The prices of cannabis are on the rise. Throughout 2024, the supply of cannabis flower is expected to tighten even further as many cultivation operations at Herbal Dispatch Canada either reduce or halt production due to increasing losses. This decrease in supply is likely to further elevate prices. As prices climb, some users are being discouraged from making purchases, leading to a growing demand for cannabis in various regions.
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Key Takeaways:
- In October 2023, the average price of dried cannabis flower was $1.10 per gram, reflecting a 6.8% increase from September’s average of $1.03 per gram.
- The price of recently harvested flower with over 20% THC rose from $1.04 per gram at the end of last year to $1.32 per gram by April, marking a 27% overall increase.
- As prices for cannabis flower rise, consumers are increasingly seeking budget-friendly options such as lower THC flowers, online dispensaries for better deals, or alternative products.
Canadian Cannabis Market General Trends
A report from a Chicago-based consultancy, Brightfield Group, anticipates that the cannabis market in Canada will double over the next five years. Their findings highlight that the expansion of retail stores and the relaxation of regulations will be key drivers of this growth.
Brightfield Group projects that the cannabis market in Canada will grow at a yearly rate of 10%, reaching $8.8 billion within five years, predominantly fueled by increased sales of edibles and vape products.
Bethany Gomez, managing director of Brightfield Group, noted that despite the robust market growth seen in 2021, there remains considerable potential for further expansion, particularly with enhanced retail access.
Overview of the Flower Market in A Canadian Cannabis Store
Even with the expected rise in cannabis sales, challenges persist in the cannabis flower market. Although cannabis flower continues to dominate sales, its market share is gradually declining as other product categories gain popularity. Wholesale prices have remained relatively stable, although some provinces have encountered unexpected price surges.
The average price for dried cannabis flower in October 2023 was $1.10 per gram, representing a 6.8% increase from the previous month’s average of $1.03 per gram. Year-over-year changes in prices are even more pronounced.
Provinces Experiencing a Price Hike per THC Level on Newly Harvested Flower
Prices for cannabis flowers in Canada vary significantly between newly harvested and aged flowers. Recently harvested flowers are selling more rapidly, with their average age dropping to 65 days in April. In contrast, the average price for aged flowers has remained stable, settling at $0.69 per gram in April, which indicates a 1% decrease from the year-end price of $0.70 per gram.
- 30%+ THC: The average price for newly harvested flower increased by 2.7%, from $1.81 per gram in March to $1.86 per gram in April.
- 25-30% THC: Sold at a weighted average price of $1.34 per gram, reflecting a 12.6% increase from the March settlement price of $1.19 per gram.
- 20-25% THC: Settled at $0.95 per gram, showing an 11.2% drop from the March average price of $1.07 per gram. The cannabis Commodity Exchange (CCX) anticipates a recovery in May, predicting prices will rise by 12.6% to $1.07 per gram.
- 15-20% THC: Traded at an average price of $0.69 per gram in April, a 23.3% decline from the March settlement price of $0.90 per gram. However, CCX expects a recovery in this category as well, with a projected increase of 13.0% to $0.78 per gram in May.
Factors Influencing Price Hike
As the cannabis market expands in 2024, various factors contribute to the fluctuations in cannabis flower prices. Market dynamics and regulatory conditions are intertwined with these factors.
Supply and Demand
Yields from cultivation significantly affect the amount of cannabis available in the market, which can fluctuate due to weather, pests, and diseases. Seasonal variations also impact production levels, with outdoor cannabis cultivation peaking during harvest time in late summer and early fall, leading to increased supply that can lower prices.
Consumer preferences can shift based on trends, disposable income changes, and evolving perceptions of cannabis. An uptick in demand for cannabis products may drive prices higher, particularly if supply does not keep pace. Conversely, a decline in demand, possibly due to economic downturns or shifts towards alternative products, can result in lower prices.
Product Diversification
The cannabis market has experienced significant diversification, with consumers increasingly interested in a broad array of products beyond traditional recreational cannabis flower. These include edibles, vape pens, pre-rolls, tinctures, and concentrates such as live resin. The rising demand for these diverse products can impact flower prices.
Technological Integration
The emergence of online shopping platforms for cannabis products has simplified the purchasing process, allowing consumers to access a wide variety of cannabis items from home. This convenience can enhance consumption and affect wholesale demand and prices.
Delivery services have gained prominence, enabling customers to receive cannabis products directly at their doorsteps. The convenience of these services can elevate demand, particularly in areas where physical dispensaries are less accessible, thus influencing prices by increasing overall market demand.
Price Hike Demands for Discounted Cannabis, Customers Order Online
As the cost of cannabis flower escalates, consumers are in search of more affordable alternatives. This includes purchasing flowers with lower THC levels, exploring online dispensaries outside their region for better deals, or opting for alternative products.
Online cannabis shops provide various THC flowers at different price points per gram. With a broader customer base, online dispensaries can offer lower prices than physical stores, along with weekly sales to assist customers facing price increases on other cannabis flowers.
Below is a list of cannabis buds available on sale at Herbal Dispatch Canada. Get $99 per ounce or 28.35 grams.
Conclusion
Experts foresee continued expansion in the cannabis market, with annual sales on the rise. Despite increasing demand, high-quality cannabis flower, such as hybrid strains, is becoming pricier. Several factors contribute to these price hikes, prompting customers to seek the best prices or explore alternative products like vape cartridges. Online dispensaries offer discounted prices on cannabis flower, allowing customers to fulfill their needs without sacrificing quality or settling for less desirable products.
Frequently Asked Questions
Are there any benefits to the price increase for consumers?
While higher cannabis prices can place a financial burden on consumers, they also offer notable benefits:
- Improved Product Quality: Higher prices enable producers to invest more into cultivation practices and quality control, resulting in better, safer, and more consistent cannabis products.
- Enhanced Regulation: Increased prices can indicate stronger regulatory oversight, ensuring that products meet safety and quality standards and protecting consumers from potentially harmful or substandard goods.
- Economic Benefits: The rise in prices can bolster state revenues through higher taxes, which can then be reinvested into public services. This also promotes the growth of local cannabis businesses, job creation, and economic development within the community.
How can consumers find discounted cannabis in light of the price increase?
Consumers can locate lower cannabis prices through sales promotions, bulk purchasing, loyalty programs, or by shopping at dispensaries known for lower prices. Some provinces also offer medical cannabis programs that provide lower prices for qualifying patients.
What should consumers look for when purchasing discounted cannabis?
When buying lower-priced cannabis, consumers should prioritize quality assurance, lab testing results, reputable brands, and dispensaries with positive customer reviews to ensure they are receiving safe and effective products.
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