In an effort to help licensed pot shops compete with illegal sellers, the Ontario Cannabis Store (OCS) will be slashing its price margins.
The OCS announced the changes on Thursday following a detailed review of its pricing structure. As of September, the OCS will transition to a fixed mark-up on each product category - such as dried flower, pre-rolls, and beverages - and reduce its margins. It is estimated the move will contribute approximately $35 million into the marketplace this fiscal year. By the 2024 fiscal, that marketplace contribution will grow to $60 million and compound annually in the years after as the legal cannabis market grows.
“As the exclusive wholesale distributor for legal recreational cannabis in Ontario, OCS is doing its part to support a vibrant cannabis marketplace that helps to displace illegal operators, while promoting social responsibility in connection with cannabis,” OCS President David Lobo said in a statement. “The OCS is pleased to use its growth in scale to establish a more balanced share of product margins to help enable a vibrant cannabis marketplace.”
The mark-ups will be applied as a percentage above the landed cost for each product and will be posted publicly. A technical guide and pricing calculator, meant to provide producers with greater certainty for business planning, will also be made public.
All legally operated cannabis stores in Ontario are required to get their inventory from the OCS.
