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Pot prices at Ontario Cannabis Store rival those of illicit market for the first time

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TORONTO — Legal recreational cannabis is beginning to gain ground in its fight against the illicit market, according to new Ontario Cannabis Store data.

A report released by the provincial pot distributor Wednesday revealed that between April and June, legal sources of cannabis made up 25.1 per cent of the total market, an increase from 24.7 per cent in the previous quarter.

The average price of dried flower per gram on OCS.ca fell to $7.05 including taxes during the same period, beating the average price of cannabis on sale through illegal mail-order marijuana sites, which reached $7.98.

"This quarter marks a milestone for the sector on the critical front of pricing," said chief commercial officer Cheri Mara in the report.

Since recreational cannabis was legalized in Canada nearly two years ago, the OCS has been battling the illicit market, which has long attracted customers with lower prices and faster delivery offerings than the legal market.

Licensed producers have scrambled to pass along savings to customers and the OCS dropped the price of 558 products in the quarter, but so far the fight against underground offerings has been slow and, recently, it has faced an extra challenge: COVID-19.

Amid the pandemic, licensed producers laid off thousands of workers and cannabis retailers were forced to close their doors in early March. Many took advantage of legislation changes allowing them to offer curbside pickup on a temporary basis, but the province later banned such offerings.

"Despite the challenges COVID-19 presented, our marketplace has consistently delivered strong sales through this first quarter," Mara said.

According to her report, shoppers in the province purchased about $126 million in pot during the quarter.

The OCS said that equates to about 14 million grams of legal cannabis purchased, including 5.6 million through the OCS website and 8.4 million from retail stores.

The bulk of those purchases were dried flower, which made up about $74.5 million or 61 per cent of sales.

Dried flower was trailed by vapes at 14.5 per cent, pre-rolls at 9.1 per cent and oils at 1.6 per cent.

Edibles, which were launched at the start of the year, captured about $5.3 million or 4.3 per cent of sales, while beverages — a category that has seen a significant uptick in offerings in recent months — made up $1.5 million or 1.2 per cent of sales in the period.

The report also looked at what was stopping shoppers from making more of their purchases through the OCS.ca.

About 40 per cent of shoppers surveyed complained about products not being in stock, while 14 per cent said they found what they wanted for less elsewhere.

Roughly 17 per cent complained that prices don't drop enough, 11 per cent cited poor quality and four per cent had issues with delivery fees.

Their complaints come after the OCS emphasized express delivery and a wider selection of products available during the pandemic.

Meanwhile, the Alcohol and Gaming Commission of Ontario upped the number of retail store authorizations it handed out, bringing the total number of shops open in the quarter to 110.

That was up from 22 stores that were in operation in the province at the same time last year.

This report by The Canadian Press was first published Sept. 30, 2020.

Tara Deschamps, The Canadian Press




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