Cannabis sales growth is continuing to slow even as the number of brands and retailers expands further.

That’s according to a report from cannabis analytics company Headset, which found that sales grew by 11.8% between 2022 and 2023, a far cry from the big 88.3% growth between 2020 and 2021.

The report warns that what sales growth has been seen throughout the country is likely buoyed by store count growth, rather than growth in consumer demand. But the increased competition means more stores dividing up what demand there is.

According to Headset data, store counts in Ontario have grown approximately 40% over last year, while average monthly sales per store in the province have dropped roughly 20% over the same period.

It’s a similar story for producers. The number of brands in the Canadian market has grown by 369% since 2020, and that flood of new entrants, the report notes, has contributed to median total sales per brand decreasing by 70% in the same period.

One thing that is going up is the average discount, which has steadily inched upward in the last two years. In addition to price emerging as a key factor in purchase decisions, Headset notes that the spike in products and brands being offered is likely contributing to excess inventory, leading to discounting or markdowns to move stale products.

Greater competition, however, is buoying the fortunes of more established brands, pointing the potential for further consolidation in the sector. In 2020, the top 21% percent of brands captured 80% of total sales. In 2023, the same share of sales went to just 12% of the top brands.

Product preferences are rapidly changing: Headset found that flower’s share of category sales slumped 15.8% this past year to nearly a third of sales. Flower at one point captured nearly half the total sales in Canada, the report notes. By contrast, pre-roll products have grown their share by 23.5% in the same period to bring the category to near parity with flower. Higher THC products, which are seen as offering more value for the price, are also gaining popularity.

After several years of pricing compression, inhalable products – which includes flower, pre-rolls and vapes – have seen the price per gram flatten since the start of 2022. On the other hand, consumer preference towards higher THC limits in edible packages has heavily influenced a equivalized quantity (EQ) price drop of 25.3% for non-inhalables in the last year.