In a world where strains with 25%-30% THC are the norm, what’s someone who wants somewhat less potent marijuana to do? And how do you keep customers from turning to the black market for cheaper prices?
Some of Canada’s largest marijuana producers think they have the answer: discount strains with 12%-20% THC at prices that rival — and at times even beat — the black market.
The Canadian brands in question are three of the biggest producers in the entire cannabis industry: Canopy, Tilray, and Aurora. All three have suffered significant losses recently, as the industry faces a number of hurdles, including an underdeveloped retail sector and competition from the black market.
According to the Canadian national statistics agency, a whopping 40% of marijuana consumers were still purchasing solely on the black market at the end of 2019, a full year after legalization, and only 29.4% purchase their cannabis exclusively from regulated dispensaries. (Around 10% were consuming home-grown cannabis.)
“[The initiative] is designed to draw consumers from the illicit market and into legal channels,” CNBC quoted Canopy’s business development lead Adam Greenblatt as saying. “It’s there to provide more variety and more of a value offering to ideally mature the market.”
The issue is by no means unique to Canada. In California, which has a thriving legal recreational marijuana industry, an analysis carried out in late 2019 found that black market dealers outnumbered legal merchants by three to one. And in Colorado, where recreational marijuana sales have been legal since 2014, there is a thriving black market, largely exporting marijuana to other US states.
Canopy’s “Twd.” line features indica and sativa strains with THC levels of between 12-22%, and can be found for $7.25-8 per gram. According to Tilray, its line, “The Batch” is “a new value brand dedicated to delivering quality cannabis flower and pre-rolls at competitive prices.” A 5 gram container of 13.5% THC whole flower sells for as little as $7.50 per gram, and a 15 gram container of 12% THC ground cannabis goes for $86.25, or just $5.75 per gram. Aurora’s “Daily Special” features whole flower with THC levels between 15-21% for $4.67-5.43 per gram.
Also, in late 2019 cannabis producer HEXO announced the rollout of discount strains that sold for around $125 per ounce, or a little over $4 per gram.
According to the Canadian statistics agency, in 2018 the average price of a gram of cannabis on the black market in Canada was $7. The price varied by province, with an average of $6.89 on the black market in British Columbia in 2018, and $10.46 in the Northwest Territories.
For comparison, at the Hunny Pot, Toronto’s first legal pot retail shop and the city’s top rated dispensary on Yelp, 3.5 grams of “Jack Haze” costs $59.96, or about $16.90 per gram. The most inexpensive strain, “Critical Kali Mist,” sells for $10.27 per gram, and an eighth of an ounce of “Shishkaberry” sells for $34.38, or $9.70 per gram.
Part of the reason for developing less potent strains may also have something to do with the diversifying demographics of the customer base. Seniors are the fastest growing group of Cannabis users in Canada, with 7% reporting cannabis use after legalization, as opposed to less than 1% in 2012. For such users, milder strains may be a better fit.
For consumers of all ages, medical and recreational alike, marijuana that is legal and easy to purchase — at a price that matches or beats the black market — is a welcome development.
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