Since legalization, the price of legal cannabis has been anything but steady. At its debut, it was being sold for, on average, $9.69 per gram. One year later, the national average rose to $10.30. With illicit markets selling at half the price, it’s no wonder that only 28% of consumers buy exclusively from legal sources.
Consumers are looking for a better bang for their buck.
Brady Olson, a sales associate at Prairie Records in Saskatoon, says that he has noticed consumers attracted more to value offerings. For example, 3.5 grams of a mid-to-high THC strain for $35 to $40 is preferred to a premium strain with lower THC. He states that, at least with the customers he sees, consumers are more drawn to value brands not only for their price, but for their simplicity.
“[People] aren’t really into the processing gimmicks,” he says, “They find they don’t need all that excess, overproduced, extra stuff. Some find that their buddy’s sun-grown stuff is just as good.”
According to Nathan Noble, the National Manager, Retail & Training at Spiritleaf, there are still some issues in the industry when it comes to consistency and quality. He says that customers’ top complaints continue to be dry product. He has also observed that consistency is key to brand recognition. “Shoppers are identifying select Licensed Producers (LPs) who are delivering consistent product that is meeting, or at least coming close to meeting their expectations,” he says, “Once a shopper has been able to make repeat purchases that deliver on those expectations, they’re more likely to continue purchasing from that brand and recommending it to their network.”
He agrees that customers often go for the value brands and are a little iffy about higher-priced, premium products. “Customers don’t have problems with paying a premium for high-quality cannabis, however, there are unfortunately some products on the market that aren’t living up to customer expectations.”
Olson says that while some “old-school smokers” have very particular tastes, the average customer is just looking for a decent product at a decent price. “Most people are open to whatever we have,” he explains. “They come in because they like our environment.”
Now, with Ontario opening up applications for new cannabis retailers, LPs will have more of an opportunity to reach consumers with their products. Noble agrees, noting that store staff can have quite an influence on the success of a brand. He notes, “If staff are personally excited about a brand and their product, we find that consumers are willing to make a purchase based on those recommendations.”
After the mild disaster of the first year of legalization, LPs are finally starting to catch on and have started to pivot towards quality versus quantity. Aurora has scaled back production 26% to focus on more “high-value, high-potency strains” and has said that they don’t expect much growth in the next quarter. WestLeaf, now rebranded to Decibel Cannabis Company Inc., promises to produce “craft, ultra-premium product” and more micro-batch craft growers are starting to pop up in the market.
Analysts predict that legal cannabis prices will continue to drop in 2020. Producers will have to remain competitive if they want to provide a brand that will be chosen by consumers.
Noble says, “In general, we’re seeing price come down and quality go up. Products are beginning to be ‘accurately’ priced. Licensed Producers are identifying what should be packaged, marketed, and priced as ‘value’ offerings and what qualifies as a premium quality offering.”