Saskatchewan cannabis prices have plummeted since the product became legal in Canada in 2018.
“We’ve probably hit a floor as far as pricing goes right now,” said Jim Southam, president and CEO of Prairie Cannabis Ltd.
Southam called the price change in recent years drastic.
“In the beginning, we were paying double if not closer to triple for some things that we have in our stores today. But that being said, the price can only go so low until people are losing money.”
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The formation of the Saskatchewan Weed Pool Cannabis Cooperative, which combined 16 independent retail members, gave independent stores across the province a chance to be competitive against national chain companies.
“Our co-op has partnered with a licensed producer and now we are vertically integrated so that’s helped us bring down pricing costs as well. We can purchase bulk product and package it ourselves,” said Southam.
Though there are no official numbers on street drugs, research suggests that legal cannabis pricing has even become competitive with that of illicit cannabis.
“It looks like prices have come pretty close to converging so I’m not seeing that two to three dollar per gram gap that we were seeing as a minimum when legalization first happened. We are seeing prices that look like they are almost identical,” said Jason Childs, an associate economics professor at the University of Regina.
After Saskatchewan dropped the cap on cannabis retail stores in 2020, Saskatoon alone ballooned from six retailers to more than 30 in just a year.
“I think the retail density in Saskatchewan has really helped as well. I mean when you look at where we started with relatively few storefronts and not a lot of competition on the retail side. Now we are seeing some significant competition among retailers and that’s going to reduce their margins and make the product more affordable,” said Childs.
“We’ve got more cannabis stores than Tims or Starbucks,” joked Southam who is also the president of the weed pool cooperative.
But while the boom in production is good for consumers it isn’t necessarily all positive for retailers.
“We’re saying no a lot more to product than we’re purchasing product, because we don’t have a place to get rid of it all,” added Southam.
Where the now very saturated market will land on cannabis prices is yet to be seen in such a new industry.
“Is it the pandemic that’s causing it? Is it the increase in the retail density? Is it the improvement in the product and delivery and licensed producers figuring out how to package this and get this product to consumers? All those different things have happened at the same time,” said Childs.