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Countdown to cannabis sales

Cannabis will soon be legal in Canada, and some retailers have high hopes for the new category

The face and body of retailing in Canada are about to change as legislation to legalize the sale of recreational marijuana comes into effect October 17. Both retailers and manufacturers are jockeying to take advantage of what are purported to be big additional sales from legalized pot. Although the federal government has legalized cannabis, each province gets to determine what restrictions they want to place on the sale, distribution and use of the substance.

According to CTV, Quebec, Yukon, Prince Edward Island, Nova Scotia and New Brunswick will restrict marijuana sales to government-operated stores, while in addition to government stores, British Columbia will also allow sales through privately-run outlets. Newfoundland/Labrador, Manitoba, Alberta and Saskatchewan will allow sales through private storefronts while the Northwest Territories will sell through privately-operated liquor stores. Ontario will permit privately-operated stores to sell pot next year, but until then, sales will be online only. All provinces will allow online sales either through private or government-operated websites.

Grocers across Canada are gearing up for the expected rush. Loblaw’s Dominion Stores in Newfoundland/Labrador, for example, have received licenses to sell cannabis products, while Real Canadian Superstore in Western Canada has applied for permits. Calgary Co-op plans to open 12 standalone stores to sell cannabis, accessories and vaporizers. Many more retailers are awaiting approval.

The number of grocers applying to sell pot is expected to climb dramatically once the sale of edible and drinkable cannabis products is allowed. In legalizing recreational cannabis, the federal government initially overlooked cannabis edibles and beverages, but later included them in the legislation. Their approval, however, has been postponed until sometime next year. It is not yet clear whether cannabis edibles and drinks will be permitted in grocery stores, but it seems likely that just like beer and wine, grocery stores will eventually be able to cash in on the demand.

Sylvain Charlebois, professor in food distribution and policy, faculties of management and agriculture at Dalhousie University, wrote recently in The Globe and Mail: “Once edibles are available, things will get complicated in Canada’s food industry. But, with the right regulations, this is a profit opportunity that doesn’t come by every day. Edibles present a hugely profitable opportunity for the Canadian food industry.” He adds that in California, consumers purchased US$180-million worth of cannabis-infused food and drink last year—roughly 10% of the state’s total cannabis sales— while in Colorado, sales of edibles rose by about 60% per year over the past two years. “This kind of tremendous growth is what the food industry needs right now,” said Charlebois.

Manufacturers are acutely aware of the potential of cannabis-infused products and are experimenting with product formulas to meet the expected demand. Big-name drink companies are looking to get a piece of the action; Molson Coors has partnered with Hydropothecary, for instance, to develop cannabis-infused non-alcoholic beers for the Canadian market. Many of Canada’s craft beers are already creating drinkable weed.

It’s going to take time for this fundamental change in retail to settle out, but it will be interesting to see who the winners will be.

This article appeared in Canadian Grocer‘s September/October 2018 issue.

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