Three months after Canada legalized recreational cannabis, Wikileaf's The Stash discusses the current market with Lift & Co.'s Vice President of Strategy Nick Pateras.

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What does the Canadian medical market look like? Does it still exist?

"The latest data revealed a slowdown in patient registrations, with only 11,345 new sign-ups in the whole three months ending Sept. 30. That's a much slower growth rate than in the previous year, where the monthly average was 10,780.

These statistics might suggest the trend in Canada will follow what happened in the US, where patient counts in Oregon, Colorado, and Washington dramatically declined after the legalization of adult-use. That said, we still over 300,000 patients. Additionally, there are some critical differences vs. the US, including the slow emergence of insurance coverage for certain conditions.

Anecdotally, I have heard from Licensed Producers (LPs) that their registration numbers have spiked following legalization as more people are comfortable initiating a conversation with their physicians, who are being forced to become literate on the subject or otherwise risk their patients self-diagnosing and self-medicating without their guidance.

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My general thesis here is that the medical market's rate of growth will decelerate for a few months, but the size of the market will not contract as some have opined."

On the producer side, is there any benefit to having a medical license over or in addition to a recreational one? 

"There are several benefits for licensed producers who sell directly to patients. The most obvious benefit is that they claim a much higher margin since they're not going through a provincial distributor — where they might currently be charging a wholesale price of CAD $4 to $6 per gram in the provinces, (according to Vic Neufield) the average price per gram on the medical side is around double that.

Secondly, they get to forge direct relationships with these customers which means better understanding their needs and amassing very rich data on their buying patterns and product preferences. The last point, which offers perhaps the most substantial long-term impact, is the potential to sell into medical markets in other countries. It is still necessary to have the required licensure - such as EU-GMP certification to sell into Europe - but many LPs are betting on this as a tremendous opportunity to tap into fast-growing new markets, establishing infrastructure at the same time."

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Is there any reason for a consumer to have a medical card? 

"Retaining a medical authorization theoretically affords patients access to more product from the LP with whom they're signed up, at lower prices than if they went through adult-use channels. While this doesn't always play out, many LPs are doing their best to allocate their harvests in a way that prioritizes patients first.

For example, the HEXO chain (TSX:HEXO) has been very good about only selling particular SKUs into select provinces including British Columbia, Ontario, and Quebec, so that their patients do not face a critical shortage of medicine. It is also becoming increasingly common to see LPs absorbing the excise tax on medical products, which is encouraging. We need to ensure that the needs of patients are never eclipsed by the allure of an ostensibly bigger adult-use market."