'Tides are shifting': Alberta cannabis retailers consider cap on new shops
CAPITALI$TS WANT TO LIMIT COMPETITION
Hamdi Issawi - Edmonton Journal
Thinking he had a good slice of a budding market in August 2019, Karl Karanjia opened a cannabis shop called Strainbows in central Edmonton’s Queen Mary Park.
There are 178 active licences for retail cannabis stores in Edmonton, and 761 in Alberta according to a database maintained by the regulator, Alberta Gaming, Liquor and Cannabis (AGLC)
But two years later, stores kept opening and saturating the scene before finally smoking him out in July, the former owner told Postmedia.
“It didn’t stop,” he said. “Now it’s like there’s one at every corner.”
As of Sunday, there are 178 active licences for retail cannabis stores in Edmonton, and 761 in Alberta according to a database maintained by the regulator, Alberta Gaming, Liquor and Cannabis (AGLC). As retailers continue setting up shops into 2022, albeit at a slower pace, some in the industry want the regulator to consider a moratorium on new licenses.
A Cannabis Benchmarks report analyzing the Canadian retail market suggested Alberta was oversaturated with pot shops in April 2022.
Based on data from Colorado and Oregon — U.S. states that legalized the drug before Canada — the report pegged the optimal service level at one retailer for every 7,500 people. At the time of the report, however, Alberta had one shop for every 5,911 people, which is 27 per cent too many and likely to lead to closures over the next two years.
Considering a cap
Scott Treasure, owner of an independent shop called The Local Cannabist in Laurier Heights, said closures connected to saturation are already a common occurrence. Also the chair of the Alberta Cannabis Council, which represents more than 60 companies and 150 retail locations in the industry, he said the group has asked the regulator’s board and top brass to consider a moratorium on licenses in Alberta.
“We are seeing failures in the space,” Treasure said. “I know friends who are closing their doors — other independent retailers.”
Of the active licences in Edmonton, eight were issued in 2018 — when the federal government legalized cannabis — 39 in 2019, 34 in 2020, 61 in 2021 and 37 in 2022.
“Putting a stop on new licences at this point is not going to crush anybody’s dream of opening a cannabis store,” Treasure said.
A cap in Alberta isn’t without precedent. In November 2020, Alberta lifted one that limited cannabis shop ownership to 15 per cent of the province’s total number of stores.
On the question of limiting licences, AGLC only said that it’s committed to working with stakeholders to support business growth and balanced oversight of industries under its purview.
And on the question of closures, it said 91 pot shops have shuttered in Alberta since legalization.
‘The writing’s on the wall’
Curtis Martel, president of Mountain Standard Cannabis, has five shops in the Edmonton metropolitan region, including four under the Mountain Standard brand running from central to northeast Edmonton, and one called Good Roots Cannabis in Sherwood Park. A separate Good Roots store in St. Albert closed in August after only 18 months
He agrees that the market is saturated.
“The tides are shifting. Stores are closing. The writing’s on the wall,” he said. “I think once people are put with the decision of renewing their lease, they’ll take a good hard look at whether it’s worth it or not.”
Even though a Mountain Standard store on 107 Avenue and 113 Street location, also in Queen Mary Park, saw an uptick in business when two nearby stores closed up shop, Martel said he’s not convinced a moratorium is the answer.
“If I was the guy hoping to open a store, I’d probably be singing a different tune,” he said.
Treasure said there may be some creative solutions to accommodate prospective owners with a cap, such as decoupling licences from locations so licensees going out of business can sell their permit to others.
City has no plans to intervene
On the question of location, both Karanjia and Martel were more concerned with concentration. Cannabis shops in Edmonton need to be at least 200 metres away from one another — less than half the 500 metre distance that generally applies to liquor stores.
“One neighbourhood doesn’t need four stores,” Martel said. Licensee records indicate a competitor has a location in the same building as his Sherwood Park location.
As far as Edmonton is concerned, the city introduced the current buffer for liquor stores in 2007 to curb proliferation and social disorder, spokeswoman Jenny Renner told Postmedia.
The shorter separation rules for cannabis shops is double the distance the AGLC requires and determined through public engagement and studying other cities, she said, adding that the city neither has a cap on the number of pot shops, nor plans to interfere in the market’s evolution.
