Sorry to kill your vibe but Dig Insights told you so
While Canadian pot smokers are celebrating 420 in 2019, Canada’s legal retailers of pot are probably not. According to data from Statistics Canada, just 21% ($307 million) of the weed that has been sold in the last three months of 2018 post-legalization was from legal sources, versus 79% ($1.17 billion) from the black market. Amid all the excitement prior to legalization who could have predicted such poor legal sales? Well, Dig Insights could.
This time last year, Dig Insights surveyed 1,187 Canadian pot consumers for its annual Cannabis Culture Report. We used our powerful Virtual Markets tool to simulate the extent to which they would switch to legal sources to buy cannabis based on price per gram. We found that if legal and illegal prices are the same, 61% would go legal. This is consistent with a widely cited report by Deloitte which claimed that “Canadians who are already consuming cannabis expect to buy nearly two-thirds of their products from legal retailers once they can”. But with our Virtual Markets tool we were able to go much further than Deloitte. We could simulate the impact of different price levels. When we input the significant current price difference between legal sources ($10 per gram) and illegal ($6.40) we forecast that 75% of sales would remain illegal. We realize that legal channels have other problems beyond price, availability being a significant one. However, our Virtual Markets tool shows that if legal sources were able to come closer to matching illegal (say, $8.00 per gram) they could capture significantly higher share (40%).
So, we don’t mean to kill everyone’s vibe this 420 but next time you see overenthusiastic predictions remember that context is king. People act according to their circumstances and in this case a key factor in those circumstances is price. If you are trying to predict consumer behaviour, get in touch with us. We have the tools to take context into account to ensure predictions are correct.
Check out Dig’s Cannabis Market Simulator here.