The cannabis market in Canada is constantly evolving, with new products, regulations, and consumer preferences shaping the industry. One of the key indicators of the cannabis market is the price of dried flower, which reflects the supply and demand dynamics of the sector. In this article, we will look at the latest data on cannabis prices in Canada, as well as some of the factors that influence them.
How are cannabis prices measured in Canada?
There are different ways to measure the price of cannabis in Canada, depending on the source and the purpose of the data. For example, Statistics Canada collects and publishes data on the average price of cannabis for medical and non-medical purposes, based on surveys and alternative sources such as municipal wastewater. However, this data may not capture the full range of prices and products available in the market, especially for the legal segment.
Another source of data is CannStandard, a company that tracks and analyzes cannabis prices and products across Canada, using data from licensed producers, online retailers, and provincial web stores. CannStandard publishes monthly reports on the average price of dried flower for medical and recreational purposes, as well as the price distribution, the market share, and the product availability of different brands and strains.
What are the trends and insights for October 2023?
According to the latest report from CannStandard, the average price of dried flower for medical purposes in October 2023 was $7.83 per gram, down from $8.07 in September 2023. The average price of dried flower for recreational purposes was $9.02 per gram, up from $8.87 in September 2023. The report also shows that the price gap between the medical and recreational segments has widened, from $0.80 in September 2023 to $1.19 in October 2023.
Some of the factors that may explain these trends are:
- The supply and demand balance of the cannabis market. According to the Cannabis Tracking System data from Health Canada, the total sales of dried cannabis for medical and non-medical purposes in October 2023 were 20,050,507 units, up 8% from the previous quarter. However, the total packaged inventory of dried cannabis held by cultivators, processors, distributors, and retailers in October 2023 was 36,921,523 units, down 1.5% from the previous quarter. This suggests that the demand for cannabis has increased, while the supply has decreased, putting upward pressure on the prices.
- The product differentiation and innovation of the cannabis market. Since October 17, 2019, a wider array of products has been permitted for legal production and sale, including cannabis extracts, edibles, and topicals. These products may offer different benefits and experiences for consumers, as well as higher margins for producers and retailers. According to the Cannabis Tracking System data, the sales of edible cannabis, cannabis extracts, and cannabis topicals accounted for 46% of the total sales of cannabis products in October 2023, up from 44% in September 2023. This indicates that consumers are diversifying their consumption preferences, and may be willing to pay more for these products than for dried flower.
- The regulation and taxation of the cannabis market. The regulation of cannabis remains a shared responsibility of the federal, provincial, and territorial governments, which have the flexibility to establish more stringent controls and different tax regimes for cannabis products. For example, some provinces and territories have imposed additional excise taxes, sales taxes, or markups on cannabis products, which affect the final retail price. According to a report from the Parliamentary Budget Officer, the average combined federal-provincial-territorial tax rate on cannabis products in Canada was 25.6% in 2022. However, this rate may vary depending on the province, the product type, and the THC content.
What are the implications and outlook for the cannabis market?
The cannabis market in Canada is still in its early stages of development, and faces many challenges and opportunities. The price of cannabis is one of the key factors that affects the competitiveness and profitability of the sector, as well as the consumer behavior and satisfaction. Therefore, it is important to monitor and analyze the trends and insights of cannabis prices, as well as the factors that influence them.
Some of the implications and outlook for the cannabis market are:
- The competition and consolidation of the cannabis market. The cannabis market in Canada is highly fragmented, with hundreds of licensed producers and thousands of products and brands. However, not all of them are able to survive and thrive in the competitive and regulated environment. According to a report from EY, the cannabis industry in Canada is expected to see more mergers and acquisitions, as well as strategic partnerships and alliances, in order to achieve economies of scale, operational efficiency, and market differentiation. The consolidation of the market may affect the price and availability of cannabis products, as well as the consumer choice and loyalty.
- The innovation and diversification of the cannabis market. The cannabis market in Canada is constantly evolving, with new products, formats, and delivery methods emerging and gaining popularity. According to a report from Deloitte, the cannabis industry in Canada is expected to see more innovation and diversification, as well as more personalization and customization, in order to meet the changing and diverse needs and preferences of consumers. The innovation and diversification of the market may create new value propositions and revenue streams for the sector, as well as new challenges and opportunities for regulation and taxation.
- The legalization and normalization of the cannabis market. The cannabis market in Canada is still relatively new, and faces many barriers and stigma from the society and the government. According to a report from Ipsos, the cannabis industry in Canada is expected to see more legalization and normalization, as well as more education and awareness, in order to reduce the illicit market, increase the public acceptance, and improve the social responsibility of the sector. The legalization and normalization of the market may enhance the reputation and credibility of the industry, as well as the trust and confidence of consumers.