- AGLC lifts cannabis retail licence freeze, will issue five each week
- Retail licence moratorium could be reinstated if inventory takes “drastic downturn”
- LPs seen benefiting from more Alberta stores, longer store hours in Quebec -BMO
Alberta already has more pot shops than any other province due to privatization, and it is now on track to have 216 retail cannabis stores open by late-October, when edible and concentrated products are expected to be legalized, after improved supplies spurred the province’s regulator to lift its moratorium on licences and re-open for new applications on Thursday.
Alberta Gaming, Liquor and Cannabis (AGLC) has already approved 115 applications that were submitted prior to the moratorium on retail licences in November, when a nation-wide supply shortage caused the government agency to impose a temporary freeze. Five new licences from this queue of successful applications will be granted each week, it said.
This move reflects improved output by licensed producers (LPs), who have struggled to increase their harvests while some were delayed as they awaiting Health Canada permits, and shows the contrast among provinces. In Ontario, Canada’s biggest market with 15.1 million residents, fewer than 20 stores have opened so far as the government there limits the number of available licences that were distributed via a lottery. That is roughly one pot shop per 755,000 people.
In Alberta, where the population is around 4.3 million people, there is one store per 40,565 people and this is on track to drop to around 20,000 residents for every store by October.
“Should the stability of inventory take a drastic downturn, AGLC will evaluate reinstating the moratorium,” AGLC said.
AGLC, the sole wholesaler of recreational cannabis in Alberta, granted an additional 36 licences in the months following the moratorium in November as its number of contracted LPs rose to 26 from 15 in 2018.
The number of licensed adult-use marijuana stores in Alberta is expected to rise even further as more applications are approved. There is no maximum placed on the number of total cannabis stores in the province, but a single company cannot hold more than 15 per cent of all licences in Alberta.
New retail licences combined with longer store hours in Quebec means LPs including Aurora Cannabis Inc., CannTrust Holdings Inc., Canopy Growth Corp., and OrganiGram Holdings are well-positioned to capitalize on larger orders from the provincial distributors, BMO Capital Markets said in a note
“We consider these developments to be a modest positive. In addition, we are of the view that a more substantial retail roll-out is needed to facilitate meaningful growth in licensed producers’ revenues," BMO said.
“The potential downside to these developments is if Health Canada allows LPs to submit notices for new value-add products this summer. In such a scenario, we would expect a number of LPs will accumulate more inventory for conversion into value-add products.”
Alberta privatized retail cannabis when it was legalized in October 2018, and now has 106 licensed pot stores, after issuing five new licences on Thursday. This is by far the largest number of adult-use marijuana outlets in the country.
Retailers contacted by Cannabis Professional were not concerned about supplies despite the flood of new stores that will join the wholesale roster, citing larger product deliveries by LPs in recent weeks.
“This week’s dried flower inventory was up to $13-million from $9-million last week,” said Theo Zunich, chief executive of YSS Corp. (formerly Solo Growth Corp.), which operates a licensed store in Red Deer, Alta.
“Between March to April, AGLC was supporting 75 licenses with $5-million to $6-million worth of dried cannabis products. It wasn’t perfect but more than enough for retailers to generate good sales and profitability.”
Mr. Zunich, whose inventory estimates came from his calculations from AGLC wholesale order sheets, is not concerned about recreational pot supplies in Alberta.
“We are excited about having some amount of certainty that lets us plan and strategize a bit better. I imagine a lot of mom and pop stores are letting out big sighs of relief that maybe they’re seeing the light at the end of the tunnel,” said Jason Kostiw, spokesman for Canna Cabana owner High Tide Inc.
“We will definitely be sharing our concerns with AGLC if we experience unexpected or severe changes in supply, but we also realize that there are a lot of people who have waited a long time to open their stores, and they deserve a piece of the pie as it gets bigger.”
There are currently four licensed Canna Cabana stores open in Alberta, with nine other stores ready in the province and 23 at various stages of development.
“I would hope that AGLC has lined up supply to meet this demand head on, but it’s difficult to confirm that at this time as we do not have line of sight to their supply chain,” said Rob Cherry, general merchandise manager for retailer Fire and Flower.