It’s official. Cannabis retail stores are opened for business in Ontario. April 1st marked the first day for the legal sell and purchase of recreational cannabis from a storefront retail location in this province.
The Ontario government decided to award licenses by lottery instead of granting license to cannabis retailers that met the requirements necessary to open retail locations. The status of the applications was announced and the first 25 new licenses were issued. Out of the 25 winners, ten cannabis retailers were given the deadline of April 1st to open for business or they would be hit with fines.
Ontario New Cannabis Retail Locations
The winners of the lottery are listed on AGCO website. While most of the approved or authorized Ontario cannabis retail stores are concentrated in the east near Ottawa and in the west near London, there is however one retailer in North Ontario that is authorized by the Alcohol and Gaming Commission of Ontario “AGCO” and that is Canna Cabana Sudbury, which is located in Sudbury, ON. They are the first retailer authorized to sell cannabis in the north region of Ontario with only one other location in Sudbury pending for approval.
The first location to open on April 1st was the Hunny Pot in Toronto. For storeowners like the Hunny Pot, the launch date was the biggest hurdle to get over as he and many other applicants were not experienced at operating this type of business and were not sure how much inventory they would need. To add to this, although Canada legalized cannabis six-month prior, the supply shortage still remains a key issue.
Saskatchewan Licensed Cannabis Wholesalers
With the law changes in October 2018 legalizing the sell of cannabis, there was not much discussion about where the supply would come from.
One of the reasons why the licenses are restricted is due to inventory. The current supply being produced in Canada is not enough to satisfy demand. Ontario is now open for business; however, the neighboring retailers in provinces like Alberta, Saskatchewan and others are already open for business and supply still remains an issue.
The province of Saskatchewan is the only province that may have the answer to supply issues, as they allow private wholesalers. The Saskatchewan Liquor and Gaming Authority (SLGA) are the governing body that issues license to private wholesalers. Those who are licensed in this province to wholesale, like Running Leaf, have the ability to regulate their own distribution.
Running Leaf and other Saskatchewan wholesalers are independent and not tied to the producer, retailer or the government. This means if the wholesaler purchases from producers in nearby provinces they have the license to sell the product to licensed retailers in Saskatchewan. Having enough supply will allow retailers in Saskatchewan to fulfill and grow demand.
Alberta Licensed Cannabis Producers
In the Niagara region, there is a marijuana producer named CannTrust. It was started by a group of pharmacists that originally was 100% focused on medical marijuana and growing in a greenhouse. Beyond the extractions for oils and capsules, they are cultivating opportunities to partner globally for everything from medical use, recreational use and even veterinarian use for animals that may be suffering from various illnesses. The opportunity is huge right now in the cannabis industry for retailers, producers, distributors and so on.
CannTrust and 22 others like them have a contract with Alberta Gaming Liquor and Cannabis (AGLC) and that relationship has helped close the gap with inventory. It also has prompted AGLC to issue 26 new retail licenses with more promised as they secure additional product.
In fact, according to JLL Research, the projected demand for Canadian marijuana-growing facilities by 2020 is more than 4 million sf in Alberta and almost 3 million sf in Ontario. These figures exclude distribution and logistic centers. This burgeoning industry will certainly continue to spillover in retail and office spaces in the short- and long-term. According to Gaurav Mathur, research manager at JLL, “This will be even bigger than the end of prohibition of alcohol, because we have so many more people, acceptance and technology,”
Now that Ontario have joined the neighboring provinces in selling cannabis for recreational purposes, supply looks like the only thing that can slow this engine as it is growing up quickly. The birth of this industry is causing many to refer to it as the new gold rush. The demand for retail space, warehouse and office will continue to increase as the industry matures.
To learn more about the retail opportunities in Ontario, Alberta and Saskatchewan, contact ReDev to get started.