I've spent five years analyzing cannabis sales data across Canadian licensed producers. The biggest lie in our industry? That market share predicts success.

Most business leaders obsess over market share percentages. They chase the same metrics that work in mature industries, such as consumer goods or automotive. But cannabis operates under entirely different rules.

Market share has utility when used smartly. However, examining market share at the national level can provide misleading trends for the market you're operating in. The same applies to evaluating market share for the incorrect province and applying it automatically to all provinces.

Here's a concrete example that breaks the traditional playbook.

The Regulatory Fragmentation Problem

In Quebec, the top three categories are dried flower, pre-rolls, and extracts. In Ontario, these include dried flowers, pre-rolls, vapes, and edibles.

Someone from Ontario might apply their model to Quebec. However, Quebec currently has no sweet edibles and no vapes available. They will reach wrong conclusions.

This regulatory fragmentation makes traditional market share calculations meaningless. A producer with 15% market share in Ontario might have zero market presence in Quebec due to regulatory differences alone.

When I show licensed producers this reality, they realize they need to adapt their mindset depending on what they're looking at. It's not one-to-one, nor is it extrapolatable.

The cannabis industry has dropped 32% in average retail prices since 2021. This price compression creates the most dramatic pricing environment in any modern business sector. Traditional market share calculations become meaningless when the entire pricing foundation shifts this dramatically.

Market Efficiency Beats Market Share

The most successful cannabis companies focus on what I call "market efficiency" rather than market share. They examine inventory turnover rates, profit per SKU, and distribution density.

Distribution density measures how well products perform in stores that carry them. I see producers who have a 5% market share, but their products sell out in 80% of locations. Compare that to companies with a 12% share, but their inventory sits stagnant for months.

The smart ones track sell-through velocity. They focus on achieving deeper penetration in fewer markets rather than spreading themselves too thin everywhere.

They're also obsessed with compliance cost ratios. They understand precisely how much regulatory burden eats into each product line's profitability.

The data shows me that companies optimizing for these metrics consistently outperform those chasing raw market share numbers.

The Real Numbers Behind Market Share Myths

I had one producer come to me frustrated because they had only a 4% market share in pre-rolls, while their competitor had 11%. However, upon examining the data, the story took a completely different turn.

Company A's pre-rolls were selling through completely within 2-3 weeks in 75% of the stores that carried them. Their competitor had massive distribution, but inventory was sitting for 30-60 days in most locations.

Company A was generating $2.3 million in revenue with way lower carrying costs and virtually no product returns. The 11% market share competitor was generating $4.8 million in revenue but was incurring massive inventory holding costs, frequent markdowns, and was losing money on that product line after accounting for compliance and storage costs.

Company A's focused approach enabled them to reinvest profits into R&D and launch two new, successful product lines that year. The competitor was so cash-strapped from their inefficient distribution that they couldn't innovate.

By year two, Company A had become more profitable overall, despite maintaining its "low" market share. Market share in cannabis can be a vanity metric that masks terrible unit economics.

This pattern repeats across the industry. Only 24.4% of cannabis operators self-reported as profitable in 2023, down from 42% in 2022. Even companies gaining market share are hemorrhaging money.

The Three Critical Mistakes

Cannabis companies are running fast instead of thinking like marathoners. There's a lot of uncertainty, and many producers get seduced by incomplete data that makes them think they need to sprint for market dominance.

I identify three critical mistakes that are repeatedly present in the data.

First, they over-expand geographically before they've proven their unit economics work. I'll see a producer with decent performance in one province immediately rush to get into four more provinces because they think that's how you "win" market share.

However, each province has distinct regulatory costs, consumer preferences, and retail dynamics. They end up with mediocre performance everywhere instead of dominating where they started.

Second, they chase SKU proliferation, thinking more products equal more market share. I've watched companies go from 5 successful products to 25 mediocre ones, diluting their focus and confusing retailers.

Their data is spread so thin across product lines that they can no longer determine which ones are profitable.

The third mistake is the big one. They optimize for vanity metrics that look good in investor presentations rather than cash flow.

They'll celebrate expanding into 200 more retail locations, while ignoring that their sell-through rates have dropped 40%. The data shows me they're essentially paying for shelf space that generates negative returns.

Because their "market share" number went up, they think they're winning. Meanwhile, their cash runway is burning faster than their actual sales growth can sustain.

The Performance Theatre Problem

The cannabis industry has created a performance theatre where companies are applauded for metrics that are actively destroying their business.

Some data providers extrapolate their data excessively or fail to inform their clients about the gaps in their data. This leads to producers being misled and ultimately failing.

Companies celebrate market share growth while their unit economics deteriorate. They measure success by metrics that investors understand from other industries, rather than metrics that predict the survival of cannabis businesses.

A healthy inventory turnover rate in cannabis is 4-6 times per year. Smart operators focus on sell-through velocity rather than shelf placement. However, many companies overlook this fundamental metric while pursuing market share percentages.

What Matters

At Weed Crawler, we help producers identify opportunities beyond simple market share calculations. We provide transparent inventory and sales data that enable them to make informed decisions and identify real market opportunities.

The metrics that predict success in cannabis are different. Inventory turnover velocity. Profit per SKU. Distribution density. Compliance cost ratios. Cash flow sustainability.

These metrics reflect the business's health and sustainability, rather than vanity numbers that appear promising in presentations.

The cannabis sector's youth means the market is still defining itself. Consumer preferences and product categories continue to evolve. Current market share positions may be temporary rather than indicative of long-term competitive advantage.

The companies that survive and thrive will be those that optimize for both profitability and operational efficiency. They'll focus on deeper penetration in fewer markets rather than spreading themselves thin everywhere.

They'll understand that in a fragmented, heavily regulated industry with dramatic price compression, market share means less than market efficiency.

The data doesn't lie. The companies chasing market share are often the ones burning the most cash. Companies that optimize for the right metrics are building sustainable, profitable businesses.

Stop chasing market share. Start chasing market efficiency. We can help.