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Report: Price most important factor for Canadians when purchasing cannabis
A new report notes that price, more than any other factor, is driving cannabis purchases in Canada.
The report, a collaboration among cannabis market research firm BDSA, Deloitte Canada and Hifyre Inc., the technology subsidiary of Fire & Flower Holdings Corp., focuses on pricing in North America.
“Pricing is consistently indicated as a primary factor in purchasing decisions,” Matthew Hollingshead, president of Hifyre and chief innovation officer at Fire & Flower, said in a statement.
“As existing markets mature and new markets come online, cannabis pricing is expected to remain extremely volatile, though there are some similarities in trends to traditional CPG (consumer packaged goods) markets like consumers willing to pay a premium price for superior products or services,” Hollingshead added.
For U.S. consumers, price has consistently ranked as a top-three driver of product choice, according to BDSA, which polls thousands of consumers every six months. In Canada, price is the leading factor when it comes to cannabis purchasing.
According to Deloitte, 70 per cent of respondents who shop on the illicit market stated that better or lower pricing was a key reason they turned to that market.
The report found that consumers are willing to fork over extra cash for premium products, citing the growth of live resin vapes, which now make up 33 per cent of total vape sales in California, up from eight per cent in 2019.
It’s a similar situation for edibles, with sales of products containing CBD increasing 41 per cent in California year-over-year, even though they are generally priced about 18 per cent higher.
“Pricing in the cannabis market is complex and dynamic, and is expected to remain so,” said Sid Hathiramani, a partner at Deloitte Canada. “Business leaders must be careful when making assumptions based on other consumer industries, and, instead, analyze the data closely, stay informed on market and competitive activity, and contain costs in order to achieve target profits.”
The report also notes the growth of legal cannabis sales in the last few years, increasing from US$14.4 billion ($17.9 billion) in 2019 to US$21.6 billion ($26.9 billion) in 2020.
BDSA predicts that trajectory will continue, with sales approaching US$62 billion ($77.1 billion) by 2026. In the U.S. alone, BDSA is predicting sales will reach US$47 billion ($58.5 billion) by 2026 as more states legalize cannabis and existing markets mature.
The findings are in line with the 2020 Canadian Cannabis Survey, which found price (29 per cent), safe supply (26 per cent) and quality (15 per cent) were the three most important factors for Canadians when it comes to buying weed.
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