The retail cannabis market has not been as lucrative as most thought upon entering with the now infamous store saturation that continues to cluster and ”plague” cities like Toronto, Ottawa and London just to name a few across the province. Though the media continues to discuss the situation, its become increasingly apparent that the question should not be “why are there so many Cannabis Retail Stores” but rather, “why are municipalities still opting out of legal cannabis sales?”
The retail business is a daunting one to say the least, regardless of industry. Retail cannabis in particular has been both lucrative and risky in its early years of privatization and retail operators are beginning to understand that being “awarded” an ROL (Retail Operator License) was not the Golden Ticket once made out to be.
More and more stores have become unprofitable in the current market conditions with staff turn over at an alarming rate due to the underwhelming amount of customers entering a particular store on any given day. It’s not to say that every store is failing, many stores are doing well and succeeding across the province. Unfortunately for city centres and populus towns, the overwhelming majority of retailers are finding it difficult to compete in a saturated market with limited to no advertising opportunities. Retailers are going as far as breaking the standards set out in the Cannabis Act, running the risk of action being taken against them by the governing bodies.
Even so, has anything actually happened to Retailers breaking the Standards set out in the Cannabis Act? Unlike the entertainment and nightlife scene, there have not been reports of Cannabis stores being fined or suspended for breaking the standards so why wouldn’t more stores take a chance if the risk is so slow? In a case such as this, it’s easy to understand the frustration of independent retailers attempting to build a compliant business while competitive corporations welcome the fines and ultimately the risks associated with pushing the boundaries so long as it means more of the market share.
The Standards set out are already out of date, with purchasing limits and advertising restrictions being the first up for review, in my humble opinion. If the legal market is to flourish and compete with illegal cannabis sales, citizens need to support store openings while our political counter parts should be encouraging all municipalities to opt-in to Legal Cannabis Retail and properly distribute the network of stores.
“Look, another Cannabis Store” – a phrase I continue to hear around the city, a phrase that I do resonate with – as a business owner, trying to compete in the market – For the general public, I can’t quite understand what was expected to come of a new, emerging private industry that became a reality on the cusp of a pandemic.
Timing is everything.
Covid made it “easier” for stores to pop up around the city and though there are clustered retailers in Toronto and surrounding areas today, these are new businesses attempting to make a splash in a struggling economy. Every operator is taking a risk by spending money, renovating and upgrading these properties to bring value back to commercial spaces that may have gone out of business or shut down entirely due to the pandemic. Without the cannabis boom, what would the commercial real estate market in Ontario look like today? Who would be occupying these store fronts?
Simply put, Cannabis Retail is aiding in Ontario’s grim economic reality. There has not been another industry willing to take such a large risk, in the masses, since the start of the pandemic.
The liberal government has now gone as far to say that they will “limit the clustering of stores in neighbourhoods” but here we are in the middle of 2022 and stores are clustered. More stores are opening and no bylaw or change has been made to the cannabis act. So even if something were to be done on the government front of limiting store openings – it would not be an effective measure to curb the issues currently present in the market today; A market that will be forced to correct itself.
Furthermore, I believe the municipalities opting out of Legal Cannabis Retail are the parties at fault for the clustering of stores in Ontario. Mississauga, Oakville, Vaughn, Markham and Newmarket account for roughly 1.8 million people yet they do not contain a single legal cannabis retailer within their regions.
Instead, by opting out, these cities have caused more stress on Toronto and neighbouring cities along the regional borders as stores rush to open where possible in order to serve these communities that do not have access to legal cannabis.
Real questions need to be raised with these municipalities as to why they continue to opt out of a highly regulated, government distributed business that provides jobs, pays taxes and focuses on improving commercial real estate with up-to-date security systems and protocols in place to ensure safety.
One argument constantly raised is that; “Allowing these municipalities to opt in to cannabis would result in new clustering of stores in new areas rendering the same problem as we currently have”. The answer though is quite simple;
The damage has already been done to cannabis retail stores.
If the government is to take anything from the privatization of cannabis retail, it’s that measures need to be taken to ensure a competitive market has room to breathe. Regulations should have been set into place to allow for municipalities to be prepared to opt in and benefit from the inclusion of these stores from the beginning.
Thankfully, there is space to grow.
The focus moving through this year and into next should be on how to properly introduce new cannabis retail stores into municipalities that do not currently contain any and ensure that clustering does not continue to happen.
The proper distribution of legal cannabis stores is the key to curbing the illegal sale of cannabis in Ontario.