To help bring vibrancy to the legal cannabis sector, the Ontario Cannabis Store (OCS) lowered its price margins in a bid to help licensed producers gain an upper hand over illegal operators.
“Consistent with its commitment to social responsibility, OCS will reduce its margins to encourage consumers to purchase safer forms of cannabis, such as edibles and topicals,” the OCS said in a release. The new markup structure will be in place later in September, allowing producers and retailers to reinvest in their business. It involves fixed markups for each cannabis product category.
Biggest market reductions will be on vapes, edibles and beverage categories. Modest decreases will be on flowers, pre-rolls and concentrates.
The OCS estimates that:
$35 million CAD ($26 million USD) will be put back in the hands of the licensed pot companies this fiscal year, beginning April 1 and contribute $60 million CAD in 2024 fiscal year
as the market grows, it will compound annually in the years thereafter
Cannabis industry players are very much aware of the price compression especially in a highly competitive marketplace. Going down on prices alone won’t necessarily mean winning more people over to the legal market.
The OCS believes this move will accelerate industry sustainable growth and ultimately profitability.