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Report on Business Cannabis Professional Alberta lifts retail pot shop licence tally to 176 with 20 more permits

HIGHLIGHTS
  1. AGLC granted another 20 retail cannabis licences this week
  2. Alberta on track to have more than double the number pot shops than Ontario by end-2019
  3. New licences were granted after Health Canada hit CannTrust with sales freeze on 5,200 kg of inventory

Alberta Gaming, Liquor and Cannabis (AGLC) issued another 20 retail pot licences this week, exceeding expectations by bringing the province’s tally to 176. This marks an increase of 75 cannabis store permits in Alberta since AGLC lifted its moratorium in late-May after supplies improved.

The surge in licences signals continued improvement in recreational pot supplies as licensed producers (LPs) raise their output. While supplies of legal recreational marijuana are still well below demand at the national level, analysts widely expect Canada will have an oversupply by 2020.

This licence increase came even as Health Canada placed a sales freeze on 5,200 kilograms of inventory grown by CannTrust Holdings Inc., one of the original LPs contracted to supply AGLC last year, after the government discovered unlicensed production at the company’s main greenhouse in Ontario.

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This would account for roughly half the monthly demand of 175 stores in Alberta, where it is common to make weekly purchases of around 15 kg per week.

This places the western province on track for higher revenue from recreational pot sales. Year-end financial statements from the government of Alberta show that roughly $30-million in cannabis-related taxes were collected by the province during the first six months of legalization, with net revenue from recreational pot at $4.7 million when less than 100 stores were operating with limited supplies.

Meanwhile in Ontario, Canada’s biggest consumer market, less than 25 stores have received licences with 42 more to be granted through a lottery process in August and an additional eight slated for First Nations reserves. This is expected to bring the province’s legal pot store numbers up to 75 by the end of 2019, when Alberta, which has less than a third the population of Ontario, could have well over 200.

AGLC – Alberta’s retail cannabis regulator and sole pot wholesaler – placed a freeze on new licences in November 2018, when the national shortage of legal cannabis meant many stores were running out of supplies between weekly deliveries. Meanwhile, many store owners continued to pay leases on their venues and construct stores while others sold or abandoned their businesses.

On May 30, AGLC said it would start issuing new permits at the rate of five per week and, at that time, it already had 115 approved applications that had been submitted prior to the moratorium, while even more waited in the queue at different stages of development.

AGLC has since added two more licensed producers to its list of suppliers, bringing it to 31. This is up from 15 in 2018.

For some companies, the flurry of retail licences being granted means they are on hiring sprees as they prepare to open multiple stores within days of one another. On Tuesday, YSS Corp. said it just received five additional cannabis retail licences in Alberta, placing it on track to open a total of 10 stores. It currently has three operating retail stores in Calgary and Red Deer.

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Earlier this month, Spiritleaf opened five stores within seven days.

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