Between October and the end of December 2020, over $250 million worth of cannabis was sold through the Ontario Cannabis Store (OCS), amounting to 30 million grams, an increase of 16% over the previous quarter.
The provincial wholesaler and online retailer reported selling 4.1 million grams of cannabis through its online store, with the remaining 25.9 million coming from physical stores. Like most markets, dried flower was the most popular format, making up 57% of sales. Vapes and pre-rolls came in second, at 15.7% and 12.5% respectively, with edibles holding up the rear, making up 4.5% of all sales.
This increase in sales corresponded with the rapid rollout of many new stores. In the second quarter, 73 new stores were opened, but in the third quarter 141 opened, nearly twice as many, bringing the number to 324 licensed stores operating in Ontario. More than one-third of these stores (111) are in Toronto, however, the OCS reported that the average distance to a store for Ontarians dropped from 18.5 kilometres to 9.5 kilometres, showing that more rural communities are being served.
OCS also expanded its express delivery service to reach 78% of its customer base, with orders now arriving on customers’ doorsteps within 3 days, at least in the Toronto area. With more stores also come more wholesale orders, keeping its new privately-operated distribution centre busy with 3,260 orders during the quarter. The OCS credits this growing access for its growing share of the cannabis market, boasting that 40% is now controlled by the legal market.
While sales may have climbed during Q3, its customer sentiment score dropped 5.3% over the quarter. According to the report, quality is the number one attribute that customers look for when shopping for cannabis, but 15% of customers reported having issues with the quality of their product, an increase of 6% from the previous quarter. Customers’ main complaints were with dried flower that was too dry, had too many pieces and stems, or was too light (underweight product).
Like other markets, the second-most important factor in choosing a product is potency. Products with THC levels of 20% or more sold 337 times faster than lower THC products. High levels of CBD, however, are also becoming attractive to consumers in Ontario, selling 139 times faster than the lowest-selling products. Interestingly, customers who shopped on OCS.ca were less likely to go for high potency products. The OCS report found that, particularly with new customers, shoppers appreciate a good product description so that they can make more educated purchasing decisions.
Rounding out the top three most important purchasing considerations is the price. The report found that shoppers on OCS.ca were much more value-conscious, going for quantity, value, and convenience more than in-store shoppers. Online, bulk offerings and lower-price-per-gram ($3 – $6.50 per gram) formats sold 4.6 times faster than higher-priced premium cannabis at over $20 per gram. This may seem obvious, however, in-store both formats sold at a similar rate.
Insights into a Growing Industry
One of the benefits of being a provincial retailer and wholesaler is that the OCS has statistics from retailers all over the province, which can teach us a lot about the largest market in Canada. As the market grows and evolves, the report shows that customers are moving away from the trend of buying the highest potency product at the lowest price and becoming more interested in the finer points of the plant.