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HIGHLIGHTS
  1. Loose leaf cannabis flower steadies in December at $10.16 per gram
  2. Average e-commerce flower price in Ontario drops to $10.67/gram but rises in Alberta to $11.34/gram
  3. Pre-roll price drops to average of $13.16 in five provinces

The average online price premium for pre-rolls over dry flower dropped in December but remained significant at 29 per cent as the cost of ready-made joints fell for the fourth straight month in several Canadian provinces and bud prices steadied. This indicates that consumers are still willing to pay for value-added cannabis products, Cowen Equity Research said in a report that compiled e-commerce data in five provinces that account for 65 per cent of the national population.

Meanwhile, Aurora Cannabis Inc.’s e-commerce market share in those regions dropped from second place to third as of mid-December, as Aphria Inc. moved into second position, Cowen stated.

Cowen’s report aggregated 1,723 product offerings with 3,423 SKUs from e-commerce platforms in British Columbia, Alberta, Ontario, New Brunswick, and Newfoundland and Labrador. The cannabis product stock-out rate, when eliminating nearly 300 stock-keeping-units (SKUs) that have not appeared on provincial sites within the past seven months, fell to 53.5 per cent versus 55 per cent in November.

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“While it is difficult to assess how much of the change is demand vs. supply driven, our view is that demand remains strong while supply is limited,” Cowen said.

Loose leaf flower accounts for 68 per cent of total online cannabis SKUs in the five provinces surveyed in December and the average price was unchanged from November at $10.16 per gram. This is the lowest level since January and follows five months of average price declines for the category.

While the average price in Ontario dropped 14 basis points (bps) to $10.67 per gram, it rose in Alberta by 34 basis points to $11.34 per gram.

The average pre-roll price dropped 78 bps to $13.16, which in turn dropped its premium to dry flower by 106 bps to 29 per cent “which speaks to consumers’ willingness to pay for value-added cannabis products,” Cowen said.

Looking to licensed producers’ (LPs) e-commerce market share in the five provinces surveyed, Canopy Growth maintained its top spot at 22 per cent. Its average price for dry flower was $10.23 per gram, 1 per cent above the category average with pre-roll pricing slightly above average at $13.21.

Aurora maintained its No. 2 market share position of in-stock SKUs in Ontario, Alberta and B.C., but the LP’s overall market share across the five surveyed provinces fell to third place with 304 in-stock SKUs. Its average dry flower price was $11.34 per gram, a 12 per cent premium to the category, with pre-rolls at a 28 per cent premium at $16.86.

Aphria moved into second place, also with 9 per cent market share but a larger number of in-stock SKUs at 396 after adding eight new items. Its average dry flower price was $9.61 per gram, a 5 per cent discount to the category, while pre-roll pricing was $10.80, an 18 per cent discount.

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“We have observed a shift from the LPs to provide more value-based offerings in order to capture demand from the illicit market,” Cowen said.

“This represents a meaningful shift for the LPS, as premiumization and price architecture remains elusive in the category.”

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