Ontario is dropping its weed profit margins to get the ‘upper hand’ over the illegal market

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Ontario is dropping its weed profit margins to get the ‘upper hand’ over the illegal market

Ontario Cannabis Store reduces price margins to boost legal pot industry competitiveness.

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In an effort to compete with the illicit market, the Ontario Cannabis Store (OCS) has announced that it will be reducing its price margins, with the changes set to take effect in September. The move is expected to benefit licensed pot companies, putting an estimated $35 million back in their hands this fiscal year, and $60 million in the 2024 fiscal year, with further annual growth predicted as the legal cannabis market expands. The reduction in margins comes after the illicit pot market still accounted for 43% of Ontario’s cannabis market last March.

The margin drop will result from a fixed mark-up for each product category that will be standard for all producers and applied as a percentage above each product’s landed costs. The changes have been welcomed by pot producers who have been struggling to compete with the lower prices of the illicit market. However, the changes won’t take effect immediately, and some pot companies have already decided not to adjust their prices in response.

While the industry sees this move as a step in the right direction, it is believed that more action is needed to ensure the sustainability of Canada’s legal cannabis sector, particularly from the federal government.

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