Discounts lead to market-share shift in Florida
Florida, one of the most valuable cannabis markets in the world, is beginning to see competition among the top players – and the state’s patients are reaping the benefits of the undercutting.
Despite the attractive structure of Florida’s limited licensed medical program, described recently in MJBizFinance, few operators have been able to challenge Trulieve’s dominance.
The company has held a greater than 50% average market share since the program began.
However, other top multistate operators are now turning their focus to the state. And according to MJResearchCo’s weekly price checks, the MSOs are undercutting their peers on price while expanding product selection for patients in order to gain market share.
This resulted in a 20% decline in market share for Trulieve and a 29% gain for Curaleaf, Parallel/Surterra Wellness, Verano and Ayr Wellness, collectively.
Liberty Health Sciences, which was recently acquired by Ayr Wellness, gained market share by attracting customers with “flash sales,” and the company plans to keep these patients with consistent quantity and quality across a consumer-friendly platform.
Even without the discounts, many of Ayr’s option are more affordable than those of its peers. Ayr Wellness nearly doubled its market share to 9% this year after averaging approximately 5% in 2020.
Similarly, Curaleaf is repositioning its products through price and selection, while using discounting to attract consumers.
The company has run a storewide, 40%-off sale since early June, among other incentives. This has shifted Curaleaf’s product base from near the average price of peers to the affordable end of the price spectrum.
Additionally, Curaleaf in 2021 established one of the widest product offerings of vaporizers and concentrates in the market. The combined pricing and selection strategy allowed the company to capture a 13% market share average in June versus 9% in the first quarter of 2021 and 11.5% in Q2.
While the sustainability of the discount-driven sales for these companies is not yet proven, it highlights the early signs of price-based competition in Florida. This has resulted in the most meaningful change in market-share distribution by operators since the program’s beginning.
The winners of this strategy are the Florida patients, who benefit from lower prices on a growing number of products.
Those at risk from this strategy are the operators in the Florida market, especially leaders such as Trulieve, which will be forced to sacrifice margin to match the lower, discounted prices of its competitors – unless the company can find another compelling value proposition for its customers.