Alcanna Inc. lowered the capital expenditure investment of its NOVA Cannabis retail stores in Alberta by more than $5-million, after finding construction efficiencies and seeing what customers want, but the company remains on track to open a total of 37 outlets in the province by June, 2019, while it readies for the larger Ontario market, executives said on a conference call with analysts.
“We’ve taken it down from around $30-million to $35-million for Alberta capex, to now more like $25-million,” Alcanna chief executive James Burns said, specifying this detail to Cannabis Professional after the call. “We’re thinking we can probably cut 25 to 30 per cent of the store costs out.”
Alcanna opened five NOVA stores on Oct. 17, and their combined sales over the first 19 days totalled roughly $3.7-million, Mr. Burns said.
Plans to open a total of 37 NOVA stores in Alberta have not been without obstacles, with several site applications rejected by municipalities due to proximity to places such as parks. So far, the company has appealed three of these cases and won, he said.
“These appeals are changing the way we’re thinking about which ones to do,” Burns added. “We are being careful with how we grow at the moment.”
And while many of NOVA’s initial customers were experienced cannabis users keen to switch to the legal market from the black market, many shoppers now are people who are new to cannabis but do not want to smoke. This segment of clientele is expected to become a source of demand in late 2019, when items such as edible and topical products are expected to become legal.
NOVA stores are also seeing unexpected demand come from medical cannabis users, with Mr. Burns adding that these customers said it is easier for them to buy off the shelf rather than go through the process of obtaining prescriptions.
“Both of those are very encouraging in the long run. Smoking is just not that popular and a lot of people are waiting until the rest of the products are legal,” Mr. Burns said.
On top of Alcanna’s plans for rapid expansion in Alberta, it will apply for retail licenses in Ontario, which is expected to open for applications on Dec. 17, and has already identified 91 locations for possible retail outlets there, Mr. Burns said.
“We don’t have any doubt we’ll be able to participate in the market. As to exactly how or what structures, will depend on the rules that are put in place,” MR. Burns said, adding he sees the country’s cannabis supply shortage as “a little speedbump.”
Though Alcanna has been in discussions with landlords in Ontario, it is “not trying to grab leases” as the company is “not concerned whatsoever” about securing locations while awaiting Ontario’s rules.