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What you need to know about cannabis price competition in Ontario

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

The Canada Cannabis Spot Index was assessed at C$5.99 per gram this week, down 3.2% from last week’s C$6.18 per gram. This week’s price equates to US$2,034 per pound at the current exchange rate.

A new report from the Ontario Cannabis Store (OCS) contains data showing how price reductions in the legal market have made it more competitive with illicit sellers.

In Q2 of this year, the OCS report shows legal sales grew by 5.4%, while the price for dried flower sold on the OCS dropped by 16.7%. This decrease put the average legal product price below that for illegal cannabis sold through mail-order sites for the first time. The OCS report indicates that about a quarter of all cannabis sales are now being made through legal channels.

In addition to lower prices in the legal market, Cannabis Benchmarks believes the COVID-19 pandemic also helped bring consumers into the regulated market, as we have discussed in prior reports. While the OCS report shows positive trends for the legal industry, it is not clear how much room licensed producers have for further price cuts or discounting while still maintaining profit margins.

Source: Canada Cannabis Spot Index, Cannabis Benchmarks

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