Opening a legal cannabis storefront looks different today than it did a year ago

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The velvet rope was in place, red carpet rolled out and balloons were even blowing in the wind along with banners announcing the opening of Tokyo Smoke's latest storefront Monday.

But unlike the province's first legal cannabis outlet openings nearly a year ago, which were met with crowds of customers lineup up out the door, the response to Stoney Creek's first shop was significantly more subdued.

Inside the spotless store, black-sweatered staff members eager to share their knowledge mingled with the people who trickled in about half an hour after it first opened its doors.

Melissa Gallagher, director of franchising for Canopy Growth, the umbrella company that includes Tokyo Smoke, said there were a "few excited guests" waiting outside, but acknowledged openings have changed since April 1, 2019.

There's  still "a lot of demand, but maybe not those lineups" she explained before quickly adding she believes the 30-odd stores currently operating in Ontario have barely scratched the surface of the cannabis market.

In fact, just a few days before Stoney Creek's shop started selling a store called the Ancaster Joint started up, becoming the Mountain's first legal cannabis location. And Tokyo Smoke's plans for Hamilton aren't over yet — its application for a shop on James Street is in progress.

 

Melissa Gallagher is the director of franchising for Canopy Growth, the umbrella company that includes Tokyo Smoke. (Dan Taekema/CBC)

"There's certainly more competition which is good for everyone. We're happy to see more stores coming on line," said Gallagher.

"It's absolutely still a great business model."

Jesse Staniforth, the editor of the Weedweek Canada newsletter, echoed that sentiment.

"In Ontario a licence for a cannabis retailer is more or less a licence to print money," he said.

But Staniforth said one thing many in the cannabis industry seem to have forgotten is that the gold-rush reaction to the first crop of stores last year is that the majority of customers who lined up to buy were already people with some sort of cannabis experience.

"For virtually everyone going into these stores this is not a new purchase for them, it's just a different way of purchasing," he said.

After nearly a year of watching the provincial government "more of less fail at cannabis retail I'm not shocked to hear that people aren't lining up on the red carpet for the 31st or 32nd cannabis store in Ontario," Staniforth added.

One of the principal challenges facing consumers here is a lack of availability.

Alberta currently boasts more than 300 cannabis stores, far outstripping what's offered here. There is a current wave of licences being handed out and the Alcohol and Gaming Commission of Ontario is working to speed up approvals, said Staniforth, but there's still a long way to go to catch up.

And it might take until June or July for the province to even see that next wave of retailers really get rolling.

 

The store offers edibles including gummies and chocolate, along with dried flowers and cannabis oils. (Dan Taekema/CBC)

Still, more stores mean a tougher market and some retailers in Alberta have reported a dip in their profits, said Staniforth.

Meanwhile, the illicit market is still a major source for cannabis as the prices and quality available at some licensed outlets has made it tough to compete.

Gallagher said Tokyo Smoke understands concerns around cost, but said they're not willing to lower the bar on what they offer.

"We try and price our products competitively but the focus really is on quality," she added.

Ontario's open lottery system introduced some novices to the cannabis market, but Gallagher said the past year has helped weed out those who just want to make a buck and what remain will be people truly interested to the industry.

"It was high pressure and very exciting times," she said. But they've all built really important skills … and all found themselves in a position where they all really appreciate the cannabis space and are looking to open up more stores."

Staniforth said he's optimistic when looking forward to the next year of legal cannabis in Ontario.

Producers are serious about tackling complaints about quality, he said. Farm-gate sales are coming online, offering smaller growers a new source of revenue and consultations around public consumption of cannabis at lounges and cafes are ongoing.

That something Staniforth said will cut into the illegal market and shows the government is listening to consumers.

"There have been losers in this game for sure. But I think from the perspective of the average person on the street … there's going to be more engagement with cannabis this year."

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