The following summarizes provincial cannabis pricing across Canada as of September 30, 2019:
Source: FRC, Online Provincial Cannabis Store
Source: FRC, Online Provincial Cannabis Store
Average price per gram decreased nominally nationwide from $12.12 to $12.04 – a 0.60% week-over-week decrease. The nationwide price decrease was primarily driven by cannabis price decreases in Nova Scotia and the Northwest Territories. This was partially offset by price increases in New Brunswick, Alberta and Ontario.
British Columbia (“B.C.”)
Average price per gram decreased nominally from $11.03 to $11.00 – a 0.29% week-over-week decrease. The minimum and maximum price remained the same, with the number of available cannabis products decreasing nominally from 117 to 116.
Earlier this month, we provided readers with a chart which outlined retail sales of legal cannabis by province since legalization. The chart, which is reproduced below, depicted that B.C. had weak retail sales. This week, we provide additional information as to why sales in B.C. were low compared to other provinces. As reported by the Globe and Mail on September 25, 2019, the province of B.C. lagged behind other provinces, in terms of retail sales of cannabis, due to:
A highly established black market for cannabis in B.C. According to the article, B.C. is the country’s largest illegal producer of cannabis.
Hundreds of “grey market” dispensaries across the province, which contributed to low legal retail sales of cannabis.
Slow roll-out of legal retail stores – 109 private retail licenses have been issued, but not all locations are currently operational.
We believe the three points above, which have contributed to low retail sales of cannabis in B.C., are temporary hurdles that will be overcome by the province. As more legal retail cannabis stores are operational, this would contribute to displacing the black market for cannabis in B.C., and also force the closure of dispensaries that are not currently legal to operate (as we have mentioned in our previous AIWs, the province of B.C. has started a stronger crackdown on dispensaries that are not legally allowed to operate). Given this, we expect retail sales in B.C. to pick up in the coming months. Given the need to displace the black market for cannabis in B.C., we do not anticipate pricing of cannabis to increase materially in the short or medium-term.
Ontario
Average price per gram increased from $12.12 to $12.25 – a 1.06% week-over-week increase. The minimum price increased from $7.12 to $7.50, while the maximum price remained the same. The number of available cannabis products decreased from 123 to 116. We believe that the price increase this week was a result of a cannabis sale that ended (which increased the minimum price for this week).
On September 27,2019, BNN Bloomberg reported that the province of Ontario is exploring the possibility of ending its wholesale cannabis distribution business and that an announcement regarding this matter would come in the coming weeks. Currently, in Ontario, the Ontario Cannabis Store (“OCS”) purchases cannabis at wholesale prices from licensed cannabis producers and sells the wholesale cannabis to the province’s private retail stores. It was mentioned in the article that this potential decision was due to the province’s warehouse running out of space to store cannabis products. Given that edible cannabis products are to be legalized mid-October 2019, we believe that the province would have to greatly expand its warehouse space to accommodate for the new inflow of cannabis products. In addition, it was mentioned that the province of Ontario is eyeing Saskatchewan’s business model for regulating cannabis – Saskatchewan allows the private sector to obtain wholesale permits to distribute cannabis to licensed retailers. By cutting out the provincial government out of the cannabis supply chain, private retail stores would be able to purchase cannabis from licensed producers at wholesale prices rather than from the provincial government at wholesale prices plus a mark-up. If the province of Ontario decides to end its wholesale cannabis distribution business, we anticipate pricing of cannabis to decrease in Ontario. As mentioned, an announcement regarding this matter is expected to come shortly – we will keep readers updated on this matter.
In addition, last week we outlined that 11 disqualified winners from the Ontario Cannabis Lottery were pursuing legal action against the Alcohol and Gaming Commission of Ontario (“AGCO”). This week, a panel of judges have dismissed the case. The reasons for the judge’s rulings will be released in the coming week – we will keep readers updated on this matter.
Alberta
The average price per gram increased from $13.59 to $13.80 – a 1.53% week-over-week increase. The minimum price increased from $7.85 to $8.17, while the maximum price remained the same. The number of available cannabis products decreased from 195 to 185. We believe that the minimum price increase was a result of a cannabis sale that ended (which increased the minimum price for this week).
No material cannabis news was published in the province of Alberta this week.
New Brunswick
Average price per gram increased from $11.23 to $11.49 – a 2.36% week-over-week increase. The minimum and maximum price remained the same, with the number of available cannabis products remaining the same as well. We were unable to find relevant news that contributed to the week-over-week price increase in News Brunswick. We suspect that the week-over-week price increase was due to price increases on “mid-priced” cannabis products (cannabis products that are priced between the minimum and maximum price in New Brunswick of $6.67 and $16.28, respectively).
No material cannabis news was published in the province of New Brunswick this week.
Nova Scotia
The average price per gram decreased from $11.80 to $11.39 – a 3.45% week-over-week decrease. The minimum and maximum price remained the same, with the number of available cannabis products increasing from 102 to 112. We believe the greater number of available cannabis products signals greater cannabis supply, which we suspect would have contributed to the week-over-week decrease in price.
On September 26, 2019, CBC reported that Nova Scotians are still purchasing cannabis from illegal sources. This implies that the black market for cannabis in Nova Scotia still remains strong. With that said, illegal purchases have declined – a survey conducted by Narrative Research revealed that 28% of people surveyed purchased from an illegal storefront, down from 40% before it was sold by the government of Nova Scotia. A driver behind purchases from the black market, according to the article, was due to high prices. The survey indicated that between 61% to 64% of purchasers cited high prices as the primary reason as to why they do not shop from the Nova Scotia Liquor Corporation (the crown corporation in Nova Scotia that controls sales of recreational cannabis). Given this fact, we anticipate the pricing of cannabis to decrease over the long-term in the province of Nova Scotia to further displace the black market for cannabis.
Northwest Territories
Average price per gram decreased from $14.03 to $13.13 – a 6.44% week-over-week decrease. The minimum price remained the same, while the maximum price decreased from $16.93 to $14.44. The number of available cannabis products decreased from 5 to 3. Given the Northwest Territories’ limited number of available cannabis products, we believe the large week-over-week decrease was a result of high-priced cannabis products being out of stock. We anticipate these cannabis products to be restocked and the average price per gram to increase back up in the short-term.
No material cannabis news was published in the Northwest Territories this week.
The below chart shows average price per gram nationwide since we began price coverage:
