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HIGHLIGHTS
  1. Average online dried flower price falls to $10.35/gram from $10.46
  2. Out-of-stock online recreational cannabis levels rise to 59 pct from 56 pct
  3. Average dried flower prices range from $8.72/g in Newfoundland to $11.66/g in Alberta

The average price of dried flower sold online in five Canadian provinces fell for the third straight month in late-September as producers increased their offerings, but the amount of out-of-stock e-commerce products rose to 59 per cent, Cowen Equity Research data show.

This “stockout” level rose from 56 per cent in early September and as licensed producers (LPs) increased their available stock keeping units (SKUs).

The falling prices underscore the efforts by LPs to find ideal price points for consumers, many of whom continue to buy from illegal dealers at lower dollar values, while licensed growers navigate rising supplies in a nascent market. Larger available volumes typically result in lower prices.

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Cowen aggregated 1,485 product offerings with 3,032 SKUs from e-commerce platforms that account for roughly 65 per cent of the Canadian population: British Columbia, Alberta, Ontario, New Brunswick, and Newfoundland and Labrador. The number of SKUs offered online rose by a moderate 191 over the prior four weeks.

In these five provinces, the average online price for recreational dried flower dropped to $10.35 a gram, from $10.46 four weeks prior. This was the lowest level since mid-April.

The most expensive province on a weighted average price basis was Alberta at $11.66 a gram, a drop of 133 basis points over four weeks. Alberta has by far the largest number of physical retail cannabis stores of any province. The average online price in Ontario, where only 24 private retail stores have opened despite being Canada’s biggest consumer market, fell by 112 basis points to $10.80 a gram, Cowen said.

The lowest average price for dried flower was in Newfoundland at $8.72 a gram.

The average cost of pre-rolls, which saw a 29-per-cent price premium to flower, dropped to $13.38 from $13.42 four weeks prior. The amount of pre-roll products listed online in the five provinces rose by a slight 1.2 per cent to 66 per cent, “which speaks to consumers’ willingness to pay for value-added cannabis products,” Cowen said.

Provincially, New Brunswick saw the biggest “stockout” rate increase at 6.1 points to 63 per cent, followed by B.C., which saw stockouts rise by 5.3 points to 63 per cent. Alberta’s stockout rate rose by 2.3 points to 38 per cent. While the Alberta government sells adult-use cannabis online and some retailers list their products online, pot shops are only permitted to sell inside their stores.

Stockouts rose by 2.3 points to 74 per cent in Newfoundland.

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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 70 per cent of total the out-of-stock SKUs, with dried flower stockouts rising 3.5 points to 61 per cent. For pre-rolls, stockout rates rose by 1.2 points to 66 per cent.

Stockouts for capsules, meanwhile, dropped by 50 basis points to 31 per cent, though this category represents just 4 per cent of the available products. Oil products account for 8 per cent of the category online and have a stockout rate of 36 per cent.

“We continue to believe that the category will look very different once vapor, beverages, edibles, and other form factors become available,” Cowen said.

Aurora Cannabis Inc., which is Canada’s No. 2 licensed marijuana grower with 11 per cent market share of in-stock SKUs in the four-week period ended Sept. 30, added 11 new SKUs during the period for a total of 286 SKUs. Aurora’s online stockouts dropped by 1.6 points to 50 per cent.

Aurora’s average dry flower price was $11.13 a gram, an 8 per cent premium, while its pre-roll prices fetched a 27 per cent premium to the category at $17.06 a gram, by far the highest priced out of seven major LPs.

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Canopy Growth Corp. holds the biggest market share in Canada at 21 per cent and added 61 new SKUs, bringing its tally to 582 SKUs. Canopy’s online stockouts rose by 3 points to 55 per cent. Its average dry flower price was near parity at $10.37 a gram, while its pre-roll pricing was at a 6 per cent discount at $12.54.

In Ontario, where online sales are relatively strong due to the small number of licensed retail stores, the dry flower prices of seven major LPs range from Tilray Inc. at $9.80 a gram to Aurora at $12.54 a gram, for an average of $10.80 per gram. Online prices for pre-rolls ranged from Aphria Inc. at $10.92 to Aurora at $19.73. This average is $15.46 a gram.

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