How Much Will Cannabis Cost in Canada?
There could possibly be a ceiling on cannabis prices for producers such as Canopy Growth (WEED), Cronos (PRMCF), Aphria (APHQF), and Aurora Cannabis (ACBFF), which could eventually put pressure on margins. But before we talk more about margins, let’s look at what Canadians can expect to pay per gram of cannabis.
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Statistics Canada survey
Statistics Canada recently crowdsourced a survey to find out how much Canadians paid per gram of cannabis. The above chart contains the results from about 15,600 recreational and medical users across Canada. The average price for combined medical and recreational purposes was 6.7 Canadian dollars per gram.
The survey found that the average price per gram by recreational users (shaded blue) is slightly higher than the combined medical and recreational users (shaded yellow) in most of the provinces and territories. Currently, recreational cannabis is illegal, which may explain the premium paid for this category. Once legalized, the cannabis price for recreational use may fall in line with medical cannabis (HMLSF).
What Canadians can expect to pay
While the final pricing strategy is still being formulated, the above chart provides some clue about what Canadians can expect to pay per gram of cannabis. Of course, there are concerns about taxes and other fees added to the final price, but the government has reason to set prices competitively. Recently, CBC News reported that Ontario is considering a ten Canadian dollar price point, which is much higher than the 7.4 Canadian dollars for recreational marijuana in the above chart. But this price point is too basic for a dynamic product such as cannabis. We’ll discuss the reasons for this in the next part of this series.