A major Canadian company launches a low-cost cannabis brand to fight against illegal market stores
One of the most important cannabis companies in Canada will launch a new 28 gram cannabis product this month that costs consumers up to a dollar less per gram than cannabis purchased at an illegal dispensary. This low-cost cannabis is called Original Stash and will be on sale in Quebec’s cannabis stores starting Thursday, October 17 for $ 125.70 for 28 grams, or $ 4.49 per gram, including taxes.
It is a cheaper price than the average cost of one gram of cannabis at $ 7.37 per gram during the third quarter of this fiscal year, while the price of legal and illegal marijuana is $ 10.23 and $ 5.59 per gram, respectively, according to the latest information from Statistics Canada.
According to Sebastien St-Louis, director of this company, with this strategy of low-cost cannabis sales they want to reach that half of Canadians who, a year after the legalization of recreational marijuana, continue to buy in the illegal market. 51% of Canadians continue to buy marijuana in unlicensed dispensaries that do not pay taxes. The idea of the company is to absorb the cost of taxes so that they do not have to pay them.
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Sebastien St-Louis is aware that the only reason for consumers to continue shopping in illegal stores is the price. Therefore this company offers an ounce (28 grams) of marijuana for $ 125.70.
If this company can offer a product of 28 grams of cannabis at such a low cost it is for different reasons. Among them the need for less packaging for bulk size instead of individual packages for each gram or product of 3.5 grams stands out.
St. Louis added that the company had increased its production of marijuana, which implies lower cost per gram, and that in addition the lower hydroelectric costs in Quebec are also another factor to consider that allows the company to reduce the price of its cannabis Low-cost cannabis is on sale since October 17. The company is working in contact with entities in other provinces, such as Ontario and Alberta, to make low-cost cannabis there.
Canada legalized recreational marijuana on October 17, 2018 and became the first G7 country and the second country in the world to opt for full legalization. It is true that at the beginning there was a shortage of products. But when this problem was resolved and supply problems decreased, legal cannabis sales in Canada increased. However, more than half of the buyers continue to resort to the illegal market.
In the second quarter of this year, Canadians spent $ 443 million, compared to 172 million in the fourth quarter of 2018. However, Canadians spent $ 918 million on unlicensed cannabis stores, a figure that is below the 1.17 billion dollars spent in the fourth quarter of last year.
According to an August survey conducted by Statistics Canada, when it comes to deciding where to buy cannabis, 76% of Canadians who used marijuana in the first half of the year said their decision criteria were based on quality and safety, while that 42% was based on the price.
St. Louis has said that its Original Stash low-cost cannabis strain is of high quality and with more THC than the cannabis that is available on the black market. He said the Original Stash has between 12 and 18 percent THC.
He also said that if they had launched low-cost cannabis it was not to lose money and that the company had studied the project, but that he would not talk about profit margins until the company reported its earnings on October 24. The media asked about a possible price war between other large-scale cannabis producers, as signs of price pressure arise. But St. Louis said he wasn’t worried since most of the other licensed producers don’t have the cost structure that their company has.
The director hopes that this low-cost cannabis will be a key part of his strategy to reach a market share of more than 20% in the coming years and increase his income since they are very optimistic with the new and cheap Original Stash.
