The CCSI declined by 7.8% to C$6.96 per gram this week, from last week’s C$7.55 per gram. After a momentary uptick last week, prices returned to levels observed throughout April and May. This week’s price equates to US$2,346 per pound at current exchange rates.

After a challenging start to the legalization of dry cannabis last year, major licensed producers (LPs) are better prepared for the upcoming launch of vapes and edibles. While supply shortages and the slow opening of retail cannabis stores set the new industry off to a slow start, conditions might be different for phase two of the Canadian cannabis market with strong consumer demand for vapes and edibles. The official launch date has not been released, but it has been stated that these new product categories will commence sometime before October 17, 2019.

On Tuesday, one of the largest LPs, Aurora Cannabis, stated in its earnings call that it is working towards reducing its production cost while building inventory for the launch of edibles and vaping products. It is doing so by controlling costs and taking advantage of economies of scale as it makes strides towards its goal of building out a production capacity of 625,000 kg/year of dry cannabis.

With the start of the Edmonton Aurora Sky and Bradford facilities, Aurora’s production has increased to 150,000 kg and they have brought their cost per gram of dried product down to $1.42 from $1.92. The company anticipates continued reduction in its production and manufacturing costs with an expectation of it trending below $1 per gram. It should be noted that their average net selling price was also down to $6.40 from $6.80 per gram.

Source: Aurora Cannabis Investor Presentation – April 2019 [page 6]