in California. Some of the substitution for Flower spend in California can be attributed to the significantly larger Vapor Pen share. Gen Z Female consumers in Ontario are spending much more of their wallet share on Flower than in Alberta and California at 48.2% compared to 42.6% and 33.9%, respectively.

In California, the collective Gen Z Female wallet looks very different to the same demographic in these Canadian markets. They are spending less on Flower and Pre-Rolls and substituting more for Vapor Pens, Edibles, and Concentrates. Gen Z Females in California are also spending over three times as much on Concentrates as the same demographic in Ontario at 7.3% compared to 1.4%.

One thing that is important to note is that in Canada, the Gen Z demographic has a head start to purchase cannabis over those in California. Individuals can start legally purchasing cannabis in many provinces at the age of 19 in Canada, but the legal age is 21 in California. Those years can often have an impact on the trends that are represented in the data.

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Year over year growth of Flower by age group

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As we saw in the previous chart, Gen Z Female consumers in Canadian markets are spending a significant portion of their wallets on products in the Flower category. Here, we explore the driving forces of the Flower category in Ontario a bit further by looking at year over year spending of different age groups in this category from June-November and compare 2020 with 2021.

In Ontario we are seeing growth within the Flower category across all demographic groups within the last year. Millennial Males are purchasing a sizable amount of Flower in the Ontario cannabis market amounting to $147 million from June-November in 2021. This is the equivalent of 37% of the total Flower market in Ontario during the same time period.

Although it’s not the largest wallet, the Gen Z age group is by far the fastest growing group as they age into the market. Gen Z Males increased their spending by 152% from 2020 to 2021 in the Flower category with Gen Z Females close behind, with a year over year growth rate of 130%. The two slowest growth rates, on the other hand, come from Millennial Females (42%) and Gen X Females (44%).

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Conclusion

When we dive into demographic groups, we begin to see some unique trends in cannabis spending. As the market continues to mature and expand with more competition, it is valuable to keep track of these trends in order to make strategic decisions within the industry. To examine the Ontario market in more detail, or to assess the opportunity in other legal cannabis markets, sign up for a demo of Headset Insights.

Key takeaways

• Sales from Male consumers in Ontario have grown 75% from November 2020 to November 2021, and sales from Female consumers have grown 58% in the same time period.
• Gen Z is the age group to keep an eye on, as the fastest growing age group in Ontario, more than doubling in sales from November 2020 to November 2021 with a 137% increase.
• When we compare Gen Z Females in Ontario with their counterparts in Alberta and California, we see that Gen Z Females in Ontario are spending much more of their wallet share on Flower (48.2%) than in Alberta (42.6%) and California (33.9%).
• Millennial Males are a dominant part of the market, spending $147 million on Flower between June-November 2021, or 37% of the total Flower market in Ontario. However, Gen Z Males are growing the fastest, increasing their spending by 152% from 2020 to 2021 in the Flower category, while Gen Z Females grew 130%.

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