The 509 stores approved by Alberta Gaming, Liquor and Cannabis (AGLC) are about half of all pot retail locations in the entire country
By Bill Kaufmann
August 11, 2020
https://www.thegrowthop.com/cannabis/cannabis-business/cannabis-store-approvals-in-alberta-surpass-500-many-more-on-the-way/wcm/aa25d78c-5e75-44cc-8430-bf983d8ce940?utm_source=Sailthru&utm_medium=email&utm_campaign=Cannabis%20Post%20Newsletter%202020-08-17&utm_term=FP_GrowthOpNewsletter
More than 500 cannabis stores have been given the green light in Alberta, with nearly another 200 pending.
The 509 stores approved by Alberta Gaming, Liquor and Cannabis (AGLC) are about half of all pot retail locations in the entire country, and are raising concerns about market oversaturation.
With 124 of those Alberta stores, Calgary has nearly a quarter of the Alberta total and more than any other city in Canada.
Within its city limits, Edmonton counts 88 cannabis stores.
Ideally, Alberta, with its population of about 4.5 million, would host roughly 450 stores to ensure a thriving business environment, said Chris Damas, a cannabis market analyst with BCMI Cannabis Report.
“A rule of thumb for a mature market is about one store for 10,000 people, so this is a little bit over that,” said Ontario-based Damas.
With Ontario ramping up its number of stores, “We’ll be facing what you’re facing — saturation, rationalization and the weaker ones will fold,” he said.
But the AGLC has no intention of capping the number of permits issued for the stores, with another 195 possible retail locations in the works, said spokeswoman Heather Holmen.
“There could be 600 or 700 stores as long as municipalities are supportive and they meet AGLC requirements,” said Holmen.
“The market will dictate what the numbers ultimately are . . . (500 stores) is a milestone, yes, but it’s just kind of business as usual.”
So far, said Holmen, five Alberta cannabis stores have shut their doors for reasons not related to the current COVID-19 pandemic.
But industry players say a number of locations have been bought out or absorbed by larger competitors in a sector whose production side has contracted due to far lower-than-expected revenues.
The number of cannabis stores is about a third of the 1,494 liquor outlets in the province, but the number of people who consume cannabis is a fraction of those who drink alcohol.
A limit should be placed on the number of pot stores — at least temporarily — to ensure the viability of existing retailers, said Shawn Bali, owner of Omkara Cannabis, at 500 Royal Oak Dr. N.W.
“A hundred per cent there should be a cap placed on that pretty soon, maybe for six to eight months,” said Bali, who opened his store last March.
“I personally think Alberta’s at that (saturation) point now.”
He said supply problems still need to be worked out among the current crop of stores.
“Right now, we get maybe 75 per cent of our order — if there are another 100 stores, that could be down to 50 per cent,” said Bali.
Karen Barry, who owns Beltline Cannabis Calgary at 806 12th St. S.W., also said many more outlets would exacerbate shortages of some products.
And she said in her area of the Beltline, stores have proliferated at a rate that’s squeezing retailers.
“It’s a challenge, it’s about having to stand out in a crowd,” said Barry.
Even so, she said she couldn’t philosophically oppose the entry of others into the market.
“I’m a full-on capitalist and you can’t tell an entrepreneur you can’t do something,” said Barry.
The cost of starting up a shop, which can easily reach $250,000 even before ordering inventory, will ultimately weed out many applicants, she added.
In the first year of legalization of recreational cannabis that took effect Oct. 17, 2018, the province slapped a moratorium on new cannabis shops for six months due to supply shortages, and then gradually reopened that process.
Some critics of legalization have voiced concerns that move and a proliferation of stores will lead to an increase in abuse of the drug.
Statistics Canada says outside Atlantic Canada, the only province where the number of consumers has increased since October 2018 is Alberta, where overall use has risen from 16 to 19 per cent.
The larger number of stores in Alberta might have contributed to that, StatsCan senior analyst Michelle Roterman told Postmedia last March.
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