The majority of Canadian cannabis companies were not ready for the launch of new cannabis products such as edibles, extracts and topicals, despite having more than a year to prepare for the Cannabis 2.0 era, according to an analyst.
Only 10 companies had products available when Ontario’s only legal online store started selling the products Thursday, Mackie Research Capital wrote in a note to investors.
The Ontario Cannabis Store (OCS) sold out of edibles within hours of their initial availability, though some of the products remain available in limited quantities though the province’s approximately two dozen physical stores.
Among Mackie Research’s observations:
- There is limited supply. Edibles products sold out, and there is limited availability for vape products.
- The OCS is typically 20% cheaper than buying at a retail store, but there is a delivery charge for online orders.
- Prices in the regulated sector must come down.
“Our view is that prices for both vapes and edibles are not yet competitive with the black market,” Mackie Research wrote.
For example, some edibles available through nonregulated channels currently sell for approximately 10 Canadian cents ($.08) per milligram of THC.
That compares to competing products in the regulated market that are over nine times more expensive.
The Mackie comparison also found that disposable vapes purchased through unregulated sources are significantly cheaper than legally sourced cannabis vaporizers.
Industry experts believe that derivative products – oils, vape pens, edibles and beverages – will eventually represent at least 50% of legal market demand.
“Companies that currently have products available will have a first-mover advantage, and this could result in increased brand awareness,” Greg McLeish of Mackie Research told Marijuana Business Daily.
“In an environment where you can’t brand products, this is a big advantage.”
The OCS started selling more than 70 newly regulated products online Thursday, including chocolates, cookies, soft chews, mints, teas and vapes.
Beverages were not among those products.
On Friday, market leader Canopy Growth walked back expectations that it would have cannabis beverages for sale in January.
“In order to deliver products that meet our customers’ high standards, we are electing to revise the launch date while we work through the final details,” Canopy’s new CEO, David Klein, said in a statement.
Klein took the reins of the multinational cannabis firm this week.
Canopy said its scaling process is not complete, forcing it to delay its to-market date.
The company plans to provide an update with the release of its third-quarter financial results.
The Ontario Cannabis Store is working with federally licensed companies to bring beverages to market, but the provincial wholesaler still does not have specific dates when the products will be available.
“As soon as the (licensed producers) make beverages available to us, we will rapidly move them to market,” OCS Communications Director Daffyd Roderick wrote in an emailed statement.