The retail footprint for cannabis continues to grow. Last week, five stores in Banff, Alberta were granted development permits, although the companies set to operate those locations still are awaiting approval from the province. One of those companies is Westleaf Inc. (TSX-V:WL) (OTCQB:WSLFF), which is looking to be one of the biggest retailers in Western Canada with its record-store like brand, Prairie Records. The Company is going to setup shop at a former nightclub in the tourist town.
Westleaf’s location sparked some speculation that The Company might be looking further ahead, given that the location will be 5,000 square feet, which is a bit big for a pot shop.
– Darren Enns, Development Services Manager, Town of Banff
While currently a lot of that space might appear to be excessive, from what we’ve seen from Prairie Records is that its stores offer consumers a very roomy, spacious shopping experience. However, if we do see the opportunity for lounges in the future, then it does put itself in a good position to adapt if necessary, whereas smaller pot shops would be less likely to do so.
Nonetheless, it’s a good move for Westleaf as it continues to expand its presence across the province.
Why Banff could be a lucrative spot for cannabis
While Banff is a very small town at around just 8,000 people, it’s a very hot tourist destination, with more than four million visitors last year. And many of those visitors are coming for leisure activities like skiing and snowboarding, which could make Banff a very popular spot for cannabis consumption.
By getting a fairly large location in a small town, it could prove to be a big move for Westleaf. After all, with limited space, there isn’t going to be much room for other competitors, and that’s going to create significant first-mover advantages.
Some of the other locations to be be home to pot shops include a former dollar store, basement locations in a cinema building and the Kirby Lane Mall, as well as a former Internet cafe.
Why it could take time for the move to pay off
While this is great news for Westleaf today, there are still some big obstacles for it and other pot shops. The first is that supply issues continue to plague the industry and they’ve kept stores from opening and realizing their full potential. Without products to sell, having retail locations isn’t going to be advantageous until those problems get resolved, which could take years.
And as noted, having a big location might not be optimal at a time when lounges are not yet permitted. Space in a small tourist town like Banff isn’t going to come cheap and so ensuring that enough revenue is being generated to cover those costly expenses is not going to be easy. While the move for Westleaf could prove to be a big win for The Company, it’ll take some time for that to happen.
Disclosure: Directors of Mugglehead own shares in Westleaf and Westleaf is an advertiser.
