CanadaRegulationsRetail‘It’s still too slow’: Ontario doubles monthly weed retail approvals to 40

Chipping away at a backlog of applications creates challenges for operators hoping to expand
Nick Laba Nick LabaSeptember 29, 20209 min

Ontario is doubling its approvals of new cannabis stores to 10 per week, a rate that some in the industry say still isn’t fast enough to deliver on the provincial government’s promise of an open market.

Canada’s most populous province has long taken the blame from publicly traded producers with weak sales for its lagging store count. With its population of 14.6 million, Ontario only has 173 authorized stores. That’s compared to 523 cannabis stores serving Alberta’s population of 4.4 million, and 258 stores for British Columbia’s 5.1 million residents.

Ontario set a new bar in July with record provincial weed sales of  $60.3 million — a 24 per cent increase from $48.9 million in June, according to Statistics Canada.

Read more: Ontario leads charge as Canadian cannabis sales surge 15% in July

Industry analysts have pegged a target ratio of one store for every 10,000 people, which means Ontario still has significant room to grow before hitting the golden figure of around 1,460 retail locations. At the new rate, the Heartland Province would have around 650 stores in a year from now.

Officially scrapping its much-criticized licence lottery system last December, Premier Doug Ford made headlines this January by saying Ontario would lead the nation in terms of store count. He never specified a target date, however.

At the beginning of September, the provincial retail regulator promised to double its rate of five approvals per week. According to a statement Tuesday, the Alcohol and Gaming Commission of Ontario has made good on its pledge, by increasing the number of new licences to 40 per month as of September 28.

Read more: Ontario promises to double pot shop approvals

But to an industry itching to capitalize on the full potential of its massive consumer base, the still-sluggish pace of backlogged approvals creates uncertainties for operators wanting to make executable expansion plans.

“It’s still too slow,” says Calyx + Trichomes Cannabis co-owner Jennawae McLean. “As an owner, I am holding back opening more locations because I quite frankly do not want to go through another year or two holding a lease with that type of uncertainty.”

Read more: Behold, a weed store that looks like it actually sells weed

digital product displays at Calyx + Trichomes
‘At this point, if I were to sign a lease today I was told it wouldn’t be until April because of the backlog,’ says Jennawae McLean, co-owner of Kingston, Ont.’s Calyx + Trichomes. ‘Maybe that has been shortened now, but it’s still brutal for expansion planning.’

She can’t afford to, McLean explains: Her business, while doing well now, is still digging itself out of the hole left by Ontario’s first two limited lotteries.

“We were promised an open market, so who is this hold up serving?” she asks. “Possibly the [Ontario Cannabis Store] because they need more time to expand their infrastructure? Ten a week is still trickling. They need to turn on the faucet and let the market decide who lasts and who doesn’t — who is worthy to sell cannabis and who isn’t.”

As it stands, the prospect of a liberal retail weed economy is at odds with the reality of a potent first-mover advantage held by current licencees.

But even if the province wanted to expand to 1,000 stores overnight, it’s likely the OCS — which wholesales to all the province’s private stores — doesn’t yet have the logistical capacity.

“I think they are trying to talk before they run,” McLean says, noting the OCS just changed warehouses and expanded their wholesale system. “They are still getting their footwork in place with the stores they have now.” Earlier this month, the OCS told Guelph Today that it’s relocating its distribution centre from Oakville to Guelph, Ont.

On Monday, the OCS announced hiring Canadian retail heavyweight Thomas Haig as its interim president and CEO.

Haig is president and COO of Giant Tiger, a discount retail chain with over 200 locations across Canada. Among other executive retail roles, he served as CEO and executive vice president of the Hudson’s Bay Company from 1997 to 2006. In a statement, the OCS said previous head boss Cal Bricker was moving on from his role in the organization.

“In the coming months, the OCS will rapidly onboard hundreds of additional wholesale retail store clients, while maintaining its position as the largest e-commerce legal recreational cannabis platform in Canada through OCS.ca,” reads the statement. “Mr. Haig’s significant retail experience at the helm of iconic Canadian brands HBC — Stores and Specialty, Zellers, Giant Tiger and Danier as well as the M.H. Alaysha Group in Kuwait — is expected to ensure the OCS is best positioned to further scale up to meet the needs of cannabis consumers.”

Top image via Calyx + Trichomes Cannabis in Kingston, Ont.

 

nick@mugglehead.com

@nick_laba

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