HEXO Launches Value Brand in Crucial Canadian Market

HEXO (NYSE: HEXO) has substantially widened the potential customer base for its Original Stash budget line of dried cannabis flower. The company announced that on Black Friday it started selling Original Stash in Ontario, a crucial market for any company selling to Canadian consumers.

HEXO's launch consists of OS .220, an Original Stash Offering that is a blend of two Indica strains. It will be sold in a 1-ounce package that retails for $140 Canadian ($105), or CA$5 ($3.76) per gram. In the press release heralding the product's availability, HEXO said OS .220 will be available at all licensed retailers who choose to stock it, and online through the Ontario Cannabis Store. Gloved hand holding marijuana leaf in front of Canadian flag.

Image source: Getty Images.

According to recent data from Statistics Canada, the average price per gram for dried flower in Canada stood at CA$9.99 ($7.52) in licensed retail outlets.

Ontario is, by far, the most populous of the country's 10 provinces. It holds over 38% of Canada's total population and is home not only to its most populous city, Toronto, but also the national capital of Ottawa. HEXO's headquarters are located very close to the Ontario border, in the Quebec municipality of Gatineau.

Original Stash is a fairly recent product for HEXO; it rolled it out in other Canadian markets in October.

It's a direct attempt at not only capturing budget-conscious marijuana consumers, but also combating the black market -- which is still a serious threat to legitimate cannabis sales. According to a recent estimate from Statistics Canada quoted by HEXO, more than 40% of the country's cannabis buyers continue to obtain product from non-legal sellers.

"Original Stash is providing consumers with 'quality weed at legit prices,'" wrote the company in its press release. "Consistent, reliable, and controlled products like this can play a major role in achieving the goals we set out nationally by legalizing cannabis just over a year ago: eliminating the illicit market and protecting public health and safety."

Investors seemed to be pleased with the introduction of Original Stash to the Ontario market. HEXO's stock price rose by almost 3% on Friday, the day the move was announced. But with the recent bearishness around marijuana stocks lately, the shares have lost value -- across the past week they dipped by 15% despite the Friday recovery, and so far this year they are down by 37%. 

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool recommends HEXO. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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