HIGHLIGHTS
- Ontario retail licence lottery at 25 seen as too small
- High Tide signed 20 conditional leases in Ontario
- Alcanna has not signed any leases in Ontario
Cannabis retailers that are established in Alberta and planned on opening 75 stores in Ontario starting in April, 2019, still aim to establish strong footholds in the country’s largest market but at a slower pace after the government there announced the number of initial licences issued will be just 25 due to the national supply shortage.
Many cannabis retailers, however, already signed leases in Ontario after the government said it had expected to licence up to 1,000 cannabis retailers and begin accepting applications later this month. The province’s move to slow the rollout of bricks-and-mortar stores comes after some Ontario municipalities voted against allowing cannabis retail outlets within their borders, and the Alberta government put a temporary halt on issuing retail licences due to low supplies.
“I think businesses should be given the chance to sort this out. If Alberta can handle 70 stores and we’ve seen supplies improve, Ontario going with 25 stores to begin with is extremely miniscule. We think Ontario could handle 150 to 200,” said Raj Grover, chief executive of High Tide Inc., which operates four Canna Cabana cannabis stores in Alberta as well as 20 Smoker’s Corner accessory stores.
“This is six months down the road and suppliers tell us supplies are getting better.”
So far, 65 stores have licences in the province, according to the Alberta Gaming, Liquor and Cannabis website.
High Tide, which will apply for the licence lottery in Ontario, has signed 20 conditional leases in Ontario, in cities including Toronto and Ottawa, and has the right to break those leases, though Mr. Grover said the company “absolutely” does not plan to terminate them.
“We’re in it for the long-term,” he said, adding he hopes the Ontario government will permit cannabis retailers that do not win the lottery to open stores in order to sell accessories and offset development costs.
Alcanna Inc., which operates five NOVA Cannabis stores in Alberta and also has its sights set on opening 75 stores in Ontario, has experienced supply disruptions and consequently reduced expectations for a quick expansion into Ontario, chief executive officer James Burns said.
“The Ontario government has done a great thing. They’re being reactive and responsive,” Mr. Burns said, referring to its decision to sharply reduce the number of available retail licences available in April due to tight national supplies.
“They won’t have a situation like in Alberta.”
This does not change Alcanna’s plans to expand into Ontario, Mr. Burns said.
“We signed no leases in Ontario because we did not think there was any tremendous hurry to get into the market … with little to no cannabis available. A lot of people have signed leases and paid huge deposits,” Mr. Burns said, adding that the industry is still awaiting details around the lottery in order to know how to proceed.
“We’re not going to go and sign leases just to get a ball in the lottery. It depends what the rules are.”