Inflation trimming back Cannabis spending, say retailers
'We have folks who are altering their buying habits and they're getting better quality products for less'
Inflationary pressures are leading cannabis consumers to prune back their spending, say Calgary pot retailers.
Even with the price of cannabis largely escaping inflation plaguing other goods, more expensive life necessities such as groceries, gasoline and utilities are leading some to seek savings on bud and edibles, they say.
“Spending’s definitely down — maybe five, eight, 10 per cent decrease — and people are just looking for cheaper things, more bang for your buck,” said Ryan Roch, owner of Lake City Cannabis, which has two Calgary-area stores.
“Maybe it’s only two pre-rolls at a time, and waiting for paydays.”
Even in the lead-up to Christmas, “we are definitely seeing some pared-down spending.”
But in recent weeks, more of that spending has been directed at purchasing edibles, said Roch.
“In November, edible sales were shooting through the roof — I don’t know if that’s seasonal,” he said.
“More people are warming up to edibles because they don’t stink . . . I think it’s a maturing of the market.”
Improving quality attracting consumers
People with less money to spend are enjoying another way the cannabis market is maturing, said Karen Barry, owner of Beltline Cannabis, at 806 12th Ave. S.W.
The improving quality of mid-priced cannabis is offering those consumers more attractive, lower-cost options, she said.
“We have folks who are altering their buying habits and they’re getting better quality products for less,” said Barry.
“The mainstream (producers) have improved the quality of their products, so people can maybe get seven grams over 3-1/2 grams (without paying considerably more).”
Customers, she said, are increasingly coming to her store with a budget, “and as service providers it’s up to us to give them options, but those options are of better quality.”
Another retail worker said sales at his store are down a little more than 10 per cent recently, possibly due to the inflationary squeeze.
A recent survey of U.S. legal cannabis buyers found similar trends — while consumption hasn’t decreased, the desire for lower prices while maintaining potency has grown.
The poll also showed less brand loyalty as consumers put a greater priority on lower prices.
‘A plateau in pricing’
With such fierce competition among so many producers and retailers, Beltline Cannabis’ Barry said unlike many other products this year, cannabis prices have fallen more often than they’ve risen.
But she said that trend has likely reached its end.
“We’ve seen a plateau in pricing, I don’t think we’ll see any more compression on price,” she said.
Others who work in Calgary cannabis retail say they’ve bumped up their prices slightly in recent months, but that wholesalers are under too much pressure to hike theirs.
Since recreational cannabis legalization four years ago, regulated marijuana prices have generally fallen, partly to compete with the cheaper black market but also due to oversupply and competition within the legal market.
The country’s largest non-franchise cannabis retailer said they’ve grown their sales amid record inflation by holding the line on prices that appeal to cost-conscious consumers.
“Like all sectors of the economy, inflationary pressures are impacting cannabis businesses, many of whom are already stretched due to a hyper competitive market,” said Raj Grover, president of High Tide Inc., which operates Canna Cabana stores.
“However, those of us who have a diversified retail ecosystem can weather the storm while keeping prices low for the consumer.”
They’ve done that through a consumer loyalty program and by operating e-commerce platforms selling higher-margin cannabis accessories and hemp-derived CBD products in the U.S. and to European customers, which subsidize their brick-and-mortar operations, said Grover.
In Alberta, 964 cannabis stores have been approved by provincial regulator Alberta Gaming, Liquor and Cannabis, with 202 of those within Calgary’s city limits.
