OCS to introduce craft designation and minimum sales quotas

Published Jan 17, 2021 12:00 p.m. ET
iStock / Andrii Yalanskyi

If you are a patron of the OCS, you may find that some of your strains are no longer available after the provincial cannabis retailer introduces a sales quota and craft designation to boost Canada's smaller licensed producers. This new strategy, outlined in a webinar this week, will see products sold through the OCS required to consistently meet weekly cannabis sales targets, or they could be delisted from the dispensary shelves.

Is this a good strategy?

Over the past year, marijuana companies have had issues meeting their projected sales targets. This move will likely be the reason for further write-downs, exasperating the pre-existing inventory problems that have accelerated over the last year. Larger LP's like Aurora and Canopy Growth have reported sizeable inventory write-downs on several unsaleable products from the first two years of legal cannabis sales.

Moving forward

Daffyd Roderick, senior director of communications at OCS, stated in an email that to aid in the maturing of the OCS, a core assortment of products will be available. This should help to drive the stability of supply for marijuana consumers.

Products will be red-flagged for delisting if the cannabis sales are reported as falling below 0.5 units per week. If it is found to be that a product is consistently out of stock, even if it has been on the market for six months or more and remains in high demand, it will be subjected to the same scrutiny.

The chief executive officer at Canopy Growth, David Klein, also believes that culling products that are not selling will be the ultimate way to keep the marijuana industry healthy. He has worked with numerous large cannabis retailers in the U.S., where the practice of delisting happens often. He spoke in a recent interview on the subject, saying that it is up to the suppliers to create the partnership needed with consumers and to design cannabis products that they can reliably keep on store shelves.

What else to expect

Products made by small-batch weed producers will be helped by OCS, with the creation of a new craft designation. This idea will resemble how craft beer is being sold in liquor stores. Cannabis firms that produce up to 10,000 kilos of weed a year and use artisan handcrafted processing methods would be eligible for craft designation, according to OCS spokespeople.

It is hoped, as expressed by Lisa Campbell, CEO of Mercari Agency Ltd, a marketing and sales firm, that this move by OCS will entice more consumers to spend money in the legal cannabis market. Lisa is expecting that there will be an enormous power shift, which is likely to lead to greater cannabis product diversity. There will also be a noted reduction in the marijuana market share promised to shareholders in 2020 by some of the big boys and girls in the cannabis industry today.

Final thoughts

The Ontario Cannabis Store is the only legal online retailer of recreational weed in Ontario. Perhaps this move will be the catapult toward supplying better products for the Ontario cannabis consumer. Since 2018, OCS has struggled to provide the best available weed in a consistent manner. Hopefully, this move will give the average Ontarian a legal superior cannabis product that will be available to them online.

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