July 19, 2019

CANADA CANNABIS SPOT INDEX — July 19, 2019

CANADA CANNABIS SPOT INDEX (CCSI) 

Published July 19, 2019

*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$7.07 per gram this week, down 4.1% from last week’s C$7.38 per gram. This week’s price equates to US$2,458 per pound at current exchange rates.

 

This week we return to an examination of the final price consumers are paying for dry cannabis products. (See our original report published on February 8, 2019 here.) Each provincial retail structure is set up slightly differently, but consumers ultimately purchase recreational cannabis in pre-rolls or canisters regardless of such variations. For this analysis we concentrate specifically on dry cannabis sold in one gram, 3.5 gram, and seven gram canisters.

 

In the original study, we focused in on the retail price of 14 out of the 80 listed dry cannabis products on the Ontario Cannabis Store. We chose a variety of products from different licensed producers (LPs), with varying THC and CBD levels, and assorted flower types (Sativa, Indica, or Hybrids). For this week’s analysis, we attempted to find the same 14 products but discovered that only eight of them are now available, despite a greater number of products on offer overall.

 

Of the same eight products from both studies, the calculated average selling price for one gram has moved up slightly from C$11.97 to C$12.30 (inclusive of the 13% retail sales tax). One specifically, San Rafael ’71 Tangerine Dream, experienced a 30% increase in price over this five-month period. We should note that not all of the products are currently available in each of the amounts specified above, but prices were listed for each size.

The volume discount customers receive when they buy quantities larger than one gram also looks quite different relative to our earlier analysis. The discount to purchase larger volumes was quite consistent across all the products we reviewed in February, when consumers received a roughly 5% savings on purchasing a 3.5 gram canister and around a 10% discount on seven grams. This is no longer the case, as some LPs have apparently changed their product pricing strategy. Five of the eight products still employ the same volume pricing strategy, but the three products produced by Aurora, Altavie, and San Rafael show vastly different product pricing on the larger increments today. The commonality shared by these three producers was to decrease or eliminate the discount received when moving from the 3.5 gram to the seven gram canister.

Source: Cannabis Benchmarks, Statistics Canada [Table  20-10-0008-01]

This change in pricing strategy could be a result of these LPs having more data to understand customer purchase habits, packaging and shipping costs, or competitors, with such metrics presumably indicating that sales revenue could be optimized by refraining from offering or reducing a significant volume discount for purchasing seven grams relative to 3.5. 

*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..

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19 July 2019 Copyright © 2019 New Leaf Data Services, LLC.  All rights reserved