In the previous part of this series, we mainly discussed marijuana in medical applications. In this part, we look at the secondary use of marijuana, recreational use.
In mid-2018, Canada is expected to make marijuana legal for recreational use. This outlook has been driving stocks such as Aurora Cannabis (ACB.TO), Canopy Growth (WEED.TO), Aphria (APH.TO), and MedReleaf (LEAF.TO) to new highs. But you might ask what’s the motivation to consume marijuana for recreational purposes? Here’s what Deloitte found.
Motivation to consume
The marijuana plant also has psychoactive properties that may come as a third alternative to customers who use alcohol and tobacco products for pleasure. Deloitte conducted a survey in 2016 that included a total of 5,000 Canadians above the age of 19 across every province and territory.
Looking at the survey results, we categorize the findings in three broad areas: relief, self-improvement, and fun. The relief category includes participants who would consume marijuana to relieve anxiety, reduce stress, and help relax. The self-improvement area includes participants who would consume marijuana to increase creativity, help concentrate, and help connect with others. The third category includes participants who would consume marijuana to have fun with friends and make activities interesting.
In the above chart, we also see an overlap between marijuana and alcohol consumption. About 20% of participants would consume recreational marijuana with alcohol always or most of the time. We also see that 55% would occasionally consume recreational marijuana with alcohol, and 25% would never consume marijuana with alcohol.
Given the second set of findings with alcohol use, Deloitte concluded that “recreational marijuana industry aspirants need only look to the beverage alcohol industry for marketing and branding parallels. Positioning a brand to align with various consumer needs and activities will be a strong strategic option.”
This outlook may explain why Constellation Brands (STZ)—one of the largest producers and marketers of alcohol in the United States (XLB)—acquired a stake in Canopy Growth. Learn more in the next part of this series.