As gatherings over five are banned in the wake of COVID-19, numerous cannabis events have gone digital. A week-long web series presented by the Business of Cannabis and Leaflink, for example, kicked off today with some interesting insights into Ontario’s legal retail landscape. In a livestreamed interview, host Jay Rosenthal spoke to Cheri Mara, chief commercial officer of the Ontario Cannabis Store (OCS), whose responsibilities span the province’s digital and wholesale operations. The two discussed current challenges stemming from the global crisis and general consumer insights as legal retailers attempt to catch up with the unregulated market’s consumer appeal.
“Two short years ago, this was an illegal business. During this time, we’re deemed essential,” Mara told Rosenthal, reflecting on the industry wide shift to digital platforms as self-isolation has become all but mandatory over the last two weeks. While the federal government and provinces like British Columbia were quick to slap the “essential” sticker on legal weed providers, Ontario wavered—at first ordering dispensaries to close alongside other “non-essential” businesses, but quickly changed its mind.
Mara said the shift in designation was not only indicative of a positive social change—ending a near century of industry stigmatization—but it has also contributed to significant growth, particularly for provincial retailers.
Where once the OCS saw an average of 2,000 orders per day on its website, it’s currently processing an average of 8,000, with peak days reaching upwards of 13,000 orders. She said this required “significant changes” in both their website and fulfillment capabilities to meet the demand.
“In the situation we are facing, people are being asked to social distance and it’s creating a need to change how we shop,” she said, listing cannabis as an affected industry, alongside groceries and discretionary items. As coronavirus has rendered brick-and-mortar retail effectively off limits, online shopping has become the choice alternative for consumers who may not have otherwise used the digital service. Mara said 30 per cent of Ontario’s shoppers are considered “new customers”, though she added data is still being collected to determine how many of these consumers are actually transitioning from unregulated sources to the provincial channels.
While the OCS used to maintain the monopoly over online sales, Ontario has temporarily passed an emergency order to allow private retailers online sales and delivery, citing an effort to curb illicit channels from flourishing during the crisis. Those privileges could be removed when emergency measures are lifted. On this development, Mara only said the increase in competition will stand to benefit the consumer as retailers up their game to provide top tier services.
“Flower continues to be king,” said Mara when asked to weigh in on product trends, adding that within that category the OCS has introduced some new price points and larger packages to appeal to a “legacy” and daily consumer. Recently, it added a $4.20 per gram ounce, “Indica Blend” by B.C. licensed producer (LP) Pure Sunfarms, as a 4/20 promotion.
The price point dramatically undercuts the most recent numbers from Statistics Canada data listing the average legal gram at $10.30, and even challenges the illicit market, which sells a gram at an average cost of $5.73.
In addition, Mara said Ontario is also “seeing tremendous success” across recently legalized categories, like edibles, specifically a high demand for infused chocolate and beverages. Topicals, wellness products, and chewable edibles, however, have been slow to market and she noted that it’s an area the retailer is working to remedy alongside LPs.
She added that the number one concern is the slow adjustment to pricing, and said that the priorities going forward are to improve the quality of flower priced in the $8 to $10 range and finding premium products that are “truly premium”.
“Pricing is critically important in cannabis, we know that. We know that to truly be a 100 per cent legal framework, we need to be priced right and we need to be offering the value consumers are looking for,” she said.
Currently through the OCS, the volume-weighted average price across all products sits at $8.06 per gram, which is a 25 per cent reduction from the initial price point. Mara said consumers generally tend to shop by price point, but noted that brand awareness seems to be on the rise, with specific name searches becoming more prominent over the last two months.
The digital series on Business of Cannabis is set to continue throughout the week, and will include web panels on topics like marketing regulations and delivery mechanisms.
This article is available under a Canadian Creative Commons licence.
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