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HIGHLIGHTS
  1. Legal e-commerce in Saskatchewan paves way for same-day delivery service
  2. Saskatchewan’s retail pot model seen as most advanced in Canada
  3. Fire and Flower hopes to supply territories from Saskatoon wholesale warehouse

One of Canada’s biggest cannabis retailers aims to establish same-day delivery and increase its ability to compete against the illicit market in Saskatchewan, the only province to completely privatize recreational pot. This has turned the Prairie province into an unexpected hub for innovative business opportunities in the country’s newest industry.

Fire and Flower, which has 17 licensed retail marijuana outlets across three provinces, also sells wholesale recreational cannabis in Saskatchewan, the only province that does not control wholesale within its boundaries and permits companies to sell online via e-commerce. The Edmonton-based company aims to take this one step further before the end of 2019 and do what the illegal market has been doing for years: offer same-day delivery within Saskatchewan.

“We do feel that Saskatchewan is a model that makes a lot of sense and probably makes the most sense in terms of displacing the black market. It provides the most options,” said Trevor Fencott, chief executive of Fire and Flower.

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“It’s the test market for the whole industry in Canada, in my opinion. It’s the only market where we buy directly from licensed producers. We have never been short supplied in Saskatchewan, ever.”

In all other provinces, governments are the sole wholesalers within their regions and, consequently, establish prices well above the black market. Illegal purchases, which still dominate non-medical pot sales in Canada, are notably cheaper than those done legally, which are higher due to taxes and the more expensive supply chain.

While the other provincial governments act as gatekeepers in the nascent industry by buying from licensed producers (LPs) and selling to retailers, this causes retailers to behave more like “buying groups” and prevents them from building brands. Establishing brand recognition is already a challenge do to strict federal marketing regulations.

“Any modality that the black market currently has, we need to compete with. The best way is to out-compete the black market,” Mr. Fencott said.

“If we can offer something comparable and it’s legal, I think people we make that choice of delivery of safe, regulated product as long as we’re competitive. We can compete on delivery mechanics. We can win on e-commerce. That’s how we displace the black market.”

Same-day delivery of online recreational cannabis sales in Saskatchewan is “absolutely” a priority for Fire and Flower, and is even part of the reason the publicly traded company has six stores plus a wholesale business there, Mr. Fencott said.

“If we can show this works, we can get other provinces to see how efficient this is and ultimately how much revenue can be generated efficiently.”

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Fire and Flower has existing relationships with delivery services in Saskatchewan and is working on rolling out same-day delivery to a significant portion of the province by the end of 2019, he said.

The rapidly growing marijuana retailer also hopes that, from its wholesale warehouse in Saskatoon, it will be able to ship cannabis to northern territories such as Nunavut and the Yukon sometime in the future.

“The government of Saskatchewan as well as (other) western provinces are open to these discussions,” Mr. Fencott said.

“In Canada, there are still experiments going on. Saskatchewan is the furthest ahead in Canada and Canada is the furthest ahead in the global market.”

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