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Pricing Compression: What role do the provincial boards play in pricing compression in Canada

pricing compression Apr 11, 2022

Any great marketer will tell you to build a product for the customer. Does the current format of product calls and requirements for provincial board listings support this? The answer I came to was… not really.

In many provinces, the boards have goals for their product assortment and ultimately act as gatekeepers to what will be available at retail stores across Canada. Many have specific requirements as to how the product needs to show up. 

This has led to a cycle of LPs creating products to fulfill board wants and needs. This is not entirely blind and means the boards have done work to consider what the customer wants.

But we will not be the first to say there could be more transparency around how we got to these conclusions or specifics around products. The simple product roadmap:

Board asks for Products (often noting features and price)->
LP Develops Product-> Presents it to Board ->
Board Approves->
Product Appears on Retailer Order Form 

If the boards are continuously noting price as part of the features and benefits, the LPs must constantly drive the price down or develop a product that fits within the pricing protocols. 

When we pulled the OCS Assortment Needs Bulletin from Fall 2022 we see the effects it will have on the pricing landscape at retail. Requirements for lower-priced products in flower, pre-rolls, and vapes will directly impact the price mix at retail. The tendency to negotiate on MSRPs and price before volume commitments make it incredibly difficult for an LP to plan its business. 



We need more transparency around what data the provincial boards like the OCS use to define what the customer is looking for?

The provincial boards can end up We will see this complex ‘chicken or the egg’ problem continuously roll out in cannabis. Do our customers require lower price products? Or are we leaning too heavily on the price being the deciding factor? What can we do:


  1. Consider how the product is presented - when does it make sense not to display the lowest priced product but still stock it for the customer that wants or needs it (think about Mcdonald's menus)
  2. Advocate the boards about what your customers are looking for


  1. Request the data that informs the product calls 
  2. Share your market research with boards to support opening the door to deeper price options 

As an Industry

Keep furthering the discussion around the need for an equal distribution model like liquor where sales/branding/marketing is allowed to speak for themselves.

It could be that the provincial boards are acting directly on requests from customers. Without transparency, we have concerns we are creating an industry that is reacting instead of leading. 

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