At least two different licensed cannabis stores in Alberta are offering certain varieties of marijuana at significant discounts, despite an ongoing shortage of legal weed at the retail level across Canada.
"I think that in the context of an overall supply shortage, it is strange to be seeing these discounts," said Rosalie Wyonch, a policy analyst with the C.D. Howe Institute think tank.
"So that does point to something potentially interesting at the micro, individual retailer level that could maybe tell us a little bit more about how this market's developing. It's not what you would expect to see."
A photo posted Sunday night on the Reddit internet forum showed a price board advertising 50 per cent discounts on seven different cannabis products at a Canna Cabana store in Calgary. Five types of dried cannabis and two types of cannabis oil capsule were on sale for unusually low prices: For example, Canna Cabana usually sells a 3.5 gram container of "Ocean View Sativa" dried cannabis bud, a product from Canopy Growth's premium "Leafs by Snoop" brand, for $38.30 at full price, or roughly $10.94 per gram. On sale, those containers were just $19.15 — less than $5.50 per gram.
'It's a mix of products that we thought would be interesting for customers to obtain at a temporarily lower price' - Nick Kuzyk, chief strategy officer for High Tide, on the discounts applied to certain cannabis products
An executive with Canna Cabana's parent company High Tide Inc. verified the sale prices on Monday. He said the discounted products are only being sold at Canna Cabana's Calgary location, and not at any of the company's six other Alberta stores.
"It's a mix of products that we thought would be interesting for customers to obtain at a temporarily lower price," said Nick Kuzyk, chief strategy officer with High Tide.
Nova Cannabis, which operates five licensed stores in Alberta, promoted half-off discounts on its website on Monday under the slogan, "Black Market Blowout." That sale covered five different products, including two varieties of "Plain Packaging" cannabis produced by Canopy Growth Corp., two different "Trailblazer" dried cannabis products produced by Organigram, and one variety of Organigram's "Edison" brand cannabis oil.
Calgary-based Brad Martin closely tracks retail cannabis prices in Canada as the director of cannabis market data firm CannStandard. Since legalization of recreational marijuana kicked off in October, Martin said, he's never seen this level of discounts in his home province.
Data provided by Alberta's provincial cannabis wholesaler Alberta Gaming, Liquor and Cannabis show the average wholesale price of a gram of dried cannabis in Alberta is $8.35. Martin used that data to calculate the approximate wholesale prices of the products Canna Cabana was selling at a discount, and determined that the retailer is likely selling those products for less than their wholesale cost. (Some of the discounted cannabis oil capsules sold at Canna Cabana might still be turning a profit for the retailer, Martin said.)
High Tide's Nick Kuzyk wouldn't say whether Canna Cabana was selling dried cannabis at a loss.
"This is part of retail practice," he said. "It's about learning about customer behaviour at different price points, and taking the opportunity, through our Canna Cabana shops, to gather market information."
James Burns is CEO of Nova Cannabis' parent company Alcanna, which also operates private liquor stores across Alberta. He didn't explicitly acknowledge whether Nova Cannabis stores were taking a loss by selling half-off cannabis.
"It's probably a good assumption," said Burns.
'You have capital and space tied up — if it doesn't sell, it doesn't sell, you can't just let it sit there' - James Burns, CEO of Alcanna
"But lots of things factor into it. You have capital and space tied up — if it doesn't sell, it doesn't sell, you can't just let it sit there... But this is common. We've got 12,000 SKUs of liquor in our real business, our main business. Stuff doesn't sell all the time. You buy something and it doesn't work, and you blow it out," he said.
"Yeah, you can call it a loss, I suppose, but in the grander scheme of business you've got to keep your inventory churning, you've got to free your capital up to buy some more, and that's retail. It's a tough business."
Burns said his business is definitely experiencing the shortage of legal cannabis at the retail level, but characterized the paucity of pot as "a huge shortage of what people want."
Certain unwanted products are actually oversupplied, said Burns, particularly pre-milled cannabis bud that sells for a lower price than intact cannabis bud.
"There's a lot of consumer resistance to it, and we just bought too much... In Alberta, you have to have a vault that the cannabis is in, and it's not that big, and it's just taking up too much room. It's not moving."
Solomon Israel is the full-time cannabis reporter for the Winnipeg Free Press and its national cannabis news website, TheLeafNews.com. He covers the social, legal, medical and scientific aspects of marijuana legalization in Manitoba and the rest of Canada.
Updated on Tuesday, February 5, 2019 at 9:36 AM CST: Removes extraneous quotation mark in sub-headline