— With files from Postmedia
hissawi@postmedia.com
SO MUCH FOR THE FREE MARKET
Hamdi Issawi - Edmonton Journal
Thinking he had a good slice of a budding market in August 2019, Karl Karanjia opened a cannabis shop called Strainbows in central Edmonton’s Queen Mary Park.
There are 178 active licences for retail cannabis stores in Edmonton, and 761 in Alberta according to a database maintained by the regulator, Alberta Gaming, Liquor and Cannabis (AGLC)
But two years later, stores kept opening and saturating the scene before finally smoking him out in July, the former owner told Postmedia.
“It didn’t stop,” he said. “Now it’s like there’s one at every corner.”
As of Sunday, there are 178 active licences for retail cannabis stores in Edmonton, and 761 in Alberta according to a database maintained by the regulator, Alberta Gaming, Liquor and Cannabis (AGLC). As retailers continue setting up shops into 2022, albeit at a slower pace, some in the industry want the regulator to consider a moratorium on new licenses.
A Cannabis Benchmarks report analyzing the Canadian retail market suggested Alberta was oversaturated with pot shops in April 2022.
Based on data from Colorado and Oregon — U.S. states that legalized the drug before Canada — the report pegged the optimal service level at one retailer for every 7,500 people. At the time of the report, however, Alberta had one shop for every 5,911 people, which is 27 per cent too many and likely to lead to closures over the next two years.
Considering a cap
Scott Treasure, owner of an independent shop called The Local Cannabist in Laurier Heights, said closures connected to saturation are already a common occurrence. Also the chair of the Alberta Cannabis Council, which represents more than 60 companies and 150 retail locations in the industry, he said the group has asked the regulator’s board and top brass to consider a moratorium on licenses in Alberta.
“We are seeing failures in the space,” Treasure said. “I know friends who are closing their doors — other independent retailers.”
Of the active licences in Edmonton, eight were issued in 2018 — when the federal government legalized cannabis — 39 in 2019, 34 in 2020, 61 in 2021 and 37 in 2022.
“Putting a stop on new licences at this point is not going to crush anybody’s dream of opening a cannabis store,” Treasure said.
A cap in Alberta isn’t without precedent. In November 2020, Alberta lifted one that limited cannabis shop ownership to 15 per cent of the province’s total number of stores.
On the question of limiting licences, AGLC only said that it’s committed to working with stakeholders to support business growth and balanced oversight of industries under its purview.
And on the question of closures, it said 91 pot shops have shuttered in Alberta since legalization.
‘The writing’s on the wall’
Curtis Martel, president of Mountain Standard Cannabis, has five shops in the Edmonton metropolitan region, including four under the Mountain Standard brand running from central to northeast Edmonton, and one called Good Roots Cannabis in Sherwood Park. A separate Good Roots store in St. Albert closed in August after only 18 months
He agrees that the market is saturated.
“The tides are shifting. Stores are closing. The writing’s on the wall,” he said. “I think once people are put with the decision of renewing their lease, they’ll take a good hard look at whether it’s worth it or not.”
Even though a Mountain Standard store on 107 Avenue and 113 Street location, also in Queen Mary Park, saw an uptick in business when two nearby stores closed up shop, Martel said he’s not convinced a moratorium is the answer.
“If I was the guy hoping to open a store, I’d probably be singing a different tune,” he said.
Treasure said there may be some creative solutions to accommodate prospective owners with a cap, such as decoupling licences from locations so licensees going out of business can sell their permit to others.
City has no plans to intervene
On the question of location, both Karanjia and Martel were more concerned with concentration. Cannabis shops in Edmonton need to be at least 200 metres away from one another — less than half the 500 metre distance that generally applies to liquor stores.
“One neighbourhood doesn’t need four stores,” Martel said. Licensee records indicate a competitor has a location in the same building as his Sherwood Park location.
As far as Edmonton is concerned, the city introduced the current buffer for liquor stores in 2007 to curb proliferation and social disorder, spokeswoman Jenny Renner told Postmedia.
The shorter separation rules for cannabis shops is double the distance the AGLC requires and determined through public engagement and studying other cities, she said, adding that the city neither has a cap on the number of pot shops, nor plans to interfere in the market’s evolution.
— With files from Postmedia
hissawi@postmedia.com
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