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This is our Lake City Market Call for the month of July. We cover the ongoing in Alberta Cannabis and trends in the cannabis community. These Market Calls are meant to be for the benefit of growers and retailers alike.
June was an exciting month in cannabis, with several stand-out trends and some overall dips as we head into the summer. We have spoken to many growers over the past few months, trying to crack the puzzle of the ever-coveted product velocity. Our feedback is the same every time. Growers consistently are not looking at the numbers when it comes to product development, pricing, and launch. The easiest breakdown is size.
3.5g units are over-saturated with over 60% of the flower market. This is why in our opinion, growers of any type are going to struggle to gain any real traction to get great results or potentially meet regulator requirements. As it stands that regardless of how well you perform in this segment, you are bound to struggle.
Compounding this issue is MSRP. For these purposes, we have used the listed MSRP, which is generally 30% margin. It should be noted that many in each category could shift, especially in this climate of discount retailers. As it stands, 50% of the market for 3.5g flower is in the price range between $30-$40, right next to the range of $20-$30 with 26% of the market. You might think that’s to be expected, but the reality is that the price range of $30.99 and $34.99 is 66% of the total segment. This means that anything within that range is in competition with over 50% of the flower market. In those price ranges it makes your product almost invisible. To add even a bit of salt to the wound, retailers across the province are shrinking their menus, making things even more competitive and tighter.
This is why it’s essential to understand your segment and what price range you plan it to be in. Especially taking in the factor of discount retail. Using other segments should be a priority to growers as they prepare for the future. Big gains can be made in the 7g market, with the majority of it being milled or old stock.
One of the best places to get velocity might be where you least expect. Ounces are a very powerful market but relatively saturated in the same pricing segments. 83% of the market is under the MSRP of $150, leaving a massive market gap in premium ounces. I would, however, caution anyone willing to enter this space that has a product that doesn’t fit the standard. It has to be of excellent quality, and the THC should be above 23%.
As we enter the summer, it’s the first time in two years we have a “Normal” movement of people. With Covid, we for sure noticed a lot of people leaving for cottages, cabins, and camping as they couldn’t go much anywhere else but could also continue to work from those locations. Now it’s unclear how the summer will go. Given fuel prices, a return to work, and the trouble within the airline industry, people might stay a little closer to home for more extended periods. Be sure to have the most popular edibles in stock, beverages cold and 10mg, and vapes of all kinds on deck.
There’s no doubt that in June, the big winner in the flower market is Carmel with their release of Animal Face and Drew’s Pheno. Customers were blown away by the big terpy noses and fantastic quality. True premium products! BC Black came in at the end of the month with a very strong offering of Mac Slurry and Nuken Sour Diesel, which is the best we have seen from the collective at BC Black. Their strategy of having some of the best growers in the industry under their banner looks like it might pay off.
On the innovation side of things, infused milled flower has entered the space. Dab Bods is quick to innovate this offering that follows the wave of their infused Pre-Rolls and Moon Rocks. It’s a tough category to sell as it won’t fit into any general menu location, so it’s very Budtender reliant. However, the feedback so far has been positive and could show to be a growing category. Shred is also entering into this space to match their popular milled line.
We’ll finish this month’s market call on Vape. Since November of 2021, a few units have held and dominated the top spots in the country, but it seems it’s finally coming to a close. Bzam’s Magic Melon and Banana Daze, Ness’s Ninja Fruit and Apricot Jelly, Back Forty Super Lemon Haze, Kush Mint, and Forbidden Fruit appear to have lost traction. However, it seems they have not been replaced by any one brand in particular but rather by a flood of well-priced and delicious options. Worryingly Vape could be headed for a similar trajectory as 3.5g flower as we move into the coming months. I’ll close by saying we aren’t worried about either of these producers as they have shown strong flexibility in the past.
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I mean our address book is pretty full… but I guess we could fit you in.