October 21, 2024
In September 2024, Ontario’s cannabis market reflected the challenges of an evolving industry, marked by a mixed performance across key metrics. While the average item price saw a modest increase, overall sales and unit growth took a hit, suggesting a shift in consumer behavior. As Canada's largest cannabis market by sales volume, Ontario remains a critical barometer for the industry. However, the significant decline in month-over-month (MoM) and year-over-year (YoY) sales highlights the sector’s ongoing struggles, as consumers become more selective and competition intensifies.
This report, drawing from Headset cannabis analytics, delves into the numbers behind these trends, examines shifting consumer preferences, and explores how retailers can navigate these challenges by adapting their strategies.
In September, the average price for cannabis products in Ontario rose slightly to $21.77, up from $21.63 in August 2024. Despite this price increase, total sales dropped to $156.71 million, a 5.4% decline compared to the previous month and an even more pronounced 16.4% decline YoY. This sales dip reflects broader market trends where consumers, likely influenced by economic pressures, are becoming more discerning and price-sensitive.
The sales decline underscores an important reality: while Ontario remains the largest cannabis market in Canada by volume, consumers are gravitating towards better value propositions or shifting to alternative consumption methods. This selective behavior poses a challenge for retailers who must now focus on providing both competitive pricing and unique offerings to maintain market share.
A closer look at product categories reveals significant variations in performance. Traditional categories such as flower, pre-rolls, and vape pens experienced substantial YoY declines. Meanwhile, newer and more niche categories, particularly tinctures and sublinguals, emerged as growth areas, signaling a shift in consumer preferences.
Other categories, such as edibles, concentrates, and beverages, also posted sales declines. Edibles dropped to $7.7 million in sales, while beverages fell to $3.5 million, reflecting the continued challenges these categories face in gaining widespread traction in a crowded market.
One category bucking the trend was tinctures and sublinguals, which saw a surge in sales. This category posted an impressive 49.7% MoM growth in sales and a 52.7% increase in units sold. Year-over-year, sales rose by 62.7%, while units jumped by 91.5%. Innovative products like Breathstrips and Sublingual Pouches, which generated over $72,000 in sales, have helped fuel this growth. These products are quickly gaining popularity due to their discreet nature and ease of use, highlighting a potential area for expansion in Ontario's cannabis market.
While Ontario’s cannabis market experienced a downturn, other provinces showed differing trends, emphasizing the regional variability within Canada’s cannabis landscape. Most notably, Saskatchewan emerged as a standout performer, with a robust 40.4% YoY increase in sales. This growth highlights how smaller markets can present opportunities for rapid expansion, even as larger markets, such as Ontario, face price and sales pressure.
In terms of pricing, Ontario’s average item price of $21.77 remains competitive on the national stage. While it’s slightly higher than in provinces like British Columbia and Saskatchewan, it’s still below Alberta’s pricing, reflecting a balanced approach to pricing in Ontario’s increasingly price-sensitive market. This balancing act between maintaining a competitive price point and addressing rising costs is a critical factor for retailers to navigate in the coming months.
Given the mixed performance across categories and the overall decline in sales, cannabis retailers in Ontario must adopt more refined strategies to stay competitive. Here are key approaches to consider:
With many retailers sourcing products from the same supplier (the OCS), offering exclusive or innovative products is crucial for standing out. The success of tinctures and sublinguals in recent months shows that there’s significant demand for unique, niche products that aren't as readily available in mainstream formats like flower or pre-rolls. Retailers should explore partnerships with craft cannabis producers, introduce limited-edition products, and keep a close eye on emerging trends to stay ahead of the curve.
As price competition heats up, customer experience becomes a key differentiator. Investing in superior customer service, personalized consultations, and loyalty programs can encourage repeat business and foster long-term loyalty. Moreover, creating an inviting, educational in-store environment can appeal to new and seasoned cannabis consumers alike. Engaging, knowledgeable staff who can explain the nuances of different products or suggest alternatives based on customer preferences can make a significant difference in consumer retention.
A strong brand identity and an engaging retail experience can help set a dispensary apart from the competition. Store design plays a vital role in this regard. Creating a space that feels welcoming and educational, rather than transactional, can enhance consumer loyalty. Retailers should focus on curating a brand story that resonates with their target market, whether that’s through showcasing their commitment to sustainability, supporting local producers, or offering a premium, boutique experience.
With consumers increasingly turning to digital platforms for research and purchases, having a robust online presence is crucial. Retailers should invest in digital marketing strategies that focus on engaging content, targeted digital advertising, and user-friendly e-commerce platforms. Optimizing product listings, offering exclusive online promotions, and maintaining an active presence on social media can help dispensaries stay top-of-mind for consumers, particularly those who prioritize convenience.
As Ontario’s cannabis market becomes more competitive, digital platforms like Poof.ca can play a pivotal role in helping retailers navigate the shifting landscape. By partnering with Poof, dispensaries can reach a broader audience, enhance their online visibility, and attract new customers looking for unique cannabis experiences.
Poof.ca offers retailers a digital marketplace where they can showcase exclusive products, including emerging categories like tinctures and sublinguals that are growing in popularity. By leveraging Poof’s advanced digital marketing tools, dispensaries can increase both their online and in-store traffic, ensuring they stay ahead of consumer trends.
Additionally, Poof.ca helps dispensaries build their brand by connecting them with consumers who are specifically looking for distinctive cannabis products. Through tailored digital advertising and enhanced online discoverability, Poof enables dispensaries to tap into a wider, more engaged audience, setting them up for success in an increasingly crowded market.
While Ontario’s cannabis market faces short-term challenges with declining sales and shifting consumer preferences, there are clear opportunities for retailers who can adapt. By focusing on product differentiation, enhancing the customer experience, and utilizing digital marketing strategies, dispensaries can thrive despite the market pressures.
Partnering with platforms like Poof.ca offers an additional layer of support, enabling retailers to stand out, reach new consumers, and build a loyal customer base. As the cannabis landscape continues to evolve, leveraging these strategies will be crucial for long-term success in Ontario’s dynamic market.
The data presented in this report is sourced from Headset, one of the premier cannabis data platforms that provides real-time insights into sales trends, consumer behavior, and industry performance.