ONTARIO POT DISTRIBUTOR TO CUT PRICE MARGINS TO HELP SHOPS COMPETE WITH ILLICIT MARKET
Feb 16, 2023
By Bob Komsic
The Ontario Cannabis Store has announced it will reduce its price margins later this year in an effort to help retailers compete with the illegal market, which made up 43% of the pot market last March.
OCS says the change will happen in September.
It will come from a fixed markup for each product category that will be standard for all producers and applied as a percentage above each product’s costs, that already take into account producers’ margins and excise taxes.
A report last fall from Deloitte Canada and cannabis research firms Hifyre and BDSA says the average price for cannabis was $11.78 per-gram at the start of 2019, soon after legalization, but dropped to $7.50 per-gram in 2021.
The average price for vape cartridges has also fallen, from $32.02 per-gram in early 2019 to $19 per-gram a year later; a decline of 41%.
The OCS estimates the margin change
will put $35-million back into retailers’ pockets this fiscal year and $60-million in the 2024 fiscal, and more in the years that follow.