As more and more cannabis stores open, some ask: How many can stay in business?


TORONTO —
If there’s one thing the western stretch of the Danforth, a busy street in Toronto’s east end, suddenly isn’t short of, it’s cannabis stores.

First it was Canvas, a brightly lit store in a former diner, part of a small local chain. Then, ten minutes’ walk down the street, Friendly Stranger, owned by national chain Fire & Flower, opened up shop. Then Green Merchant, part of a small local chain, opened a store across the street from the Friendly Stranger.

Finally, Canopy Growth, owner of retail chain Tokyo Smoke, confirmed this week to CTVNews.ca that they plan to open a fourth store in the neighbourhood, just across from Canvas.

Ontario, which has lagged far behind other provinces in opening cannabis retail stores – with an outsized effect on the national legal cannabis market, which for a long time lagged because of Ontario’s lack of stores – is now making up for lost time, slamming the accelerator on licensing new stores. Regulators there are now issuing 30 new authorizations a week, or one every hour-and-20 minutes of the working day.

At that rate, Canada’s most populous province will have 1,390 legal cannabis stores by October 1, or one for every 10,000 residents and two for every liquor store.

The pace of openings raises a couple of questions. How many legal weed stores can Canadian customers actually keep in business? If there is a shakeout, what will the survivors have in common?

Stores seek to form loyal customers, but rigid rules make it challenging

As in other retail businesses, observers we talked to said the key to success is developing relationships with loyal customers.

But with all stores forced by law to deal with one monopoly wholesaler, and federal laws making marketing nearly impossible, it’s very challenging to figure out how to stand out from the competition.

“We have a few unique trends here,” said Shayne Ward, assistant manager at Green Merchant. “We have a rosin press that we’re using, so you can buy fresh flower, and we’ll press it into a concentrate for you. We also offer rolling services with a pre-roll machine.”

As well, he told CTVNews.ca the store will match any competitor’s price for a given product.

The problem with using these details as selling features, though, is that rigid advertising restrictions forbid the store from promoting them in the window. And with tight public health measures in place, customers who visit the store can only ‘click and collect,’ or pay in advance and pick up their purchases from the door with minimum interaction.

“Because of COVID, we are extremely limited in what we can do. Especially under this lockdown, we aren’t allowed to help customers at the door – it has to be over the phone, or online. It’s thrown a bit of a wrench into everyone’s plans, to be honest,” said Ward.

(Ward says…



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