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HIGHLIGHTS
  1. Canadian retailers struggle to meet demand for pre-rolls
  2. Pre-roll sales expected to grow in Canada
  3. Consumers say prefer smoking pot for entourage effect

Demand for ready-made reefers is strong despite health concerns around smoking, suggesting the pre-roll product category is a burgeoning area for growth resembling the early commercial tobacco days when smokers shifted away from rolling their own cigarettes.

“Pre-rolls are rock stars. Pre-rolls are still in high demand, although supply has been low,” said James Burns, chief executive of Alcanna Inc., which owns five NOVA Cannabis stores in Alberta.

“Plans are to highlight pre-rolls when we get a secure supply of them. New consumers far prefer pre-rolls.”

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Canada’s national cannabis supply shortage prevents stores from offering larger amounts of pre-rolls, though retailers expect demand will remain strong when the amount of available pot increases.

Alberta Gaming, Liquor and Cannabis (AGLC), the province’s sole recreational marijuana wholesaler that is in the midst of an overall shortage, sells out of pre-rolls “almost instantly” whenever they get them in stock, a spokeswoman said.

“Pre-rolls will grow substantially as a percentage of total sales based on what we’ve seen in U.S. states,” said Tom Adams, managing director of BDS Analytics.

“There are some factors about smoking cannabis that are likely to keep it in the game. One is the rapid onset and dissipation of the effect. You get that by smoking cannabis, not by eating it.”

Consumer feedback and testing shows that people like the so-called entourage effect, which is when all of the plant’s compounds interact with the human body. In contrast, other cannabis products contain specific compounds that have been extracted from the plant to produce more isolated effects.

“Through consumer feedback and testing, the industry’s finding out that people like that entourage effect. It will keep smoking flower in the game forever because it will be hard to perfectly match this entourage effect,” Mr. Adams said.

In Arizona, California, Colorado, and Oregon, BDS Analytics’ GreenEdge point-of-sale tracking data show pre-rolls made up roughly 6.6 per cent of pot sales the past three years, up from 3.5 per cent in 2015.

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In Canada, this would equate to US$310-million in sales in 2022, if recreational pot purchases reach the US$4.7-billion as forecast by Arcview Market Research and BDS Analytics.

In five states where adult-use cannabis is legal, 100 million pre-rolled joints were sold in 2018 at an average retail price of US$7.73 each, with single packs the most popular size, BDS data show.

Of the 75,000 Canadian cannabis reviews gathered by Lift & Co, 30 per cent said they preferred smoking joints. In 2018, it was the most preferred method of consumption by those aged 35 to 44.

“Pre-rolls are a very popular product and we often sell out of the highest potency strains within two or three days, although we consistently have stock of the more balanced products for perhaps the novice or casual consumer, who might prefer those,” said Jason Kostiw, spokesman for High Tide Inc., which owns Canna Cabana stores.

“Since they can sell out fairly quickly, it’s hard to say what the sales would be like if we were able to stock the most popular ones in larger quantities, but right now pre-rolls probably average about 15 per cent of our store cannabis revenue, and they are our second-highest selling category after dried flower.”

Customers have told High Tide they like the convenience and small portions that pre-rolls offer.

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“The vast majority of cannabis consumed on the illicit market is smoking. As people move to the legal market, they’re looking for some of the convenience that you get from pre-rolls,” said David Abernathy, vice-president of data for Arcview Group in California.

“Manufacturers and cultivators are pushing pre-rolls because it allows them to sell some of the flower that’s otherwise difficult to sell (though) I’ve seen more of an emphasis on high quality pre-rolls.”

Mr. Abernathy expects pre-roll sales in Canada will be similarly popular.

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