Report: Canadian cannabis market growth slows to 4% in first quarter

Canada’s recreational cannabis market grew just 4% year-over-year in the first quarter of 2025, continuing a trend of decelerating growth from previous years, according to a new industry report.

The analysis from Zuanic & Associates, which examined retail data from Hifyre, shows the market growing at a much slower pace versus the mid-teens growth seen in 2022 and 2023.

Despite ongoing industry consolidation efforts, the cannabis market appears to be becoming more fragmented. The top three companies held 27% market share in the first quarter of 2025, down from around 31% in the same quarter last year, the report found.

Several midsized producers posted strong growth despite the overall market slowdown. Companies with double-digit sales increases include:

Meanwhile, larger players, including Tilray, Village Farms International and Decibel, experienced double-digit declines in their domestic market share. According to the report, that likely reflects strategic shifts rather than competitive failures.

“For at least the first two, the share loss relates to an increased focus on sustainable sales growth,” the report noted, adding that these companies are shifting “away from deep discounts and the value end of the market.”

The analysis also pointed to format shifts in Canadian consumer preferences. Flower declined from 38% of sales in the first quarter of 2024 to 36% in the first quarter of 2025, while pre-rolls grew from 30% to 32% and vapes from 17% to 18%.

“Compared with the larger U.S. market, vape and edibles are underindexed in Canada, while pre-rolls are overindexed (flower is only slightly underindexed),” Pablo Zuanic, the report’s author, wrote.

Segment leadership shows varying degrees of market concentration. In vape products, the top five companies control 57% of the market, while in flower they hold 49% and in pre-rolls just 34%.

Retail flower prices have largely stabilized, averaging C$5.09 per gram in the quarter compared to C$4.89 a year earlier. However, pricing strategies vary by company, with premium producers like Cannara (C$8.24 per gram), Rubicon (C$8.30) and Aurora (C$7.68) commanding substantially higher price points than the category average, Zuanic said.

Organigram, including its freshly-acquired Motif Labs, maintained its market leadership with 11.6% share, while Tilray dropped nearly 2 percentage points year-over-year to 9.1% and Village Farms fell 1.8 points to 6.2%.

The report suggests that export opportunities may be becoming more important for Canadian producers, noting that “the pull of the export markets is also impacting domestic market share performance and operator economics,” as exports have helped stabilize domestic pricing.

Zuanic found that despite recreational legalization being in place for over six years, Canada’s cannabis market remains underdeveloped versus many U.S. states on a per capita basis. The report estimates Canadian recreational per capita spending at approximately $100, significantly lower than states like Michigan (>$300) and Colorado (>$200).