Cannabis shops watching to see if Ontario’s new pricing plan can save them

A growing black market and over-saturation are threatening to put cannabis shops out of business

My Green Merchant cannabis shop
My Green Merchant on Danforth Avenue is trying to set itself apart from other cannabis shops to combat over-saturation of the market. 

The cannabis market has been experiencing a massive recession in recent years due in part to the growth of the illicit market.

Licensed producers in Ontario saw their share of sales revenue fall from 74.2 per cent in July 2019 to 60.8 per cent in April 2022, according to a report from the Ernst and Young, commissioned by the Cannabis Council of Canada.

Currently the black market accounts for an estimated 43 per cent of the total Cannabis market.

However, that is not the only problem facing cannabis retailers. Toronto now has more than 400 cannabis stores, creating an over-saturated market.

To combat these losses, the province’s online retailer, the Ontario Cannabis Store, announced in February it would reduce its price margins as of September.

The OCS estimates the plan will give $35 million back to licensed cannabis companies this fiscal year and $60 million the following fiscal year.

Competitive edibles

While the plan is going to help, the black market still holds a major advantage as it does not play by the same rules and regulations cannabis shops do, retailers say.

“The legal market is competing with the black market, but mainly when it comes to the edible market,” said Sara Wilson, manager of My Green Merchant on Danforth Avenue.

In Ontario, each package of cannabis edibles is limited to 10 milligrams of THC, the main psychoactive ingredient in cannabis, while black market edibles can have a THC content in the hundreds of milligrams.

One solution proposed to combat this problem is to raise the packaging limit to 100 milligrams, but not the serving size — offering, or example, 10 separate 10-milligram edibles in a package.

Cannabis cocktail lounge

My Green Merchant is combating the black market with ‘”education and comfort in the products people are getting,” Wilson said.

“Having a cannabis cocktail lounge, being super friendly, educational, and supportive, promoting local artists and do other events that help build the neighbourhood,” is how she said her shop was trying to set itself apart from other cannabis shops in the east end.

My Green Merchant has become a local pub for cannabis smokers, one of the unique features the shop presents.

However, the shop is still part of a market that is dealing with over-saturation and a large black market.

Wilson wonders whether the Ontario government’s plan going to be effective or whether more action is needed to help the struggling market.

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Posted: Apr 17 2023 11:50 am
Filed under: Business News