Cannabis legalization became official in Canada on October 17th of 2018. You may remember the stories or have firsthand experiences with various downfalls that have occurred since this time. Things such as long lines, sold out product, store closures, recalls and poor-quality cannabis. None of these experiences were out of Ontario though. This is because no cannabis dispensaries were able to open until April 1st, 2019 – almost six months following Canadian legalization.
Per the Alcohol and Gaming Commission of Ontario website, “On December 13, 2018, the Government of Ontario announced that a temporary cap of 25 Retail Store Authorizations will be imposed while cannabis supply stabilizes. As set out in Ontario Regulation 468/18, the Government of Ontario gave the AGCO the mandate to hold a lottery to determine who may apply for Retail Operator Licences.”
Post Lottery to Opening Day in Ontario
The lottery was a success and on January 11th, 25 recipients were selected. Lottery winners then had till January 18th to submit a “Retail Operator Licence Application.” The application has to include a plan for implementation and opening. After submitting an application, applicants are subject to a background check including a review of tax and financial statements. Applicants must also submit a nonrefundable $6,000 fee to the AGCO along with a $50,000 letter of credit.
Those who meet the qualifications can then undergo a Retail Pre-Opening Inspection. This process involves an official inspection of everything inside and out regarding the business. If an applicant passes the inspection, they then receive a Retail Store Authorization. As of the April 1st deadline, 10 of the 25 lottery winners had completed this process. On April 1st, they all opened their doors to much success. Applicants who do not complete this process and open shop after receiving the authorization are subject to a $25,000 fine if they do not open their doors by the end of April.
As for the 10 stores that opened on April 1st, they have seen much success.
Elevated Demand = Great Success on Opening Day
With demand elevated and suppliers limited, this led to an excellent start for the brick and mortar cannabis sector. According to Cova, which offers retail software solutions for the cannabis sector, 7 of the 10 Ontario dispensaries that opened on April 1st saw great success. On average they reported dispensaries seeing almost $51,000 in sales across an average of 867 transactions per dispensary on the first day of brick and mortar sales in the province.
Other areas across Canada that Cova has reported on saw statistics much lower than that of which Ontario saw on April 1st. On average dispensaries have seen around 111 transactions on opening day and less than $5,000 in sales.
As the market stabilizes, Ontario should grant licenses to additional applicants who complete the process of approval. Have you had the chance to visit a dispensary in Ontario since they opened on April 1st? If so, weed love to hear from you in the comments below.