Cannabis wholesale prices in Canada are rebounding according to new data shared by the Canadian Cannabis Exchange.
“We are seeing a soft rebound in the later part of 2023,” Erin Butler, VP Corporate Development says. “We are definitely seeing better strength into November and December compared to last year. The average pricing in December 2022 for flower was $0.56 per gram—it really bottomed out. This year average pricing is closer to the $1.10 per gram mark.”
| Month Traded | Harvest Age | % Change |
| Over 4 Months | Under 4 Months | ||
| June 2023 | $0.64 | $1.05 | +64% |
| July 2023 | $0.72 | $1.13 | +57% |
| August 2023 | $0.74 | $1.07 | +45% |
| September 2023 | $0.72 | $1.10 | +53% |
| October 2023 | $0.85 | $1.12 | +32% |
Weighted Average Price ($/gram) by Age of Product, Dried Flower Index 4-6
Source: Canadian Cannabis Exchange
Tightening of Supply
While it has not been a ‘huge hockey stick’ of growth, the Canadian wholesale market is seeing strong and steady gains.
Butler says this is in the large part due to the tightening of supply. “Greenhouse cultivation space was down 32% from 2020 to March 2023 according to data from Statistics Canada,” she says. “Overall, we’re seeing greenhouse cultivation closures across Canada. A number of facilities have unfortunately gone out of business, or some growers are scaling back. This all impacts availability of supply.”
With the change in supply, Canada is starting to see sellers push back on pricing and be able to achieve higher prices than they would have in 2022. Canadian Cannabis Exchange expects these trends to continue in 2024.
“It is the pendulum effect,” Butler explains. “When prices plumet, investment in new capacity goes down, and current capacity gets limited. Supply tightens, prices go back up, and then you start to see investment come back into the sector.”
Retail Prices Need to Increase
Butler suspects we haven’t yet seen the full supply chains effects of the tightening supply yet. “There are still a lot of LPs, unfortunately, in Canada that are barely breaking even,” she says. “They’re one bad crop away from potentially having to restructure and liquidate assets. It has been a hard couple of years and those impacts don’t go away quickly for companies.”
Prices have seemingly risen in every segment of the Canadian economy with inflation except for cannabis where prices have done the opposite.
“You’re going to have to see cannabis prices go up in the retail environment if LPs are going to still be operating,” Butler says.
Global Opportunity
She also expects the access to global markets will continue to have an impact on wholesale pricing. “We have just seen the tip of the iceberg for export opportunities for Canadian LPs to globally grow. As cannabis becomes a global market, and other countries bring on cultivation, those dynamics will be impacting our market and Canada’s position globally.”
Other Market Trends
The Canadian Cannabis Exchange is seeing a change in how consumers use cannabis including increasing demand for pre-rolls, continued market growth for vaping, and new product innovation like infused pre-rolls.
“But the big challenge we have right now is LPs that are in the market have a set a price, but pricing on the supply side continues to increase—the cost of power, materials, labour, etc. We’re not seeing the end retail price increase. Where people are finding margin in that supply chain, and if they are, remains really challenging because of that disparity,” Butler says. “I do think you’re going to have to see some of those prices increase to allow for LPs to keep making breakeven or profit—otherwise they’re not going to continue to operate or they’re going to look at other international markets.”