On Every Corner, In Every Neighbourhood?
By Justin Allec
We had other things on our mind back in April 2019. For those of us following the cannabis industry, it was an agonizing time. The Ontario Cannabis Store (OCS) was finally granting retail stores licences and two were promised for northern Ontario. What outrage, then, when we found that both stores were in Sudbury!
Fast-forward two years and one ongoing pandemic later, and Thunder Bay now has its choice of cannabis retailers. By my count, we have nearly twenty stores in the city, both local and franchise, with some retailers operating multiple stores. The rapid expansion has, understandably, made a lot of Thunder Bayers wonder: how many cannabis stores does the city need?
Local retailers can see how much the industry has evolved in such a short time. William Reynolds, a supervisor/budtender at Toke House’s Westfort location, says “The kind of questions we’re getting, the science-based way people are discussing cannabis and all the different products… it makes our staff need to be knowledgeable, to be able to meet their requests.” After establishing a second store in Current River and third in Dryden, Toke House is in a good position in the local cannabis retail market, but it’s difficult to say what that market could look like in a year.
Ontario is exponentially expanding the number of cannabis retailers. Recently the Alcohol and Gaming Commission of Ontario (AGCO) made headlines when they met their 2021 goal of approving one thousand retail licences for Ontario, an astronomical increase from the 100 licences they had granted by summer of 2020. AGCO is following a mandate that dictates trusting licensed cannabis retailers in an open market to keep communities safe from the black market. The strategy seems to be slowly working, as each quarterly report shows more and more of the black market being eroded by the legal one. Established markets, such as Colorado, have proved that a ratio of one store per 10,000 people meets the demand, but that means that the AGCO has only granted a third of the licences that Ontario could eventually support.
While our 13 stores might match the city’s population, everyone knows that Thunder Bay also acts as a hub for the north. We might still see an increase in stores, as it’s not the municipality’s decision, either. When the idea of cannabis retail was first floated in Ontario’s Cannabis Licence Act, municipalities only had one option: in or out. The actual number of licensed retailers would be decided by the AGCO through association with OCS. The Act does not let municipalities decide the number of stores or their locations, save that they are 150 meters from schools.
Even if AGCO grants more licences to Thunder Bay, it doesn’t mean success. Despite research showing that at present, no cannabis retailer has gone out of business and that 90% of all legal cannabis purchased is through retail, in areas of Toronto they’re seeing situations where four stores show up on the same block. Anecdotes of stores making five to ten sales a day are common. While I don’t think Thunder Bay will approach that level of saturation, it does empower the customer. With so much selection for stores—which nonetheless all draw their product from the same source, the OCS—the traditional factors for retail success must then come into play: location, a store’s aesthetic, price, and customer service. The competition is just getting started.