In October, Quebec-based pot producer Hexo Corp. announced the unveiling of a new cannabis line comprising a hybrid blend of sativa called “Original Stash.”Most newsworthy about the new line of pot: it marked a significant price reduction for the cannabis seller, with 28-gram packages priced at just $4.49 a gram — less than half the average retail price, and lower even than the average cost of cannabis on the black market.“Our aim with Original Stash is to disrupt the illicit market, educate consumers about the value of a regulated and tested product, and drive them to purchase their cannabis legally,” said Sebastien St-Louis, Hexo’s CEO and co-founder, in a press release. “We’re now competing directly with the illicit market and providing consumers with an affordable, controlled, quality product.”The company’s decision to lower prices shines a spotlight on a growing problem for Canada’s licensed cannabis producers. Since the drug was legalized in 2018, legal companies have had difficulty drawing in users who rely on the illicit market, largely due to how expensive legal prices are and how difficult it is to obtain.In fact, according to Statistics Canada, a full 40 per cent of users still purchase from illegal dealers.“Cannabis users have a source of supply that they’re comfortable with and that they like, and they need to be given a reason to change,” said David Soberman, a professor of marketing at the University of Toronto. “To get them to switch you need to make the product available and it needs to be a price that’s comparable to the black market.”To compete with the black market, sellers like Hexo have dropped their prices. In July, the government of Nunavut reduced its markup on dried cannabis flower from $4 per gram to a mere $1 per gram. Some retailers, like the Ontario Cannabis Store (OCS), offer a small selection of products matching the prices of the ...
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