As Pacific Green Canada observes, cannabis prices are on the rise. The availability of cannabis flower is tightening throughout 2024 as numerous cultivation operations either downsize or completely halt production due to increasing losses. This diminished supply is expected to push prices even higher. The surge in prices is deterring some consumers from buying, which is subsequently elevating the demand for cannabis in various areas.
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Key Takeaways:
- In October 2023, the average price of dried cannabis flower was $1.10 per gram, marking a 6.8% increase from September’s average of $1.03 per gram.
- The cost of freshly harvested flower with over 20% THC rose from $1.04 per gram at the end of the previous year to $1.32 per gram by April, reflecting a 27% overall increase.
- As cannabis flower prices escalate, consumers are exploring cheaper alternatives such as lower THC flower percentages, online dispensaries for better deals, or other product options.
Canadian Cannabis Market General Trends
According to a report by Brightfield Group, the cannabis market in Canada is expected to double over the next five years. The report highlights that expanding retail outlets and relaxed regulations will drive this growth.
Brightfield anticipates that Canada’s cannabis market will grow at a yearly rate of 10%, reaching $8.8 billion in five years. This growth will primarily be fueled by increased cannabis and vape product sales.
Bethany Gomez, managing director of Brightfield Group, noted that despite robust market expansion in 2021, there remains considerable potential for further growth, particularly with enhanced retail accessibility.
Overview of the Flower Market in A Canadian Cannabis Store
Even with projected increases in cannabis sales, challenges persist in the cannabis flower market. While cannabis flower continues to dominate market sales, its supremacy is gradually diminishing as other categories gain popularity. Wholesale prices have largely remained stable, although some provinces have experienced unexpected price surges.
The average price for dried cannabis flower in October 2023 was $1.10 per gram, reflecting a 6.8% rise from the September average of $1.03 per gram. Year-over-year prices exhibit even more significant fluctuations.
Provinces Experiencing a Price Hike per THC Level on Newly Harvested Flower
The price of flowers in Canada varies between freshly harvested and aged flower. Newly harvested flowers are selling rapidly, with the average age of these harvests dropping to 65 days in April. The average price for aged flowers has remained stagnant at $0.69 per gram in April, a 1% decrease from the year-end price of $0.70 per gram.
- 30%+ THC: The average price for recently harvested flower increased by 2.7%, from $1.81 per gram in March to $1.86 per gram in April.
- 25-30% THC: Traded at a weighted average price of $1.34 per gram, a 12.6% rise from the March settlement price of $1.19 per gram.
- 20-25% THC: Settled at $0.95 per gram, an 11.2% drop from the March average price of $1.07 per gram. The cannabis Commodity Exchange (CCX) has forecasted a recovery in May, expecting prices to increase by 12.6% to $1.07 per gram.
- 15-20% THC: Traded at an average price of $0.69 per gram in April, a 23.3% decline from the March settlement price of $0.90 per gram. Despite this, CCX expects 15-20% THC to recover in May, with a 13.0% increase to $0.78 per gram.
Factors Influencing Price Hike
As the cannabis market continues to expand in 2024, various factors contribute to fluctuations in cannabis flower prices. Market dynamics and regulatory environments intertwine with these factors.
Supply and Demand
Cultivation yields heavily influence the quantity of cannabis available in the market, which varies due to weather conditions, pests, and diseases. Seasonal variations also play a role, with certain times of the year yielding higher or lower production levels. For instance, outdoor cannabis cultivation peaks during late summer and early fall, resulting in a supply influx that can lower prices.
Consumer preferences can shift due to trends, changes in disposable income, and evolving perceptions of cannabis. An increase in demand for cannabis products can raise prices, especially if supply cannot keep pace. Conversely, a decrease in demand, possibly due to economic downturns or shifts toward alternative products, can lead to lower prices.
Product Diversification
The cannabis market has seen significant diversification, with consumers showing interest in a wide range of products beyond traditional recreational cannabis flower. These products include edibles, vape pens, pre-rolls, tinctures, and concentrates like live resin. The increased demand for these varied products can impact flower prices.
Technological Integration
The rise of online shopping platforms for cannabis products has made it easier for consumers to purchase a vast array of cannabis items from the comfort of their homes. This convenience can elevate consumption and affect wholesale demand and prices.
Delivery services have also gained prominence, allowing customers to receive cannabis products directly at their doorsteps. The convenience of delivery services can boost demand, particularly in regions where physical dispensaries are less accessible, consequently impacting prices by increasing overall market demand.
Price Hike Demands for Discounted Cannabis, Customers Order Online
With rising cannabis flower costs, consumers are actively seeking more affordable options. This includes purchasing flowers with lower THC levels, exploring online dispensaries outside their region for cheaper alternatives, or opting for different products.
Online cannabis shops provide a variety of cannabis at different price points per gram. Due to their broader customer base, online dispensaries tend to offer lower prices than physical stores. They also provide weekly sales, offering customers alternatives if they cannot afford the price increases of other cannabis flowers.
Here is a list of cannabis buds available at Pacific Green Canada, priced at $99 per ounce or 28.35 grams.
Conclusion
Experts predict that the cannabis market will continue to grow, with annual sales on the rise. Despite increased demand, high-quality cannabis flowers, such as hybrid strains, are becoming more expensive. Various factors contribute to these price hikes, prompting customers to seek the best deals or explore alternative products like vape carts. Online dispensaries offer discounted prices on cannabis flowers, enabling customers to meet their needs without compromising on quality or settling for less desirable products.
Frequently Asked Questions
Are there any benefits to the price increase for consumers?
While higher cannabis prices can strain consumers financially, notable benefits include:
- Improved Product Quality: Higher prices allow producers to invest in better cultivation practices and quality control, resulting in safer and more consistent cannabis products.
- Enhanced Regulation: Increased prices can indicate stronger regulatory oversight, ensuring products meet safety and quality standards while protecting consumers from potentially harmful goods.
- Economic Benefits: Rising prices can boost state revenues through higher taxes, enabling reinvestment in public services. It also promotes the growth of local cannabis businesses, job creation, and economic development within the community.
How can consumers find discounted cannabis in light of the price increase?
Consumers can discover lower cannabis prices through sales promotions, bulk buying, loyalty programs, or shopping at dispensaries known for affordability. Some provinces also feature medical cannabis programs that offer lower prices for qualifying patients.
What should consumers look for when purchasing discounted cannabis?
When buying lower-priced cannabis, consumers should prioritize quality assurance, lab testing results, reputable brands, and dispensaries with positive customer reviews to ensure they receive safe and effective products.
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