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In November, the first full month of legal recreational cannabis sales, consumers in British Columbia spent around $1-million on regulated cannabis – less than a third of what people in New Brunswick spent on legal marijuana. Even Prince Edward Island, a province of around 150,000 people, saw several hundred thousand dollars more in total sales than in B.C.

Across the country, legal spending – $54-million in November, according to data published by Statistics Canada last week – appears to be off to a slow start compared with illegal sales, which run into the billions of dollars annually. The numbers are particularly striking for B.C., the province with the strongest cultural association with cannabis.

There is some disagreement among people who follow the province’s legal and illegal cannabis markets about what’s causing the lacklustre start to legal weed. However, most chalk it up to a combination of poor access, lack of supply and an incumbent market that is out-competing on quality and pricing.

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"In my mind, really this is a matter of convenience,” said George Anstey, chief compliance officer with Craft Depot, which works with B.C. craft growers on micro-cultivation licensing, and intends to act as a broker selling craft product to larger Licensed Producers.

B.C. has licensed only eight private retail stores – three in Vancouver, and the rest in smaller communities in the Interior – and one government-run store in Kamloops. Alberta, by contrast, has licensed 65 stores, although it had to stop issuing new licenses due to a nationwide shortage of legal cannabis; retailers there sold $12-million worth of cannabis in November.

“Would you take a ferry to go and buy an eighth? No you wouldn't. So anyone that's on Vancouver Island [where there are no legal retail stores] is not taking a ferry to go buy an eighth, it's that simple,” Mr. Anstey said.

The BC Liquor Distribution Branch, the province’s wholesale middleman, does run online sales. However, legal e-commerce sales do not appear to be capturing significant market share, as evidenced by Ontario, where per capita spending in November was considerably below the Canadian average. (The Ontario government’s e-commerce platform is the only place to buy legal cannabis until April, when the first physical stores are scheduled to open.)

The slow rollout of bricks-and-mortar stores in B.C. is largely due to things happening at the local government level, according to Brenna Boonstra, director quality and regulatory at Cannabis Compliance Inc., a consulting firm.

“In B.C. each municipality has the jurisdiction to set rules for their own city or their own municipality… And so what's happening is the province is referring [retail store applications] to the municipal government, and then the application sits there until the municipality finalizes their own bylaws,” said Ms. Boonstra.

Of the roughly 400 retail applications submitted to the province, nearly 70 per cent are now sitting with municipal governments, awaiting approval, she said. Even in communities that have updated their cannabis bylaws, retail applicants still need to go through a community consultation process, get development permits and have their property rezoned.

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"This is what I told the marijuana retailers and activists from the get-go: if you want to be legal, you're going to be like everybody else, you've got to get in the queue and wait,” said Dr. Kerry Jang, a former Vancouver city councillor and the co-chair of the Union of BC Municipalities’ cannabis committee, which advised the provincial government.

Like Ms. Boonstra, Dr. Jang chalks up the slow retail rollout to municipal governments. However, he has a further theory about the province’s low legal sales numbers. Rather than put a hard deadline on when illegal cannabis shops had to close in order to transition into the legal system [as in Ontario], the B.C. government only said that stores needed to stop selling illegal cannabis by time of their retail licensing inspection.

“There's still a lot of illegal cannabis out there and a lot of shops still operating. I know that a lot of them are selling off stock, getting ready, while their license works through... and they’re selling off their stuff cheap,” Dr. Jang said.

In other words, particularly cheap illicit products are flooding the market just as legal cannabis is struggling to establish a foothold. In many cases, these products – vape pens, edibles, and creams – will not be available through legal channels until later this year.

There are also questions of quality and authenticity in a province where cannabis is more thoroughly integrated into the local economy, especially in rural areas, and many consumers pride themselves a connoisseurs.

"When you unroll legalization somewhere like Prince Edward Island, the cannabis they're getting legally is probably not that much worse than what they were getting illegally, maybe it's even better in some parts of the country. But here in B.C. it's significantly worse,” said Jamie Shaw, a partner at Groundwork Consulting, which helps craft producers trying to enter the legal commercial system.

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“It's really going to take all of the people that have been working on it their whole lives; they need a chance to come into the market," she said.

The federal government’s micro-licensing regime, introduced in October, could provide a path into the legal system for grey market growers and manufacturers. But it could be more than a year before Health Canada begins issuing micro-licenses. Incumbent growers also face a range of challenges to going legal, from expensive facility upgrades needed to comply with federal regulations, to rules banning concrete floors on B.C.’s Agricultural Land Reserve (ALR) land, where many craft growers are located. (Federal regulations require producers to have non-porous floors made of a material like concrete, which puts ALR-located growers in a bind).

Clearly, legal cannabis faces an uphill battle in British Columbia. However, the slow rollout could be a blessing in disguise, according to some observers. The shortage of legal cannabis across the country appears to have hit provinces like Alberta and New Brunswick – which had better-developed retail systems on Oct. 17 – particularly hard.

Alberta’s decision to stop approving retail license applications (which was partially lifted last Friday), left many would-be vendors sitting on expensive leases. New Brunswick’s cannabis retail chain, which trumpeted its readiness in the months leading up to legalization, recently had to lay off around 60 people.

“The reason you saw sales out there [in Alberta or New Brunswick] is because they were the first ones to open up a couple of quick stores, because they bought fully hook line and sinker the federal government’s message that this would all work out hunky dory,” said Ian Dawkins, co-founder of Vancouver-based Althing Consulting. “Now that it’s imploding, they are the ones most vested in it.”

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