Canada Cannabis Spot Index (CCSI)
Published July 10, 2020
*The provincial excise taxes vary. Cannabis Benchmarks estimates the population weighted average excise tax for Canada.
**CCSI is inclusive of the estimated Federal & Provincial cannabis excise taxes..
The CCSI was assessed at C$6.14 per gram this week, down 2.6% from last week’s C$6.31 per gram. This week’s price equates to US$2,053 per pound at the current exchange rate.
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This week we review a strategy the Northwest Territories (NWT) government is undertaking to fight the robust illicit market. Over the past couple of weeks, we have reviewed the size and price differential between the legal and illegal market in Ontario, but this phenomenon is relevant across the country. Both Ontario and British Columbia not only face issues with illicit dealers, but also unlicensed storefronts.
In Q1 2020, the Ontario Cannabis Store (OCS) stated 81% of the province’s cannabis supply still originated from illicit sources. The two primary contributors to the size of the illicit market are lack of retail accessibility and higher dry flower prices in the legal system. From April 2019 to March 2020, OCS data shows that dry flower purchased legally was C$2.28/gram, 27% more expensive than that from illegal sellers.
In the NWT, legal cannabis products can be purchased online through the provincial government’s sales site or from five liquor stores distributed across the territory. NWT faces some of the highest retail prices in Canada, and by a significant measure. Crowdsourced data collected by Statistics Canada shows the average price at C$10.65 per gram in 2019 and 2020, well above the national average.
With a lack of convenient physical retail infrastructure and high prices, the NWT government made the tough decision of trading revenues for a thriving legal supply network. The NWT government has decided to cut the price of legal cannabis products by 10%. This is a bold move, but a necessary one to grow market share. We believe the NWT approach will be seen as a successful pilot project, and other major provinces will follow suit.
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