The legal cannabis market in Canada grew 107% in 2019, but illegal sellers still dominate with 70% of sales, according to new data from StatsCanada.
Total cannabis sales also declined 7% from the previous year where illegal sellers held 86% of the market.
Cannabis stocks have fallen more than 60% over the past year as Canadian producers have struggled to compete with the established supply chains and lower prices of illegal sellers. In the fourth quarter of 2019, legally sourced cannabis averaged $7.84 per gram while illegally sourced cannabis cost $4.36 per gram, according to StatsCanada.
Companies have also blamed lower than expected revenues on the slower than expected rollout of retail stores.
Canopy's value brand is called "Twd.," and the company is launching a one-ounce product in April called "Twd. 28" (there are 28 grams in an ounce) that will average approximately $4.00 per gram with a THC count of 13-25%.
"All of this is designed to draw consumers from the illicit market and into legal channels," said Adam Greenblatt, Canopy's business development lead. "It's there to provide more variety and more of a value offering to ideally mature the market. Low-cost cannabis attracts bulk purchasers, people on the illicit side who would buy their cannabis by the ounce. People who buy cannabis by the ounce have been toughest to convert."
Aurora's value brand called "Daily Special" will be sold in three sizes with 15 grams being the largest and it will have a THC count of 15-21%. Tilray's "The Batch" will be sold in three sizes with 7 grams being the largest and a THC count of 10-15.9%.
"The Batch is a new no-frills cannabis brand focused on delivering quality cannabis flower and pre-rolls at competitive prices," said Tilray's Chief Marketing Officer Adine Fabiani-Carter. "We expect our new product format and offerings to increase revenue and profitability over the long term."
Profitability continues to be an issue for Canadian cannabis producers. Earlier in February, Aurora announced the resignation of its CEO, a write-down of $744 million and the layoff of 10% of its workforce as part of its effort to become profitable. Tilray also cut 10% of its workforce.
On Monday, Tilray will report fourth quarter earnings after the bell.