Ontario cannabis wholesaler hails ‘largest jump’ in legal market capture

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Residents of Canada’s biggest province by market size are buying more and more cannabis from the legal market, the Ontario Cannabis Store (OCS) says in a new quarterly report.

Legal cannabis comprised 36.2% of all marijuana purchases in Ontario for the quarter covering July, August and September, according to the report, which was released Thursday.

That represents a quarter-over-quarter increase of 11.1 percentage points, which the OCS called “the single largest jump in market capture from the illegal market.”

The OCS attributed its legal market share estimate to Statistics Canada data and its own calculations.

The increase in legal market share coincided with a long-delayed increase in the number of brick-and-mortar cannabis stores in Ontario, where more than 100 retailers were licensed to open by late June and officials started ramping up the pace of licensing in September.

The vast majority of Ontario’s legal cannabis sales during the quarter – more than 85% – occurred in physical retail stores.

“The number of stores hit 183 by the end of the quarter and is over 280 at the time of publication of this report,” OCS President and CEO Thomas Haig noted in his introduction to the report.

“This is a clear indicator that continued improvements in the number of consumers choosing legal will be driven by creating much broader access across Ontario.”

Legal marijuana sales for the three-month period totaled 204.3 million Canadian dollars ($160.4 million) on sales of 25.8 million grams and gram-equivalents of cannabis.

The government-operated OCS has a monopoly on legal cannabis e-commerce in Ontario and also serves as the sole marijuana wholesaler to licensed private-sector stores.

Online sales through the OCS “predictably sagged” during the quarter, said Haig, “as (public-health) restrictions eased and the total number of stores grew, creating more opportunities for consumers to shop easily in stores in their community.”

In its last quarterly report, the OCS said its online prices were beating black-market prices with an average price of CA$7.05 per gram.

The new report says OCS’ online prices continued dropping during the quarter, to an average of CA$6.41.

The average price for a gram of cannabis at private-sector retail stores also dropped on a quarterly basis to CA$9.45, higher than the CA$8.17 illicit market price cited by OCS.

Solomon Israel can be reached at solomon.israel@mjbizdaily.com