MJBizMag July 2021 - 74

BestPracticesInRetail | Solomon Israel
on to the market approach to see if
there's room to increase the price.
That process involves finding prices
for the same product from multiple
competitors, then averaging that price
across the group to determine what
consumers are willing to pay.
Sabet said he has encountered
marijuana retailers who can afford
to have lower markups and slimmer
profit margins, but those stores tend
to be high-volume businesses. " The
store was always packed, and the
average ticket price was fairly high, "
he said.
Compensating for Limited Margins
Calyx + Trichomes, an independent
Canadian retailer with one location
in Kingston, Ontario, is an example of
how a high-volume strategy can work in
a limited-margin environment.
Like all regulated cannabis stores
in Ontario, Calyx + Trichomes can
source its products only from a single
wholesaler, the government-operated
Ontario Cannabis Store (OCS). The
OCS is also the sole online seller of
legal recreational marijuana in Ontario,
meaning it competes directly against
the stores it supplies. (However, most
legal cannabis sales still take place at
private-sector stores.)
The OCS wholesale operation sells
products to private-sector stores at a
25% markdown from what its online
retail division sells to the public, before
taxes. That means Ontario retail stores
such as Calyx + Trichomes can't mark
up prices very far before getting beaten
by OCS pricing.
" It doesn't leave us a lot of room
to have promotions or sales, " Calyx +
Trichomes founder and CEO Jennawae
McLean explained. " We can really only
have sales if there's something we
absolutely need to get rid of. "
Calyx + Trichomes relies on a heavy
sales volume to make up for its limited
markups.
" We're just a very high-volume store;
we sell about four times more than the
74 MJBizMagazine | July 2021
The government-operated Ontario Cannabis Store sells to the public online and serves as the sole
wholesaler to private-sector stores, contributing to a competitive price environment. Courtesy Photo
Jennawae
McLean
(competitors) by usually around 10%. "
McLean believes it's easy for
cannabis consumers to comparison
shop online. When prices change, she
said, customers notice quickly.
Calyx + Trichomes offers customers
average store in Ontario, " she said.
McLean's store also includes taxes in
its prices.
" Our price, after tax, beats what
other stores are pricing after tax. The
price out the door is always beating
a price-matching guarantee. For one
week, a rounding error in the retailer's
internal pricing spreadsheet resulted
in all the store's prices being 20 cents
(25 Canadian cents) lower than they
should have been.
" When we caught the error that we
made, we bumped it back up to the
original price that it was supposed to
be, " McLean said. " I swear, I fielded six
or seven different emails and phone
calls (from) people complaining about

MJBizMag July 2021

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