To undercut the black market, cannabis company Hexo Corp.(TSX: HEXO) is launching a new product that will cost consumers one dollar less per gram than the average illegal pot dispensary.
The product, called "Original Stash," will be on sale in Quebec cannabis stores starting this Thursday (October 17) for $125.70, or $4.49 per gram, including taxes, the company said in a news release.
That's cheaper than the average cost of a gram of cannabis sold on the black market, which averages $5.59 per gram. The typical price for legal cannabis in Canada is $10.23 a gram, according to the latest data from Statistics Canada.
Hexo says it is targeting the 50% of Canadians who, one year after the legalization of recreational cannabis, are still buying weed from the illicit market. Hexo can offer a one-ounce, or 28-gram, product at such a low price because it has cut back on packaging and has increased its production scale. Lower hydroelectric costs in Quebec have also helped to reduce the price, said the company.
Hexo worked with Quebec's provincial cannabis corporation on this pricing strategy. The company is also working with other provinces, such as Ontario and Alberta, to do a similar low-cost product. Canada legalized recreational cannabis on October 17 last year, making it the first G7 country and the second country in the world to take that step.
