In an effort to outpace the illegal market, marijuana companies in Canada are introducing lower-priced, ‘value brand’ marijuana products. The illicit market in Canada accounts for about 70% of all marijuana sales.
Canada legalized recreational marijuana in 2018 under the Cannabis Act. After Uruguay, Canada is the second country on the globe to legalize marijuana for adult-use purposes nationally.
Statistics Canada released a report in December last year stating that marijuana sales in Canada in that year were around $908 million, and the number of retail marijuana outlets was more than 400 in the country. However, as of September 2019, 15% of the total revenue was generated from online sales shops and retail stores.
Since marijuana was legalized in Canada in 2018, a total of 13.3% of business represented online sales from marijuana stores, while retail sales from licensed cannabis stores and wholesalers accounted for a total of 1.9%, the report said.
According to Statistics Canada, marijuana that was sourced legally was sold at an average price of $7.84 per gram, while on the black market, it was sold at an average price of $4.36 per gram during the fourth quarter of 2019.
The stiff competition in the marijuana industry has prompted three of the largest marijuana producers in Canada, Aurora, Canopy Growth, and Tilray, to introduce into the market low-priced marijuana products that are offering consumers an equal, if not better value for their money.
According to CNBC, this April, Canopy Growth would be offering a one-ounce product referred to as Twd. 28. Twd. 28 would be priced at $4 per gram, and the THC concentration would be ranging from 13% to 25%.
Speaking to CNBC, the head of business development at Canopy Growth Adam Greenblatt said that the new products and the lower pricing are all designed to pull customers from the black market back to the legal sources.
Greenblatt further said that the new product is there to provide more variety and value to the ideally mature marijuana market. He also noted that low-priced marijuana attracts bulk-purchasers, and people who are looking to buy marijuana by the ounce. The legal market has been having a challenge attracting people who purchase marijuana by the ounce, and the black market took advantage of this shortcoming.
Tilray is launching a brand known as The Batch, and it will be sold in three sizes, with the highest being seven grams having THC levels ranging from 10% to 15.9%.
Speaking to CNBC, the Chief marketing officer at Tilray, Adin Fabiani-Carter, said that The Batch is focused on providing marijuana consumers with quality marijuana flowers and pre-rolls at competitive prices.
Fabiani-Carter further said that his company expects the new product to increase revenue and profitability over the long term.
Aurora would be introducing a new brand known as Daily Special. Its THC level will range from 15% to 21%. It will be available in three sizes, with the largest being 15 grams.
It remains to be seen what lessons industry players like Willow Biosciences Inc. (TSX: WLLW) (OTCQB: CANSF) will draw from this shift in pricing strategy.
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