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Nova Scotia is the only province in Canada where adults can walk into the same building and legally purchase a bottle of wine and a few grams of bubba kush without having to go outside.

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Every other jurisdiction in the country opted to keep cannabis and alcohol sales physically separate, with only Canada’s Ocean Playground opting for co-location with 11 existing provincially-owned liquor stores in the province, and only one standalone pot store. During the penultimate Road Ahead tour stop in Halifax, Cannabis Professional spoke with Nova Scotia Liquor Corporation vice president Dave DiPersio - the executive in charge of the NSLC cannabis file - about that experience over the industry’s first full year of operations.

What follows is a transcript of that conversation, lightly edited for length and clarity.

Cannabis Professional: What led to the decision to adopt the co-location model?

Dave DiPersio: Co-location was actually not a recommendation of the [2016 task force]. The philosophy of this province was to really proceed cautiously so for that reason they those the public model and they chose to restrict the number of locations. It was actually initially only going to be nine but we had it increased to 12 so we could cover all of the major towns in the province as well as Halifax. It was some discussion even just to get to the 12 locations, 11 of which are co-located. The idea was just to minimize the investment until we could understand how the ecosystem was going to unfold and then better assess once the industry matures. That was really the philosophy of the province to just proceed cautiously until we know what we’re dealing with.

CP: It was primarily about saving money, then?

DD: I would suspect it was primarily cost. We got our mandate, but the rationale wasn’t always communicated. The public model was just a way to control things tightly. So, rather than put a lot of new provincial regulations in place, they prefer to just keep the retailing tight and then if we have to regulate it further, later on, then we will.

CP: What kind of concern during the planning process was raised, if any, about putting cannabis and alcohol so close together?

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DD: I suppose there was some concern, but what we have found is it really has been a non-issue. In the co-located stores it has not been an issue because it is completely different consumers, is what we’re seeing.

CP: Were you expecting an overlap, and, if so, to what extent?

DD: We didn’t know, we had no expectations, to be honest. The goal was to attack the black market so the idea was we were attracting the consumer that was buying through illicit channels before. I would say the only minor challenge was in the early days when the lineups were long going into the cannabis shops. Those co-located stores, people would see the lineup outside the store and not really know what it was for. There would be queues in the alcohol section but that went away quickly.

Really we have had no issues with the co-located model. [Cannabis and alcohol] is physically separated in the store, it is separately age-gated and it is generally a different consumer. You need to be 19 or over to get into [the cannabis section] where minors are allowed in liquor stores with an adult.

CP: Aside from the lower cost, was there any other basis on which the co-location model was justified?

DD: One of our goals was to take the stigma away. We are trying to take on the cannabis market here, the illegal market, we are not here to encourage consumption but we certainly want to take care of the black market. To do that we wanted to make a very comfortable and accessible experience that felt inviting and encouraging, we thought that was the only real way to do it. We wanted to make sure anybody who had questions felt very comfortable walking into one of our stores. Getting rid of stigma is one thing but appearing to be promotional of [cannabis] is another, so we drew the line at Air Miles.

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CP: You mentioned cannabis and alcohol consumers are “completely different”, can you quantify that in any way??

DD: That is what we’ve noticed. We don’t have segmentation the same way we do with alcohol because we don’t have an Air Miles program with cannabis. We have chosen not to have any promotional programs in place at all. That means we don’t have the same type of consumer insight like we have with alcohol, but from what we have seen and what we saw in the early days especially it was for sure a different consumer. That is not to say they are not also buying alcohol, they just don’t seem to be doing it at the same time.

CP: And is that why you don’t have any specific cannabis consumer insights?

DD: One of the objectives of the federal Cannabis Act was to protect youth and others from incentives to use cannabis. Even though there was no legislative provision that says no loyalty programs we just kind of looked at the philosophy of the legislation and said we should probably not do this, at least not now.

CP: Have there been any changes to your usual alcohol sales patterns over the past year that you would attribute to cannabis?

DD: [Alcohol sales] have been following their traditional trends, so nothing that would cause us to believe that cannabis has had any impact at all [on alcohol sales].

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CP: Were there any surprises that have come up over the past year that you were not expecting?

DD: One of the things we noticed was a lack of e-commerce adoption. It has been a brick-and-mortar business. When we built our plans we thought [e-commerce] would be 40 per cent of our volume and so we thought the 12 stores we had plus e-commerce would pretty much satisfy the demands of Nova Scotians. But we have seen e-commerce at less than 2 per cent of our sales, and that is causing us to look at the number of access points we have in the province, whether we should open more stores. We haven’t made any decisions there yet but it is a question we are asking ourselves.

CP: What about anecdotal observations in the difference between the two types of consumer?

DD: It has been a surprisingly consistent business. In terms of sales levels, traffic in our stores, it is surprisingly consistent. Obviously the first few weeks it was pretty hectic but then it kind of levelled off and really stayed very very consistent all winter long and then once the supply situation got better, that in conjunction with summertime, we actually did see cannabis sales go up over the summer months. We aren’t sure if there is a seasonality to it yet or if it was just the supply issue.

CP: Have you noticed any seasonality with cannabis sales thus far?

DD: A sunny day on a Friday will spike your beer sales, but with cannabis, even on holidays there might have been a tiny little spike over Christmas but nothing like what you would see in alcohol. I think consumers individual patterns are fairly consistent as well, you see the same people coming in at the same time each week.

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