On October 16, 2019, the company HEXO Corp|HEXO put on the market a new product with the aim of attacking the black market.
HEXO launched a value brand product “Original Stash” a product of 28 gr. (1oz) priced at $ 125.70 including sales taxes, equivalent to $ 4.49 a gram all in. A few weeks later, Hexo launched the “Original Stash” in Ontario for $ 140 ($ 5 per gram).
This product has since been one of the best sellers in Quebec and in Ontario. HEXO CEO Sebastien St-Louis said that he had been working on this product for several months and that he had the conditions to be able to supply this product at such a low price.
According to Statistics Canada’s latest National Cannabis Survey (published on August 15, 2019), over 40% of Canadians continue to purchase cannabis from illegal sources. One of the major factors that drive Canadians to purchase cannabis from the black market is price.
Several questions remain with this product. Will the profit margin be high enough for it to be profitable ? The next HEXO financial statements will give us several answers.
All analysts and consumers expect to see competition for the “Original Stash” and that day may have arrived.
Aurora Cannabis | ACB with the “DAILY SPECIAL” announced at a price of $4.67 per gram (15 gr.) has just entered the competition.
We should see more and more products appearing at competitive prices, especially as producer inventories increase from month to month.
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It will all be a matter of profit margin and the ability of producers to support a lower margin to gain market share. Producers who are going to be able to bear a low price should be able to survive in the medium and long term.
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