Canada’s Medical Cannabis Market Shrinks but Stays Alive Post-Legalization

As Canada marks the sixth anniversary of recreational cannabis legalization, a new study reveals surprising changes in the medical cannabis market. While the number of patients in the medical system has dropped, the demand for medicinal cannabis has not completely dried up. Michael Armstrong, an Associate Professor of Operations Research at Brock University, sheds light on the impact of legalization on the medical market, showing how patient behavior has shifted and what might come next.

Medical Cannabis Patient Drop-Off and Stabilization

Armstrong’s research highlights a notable drop in the number of patients registered for medical cannabis when recreational cannabis became legal. In particular, July 2018 marked a turning point, as the passage of the Cannabis Act seemed to trigger changes in patient registration behavior. Alberta saw the most significant decline in registrations, while Ontario’s numbers just slowed down.

However, this decline may not signal bad news. According to Armstrong, some of the early exits from the medical system likely represented patients who didn’t really need to be in the program. Meanwhile, those who remained appear to have adjusted to the new landscape. The data shows they stabilized their purchasing rates and even increased the amount of cannabis bought per order.

  • Before legalization: Patient registrations were steadily rising.
  • Post-legalization: Registrations slowed or fell, but purchasing amounts per patient increased.

This suggests that while fewer patients are using medical cannabis, the remaining ones are purchasing larger quantities, keeping the system alive, albeit smaller.

The Role of Edibles and Processed Products

The arrival of cannabis edibles and other processed products in December 2019 marked another pivotal moment in the medical cannabis market. As Armstrong’s study shows, this expanded product range spurred significant changes in how patients behaved.

Registrations declined further when these new cannabis products hit the market, but it was a different story when it came to purchasing activity. Patients who stayed in the medical system started placing larger orders, with some gravitating towards producers offering a good selection of edibles. The broader product offerings in the recreational market might have enticed some patients away, but those who remained in the medical system became more active customers.

According to Armstrong, this suggests that some producers lost their patients to the recreational market, while others gained customers by offering what the patients wanted—larger, more varied options. The behavior shift wasn’t dramatic in terms of registration numbers, but the rise in purchase sizes was significant.

What Happens Next? Medical Cannabis Pricing Could Be Key

So what does the future hold for Canada’s medical cannabis market? Armstrong doesn’t foresee any drastic changes unless there’s a major policy shift. The two factors most likely to influence the market are taxes and access.

If the government removes the excise or sales tax on medical cannabis, this could make it more attractive for patients compared to recreational cannabis. Tax-free cannabis would likely lead to increased interest in the medical route. Accessibility is another critical issue. Armstrong notes that if medical cannabis were available in local pharmacies, giving patients easy access to a pharmacist’s advice, it could significantly boost the appeal of staying in the medical system.

Factors that could impact future trends:

  • Tax changes: Removing taxes on medical cannabis could shift purchasing habits.
  • Accessibility: Easier access in drugstores, along with medical advice, could drive demand.

For now, Armstrong’s research shows a relatively stable medical cannabis system in Canada, albeit with fewer patients. He believes Canada’s experience could serve as a model for other countries considering legalization.

A Global Perspective: Canada as a Model for Cannabis Legalization

As a pioneer in cannabis legalization, Canada’s handling of the medical and recreational markets provides valuable lessons for other countries. According to Armstrong, countries legalizing cannabis should expect significant shifts in their medical cannabis markets, but that doesn’t mean the market will vanish. Instead, the medical system will likely “right-size,” depending on factors like pricing, product selection, and how competitive the two systems are.

Armstrong’s study underscores that while recreational legalization might reduce the number of medical cannabis patients, the demand for medical products won’t disappear entirely. Countries should be prepared for such changes and plan accordingly.

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