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How to understand legal and illicit cannabis sales

The CCSI was assessed at C$5.02 per gram this week, up 1.0% from last week’s C$4.97 per gram. This week’s price equates to US$1,780 per pound at the current exchange rate.

Each week, Business of Cannabis delivers a series of insights from our partners at Cannabis Benchmarks®.

Last week, the Ontario Cannabis Store (OCS), the organization that regulates the province’s cannabis market, released its quarterly Cannabis Insights report for the period from July through September 2021.

In the first few years of cannabis deregulation, the legal Canadian cannabis market has faced strong competition from illicit supply chains, due in part to high product prices and few stores. That story has changed dramatically, however, especially in Ontario, Canada’s largest province by population.

The most recent report shows that Ontario’s brick-and-mortar retail footprint grew rapidly in 2021, leading to a big jump in legal cannabis sales. The latest report shows the legal cannabis market in Ontario makes up 54% of total cannabis sales, which was a big jump from the previous quarter.

The growth of the legal cannabis sector had a very strong correlation to the number of storefronts open for business before 2021, but this year that relationship has broken down.

This is not all bad news though, because total recreational sales continue to pick up each month. Cannabis Benchmarks believes that legal sales would be much higher if stores were more evenly spaced out. In Ontario, stores are in close proximity in densely populated areas and shopping districts; hence the recent rising store count is not necessarily pushing out the illicit suppliers.

Source: Canada Cannabis Spot IndexCannabis Benchmarks

See previous weekly updates from Cannabis Benchmarks:

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