Which brands are leading Ontario’s cannabis market?

A report from OCS also shows how "cannabis 2.0" products are faring against more tried-and-true formats.

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Despite a late rollout compared to other provinces, physical retail has taken hold in Ontario’s cannabis market, according to a new report from the OCS.

The report tracks sales in Ontario in the year since April 2019, when physical retail sales in the province began. At $385.1 million, Ontario is responsible for more of Canada’s cannabis sales than any other province over the last year; as of the most recent quarter, it represented 25% of national sales and 34% of its growth.

Recreational cannabis sales from physical retail were $313.7 million (or 81.5% of total sales), with online representing $71.4 million (or 18.5%). However, the share of online sales is slightly higher than what would be seen in other product sectors, likely due to the fact that physical retail was hampered by a complicated lottery system for awarding licenses, which has since been redesigned. While the province had 53 stores open by the end of March, nearly half of those launched in Q4, and most municipalities in the province only had one store open. There were 4.4 million unique visitors to OCS.ca over the last year, with a conversion rate of 7.52%. There was also a spike in visitors to OCS.ca in March (114,400, compared to 62,800 in February), possibly due to onset of the COVID-19 pandemic.

Sales at physical retail outpace online sales across every product category, except for seeds (where online sales outpaced retail sales by a meagre 10,000 grams) and topical products like creams (where sales were roughly the same).

Dried flower is the most popular product category, earning $226.6 million in retail and $47.3 million in online sales, followed by pre-rolls, which earned $39.3 million in retail and $3.3 million in online sales. Despite only being available for three months, “cannabis 2.0″ formats like oils ($16.8 million in retail, $9.5 million online) and vapes ($11.6 million retail, $3.2 million onine) are beginning to catch up. Sales have been more muted for edibles ($3 million in retail and and $800,000 online) and beverages ($300,000 in retail and $110,000 online), though that can be attributed to a later than expected roll-out for beverages.

Many major producers cited issues with scaling beverage production and the fact that some ingredients interacted with the liners of cans in a way that reduced the products’ potency. Cannabis-infused beverage offerings still remain scant: Canopy Growth’s Tweed brand was the first major producer to market with its ready-to-drink cannabis drinks in March. It was followed shortly by Everie, a brand of CBD sparkling beverages from Fluent, a joint venture between Tilray and AB InBev. Everie and Haven St., a brand owned by TerrAscend, both had lines of cannabis-infused tea bags available for sale in January.

Everie and Haven St. have dominated the share of sales in the beverage category, mainly because it was the only product available before the end of the period examined in the report. Aphria’s wellness-focused Solei brand is leading sales in oils, while Redecan has an advantage over San Rafael in vapes. In the lucrative dried flower category, share of sales is in the single digits across brands, with no more than a few percentage points separating the top five.

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The report also shows there is an opportunity for more affordable brands to make headway. Sales for dried flower in the $5 to $8 per gram range increased 4.9 times over the course of the year, with flower in the $8 to $12 range growing by 3.5 times. OCS notes in the report, however, that there are opportunities at all price points, “as long as producers meet the expectations of consumers.”

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