‘Horrifying’ marijuana sales in British Columbia a wake-up call for regulators

British Columbia’s dismal cannabis sales in the opening hours of legalization should be seen by provincial and federal regulators as a sign to do more to entice illicit players to join the regulated industry, experts say.

Among the provinces that disclosed first-day sales data, British Columbia’s sales were the lowest in Canada.

The province recorded 9,137 separate transactions of recreational cannabis products through its government-run website in the first 24 hours. That compares with Ontario’s more than 100,000 purchases, Quebec’s 30,000 online orders, and Nova Scotia’s 12,810.

Neighboring Alberta reported 8,300 online orders in its first 15 hours, meaning the province likely outsold British Columbia by the end of the day.

“B.C. coming last in sales is horrifying for the cannabis industry in this province,” said one executive, who asked to remain anonymous because of ongoing supply talks with the province.

“The first-week sales numbers in B.C. were by far the weakest of any province. The (BC Liquor Distribution Branch) needed retail storefronts open yesterday,” the executive said.

“If they cannot foster a growing retail network, LPs will simply favor other provinces with the proven ability to actually move product.”

Most experts believe the province’s gray market is a multibillion-dollar industry.

How much of that is shifted to the regulated market in the coming months and years ultimately depends on the effectiveness of the provincial and federal regulations on cultivation, sales, distribution and consumption.

Provincial government not ready

British Columbia managed to open only one government-run retail store for the first day of legalization – hundreds of kilometers from the heavily populated Vancouver area.

A spokesperson for the Ministry of Attorney General told Marijuana Business Daily that the government “cannot speculate” when private stores could start serving the market.

Responding to a second query on when more government-operated stores could be added to the single outlet already open, the ministry said the Liquor Distribution Branch “is actively searching for suitable locations for stores across the province.”

No timeline was provided.

Of the nearly 200 cannabis retail store license applications for privately owned stores received by the Liquor and Cannabis Regulation Branch, 113 are “paid but incomplete” and 73 have been referred to respective local governments for approval.

So far, no stores have been allowed to open.

Ian Dawkins, principal consultant of British Columbia-based Althing Consulting, said the province simply was not prepared for the launch of the recreational market last week.

“How did we end up in a place where British Columbia – with the largest and most robust cannabis market in Canada, with the most sophisticated consumers – has one retail shop, no licensed micro-producers and no timeline for when any of that will change?” he said.

Dawkins believes federal regulators should share some of the blame for not having micro-cultivation ready sooner, which will be essential to providing a pathway for illicit growers into regulated channels.

The federal government started accepting applications for micro-cultivation on Oct. 17 – the first day of legalization – but has no estimate as to when the first licenses could be issued.

“Ninety percent of the product right now is on the wrong side of the fence,” Dawkins said. “Clearly, the illicit market is entrenched, and we need to deal with that.”

Little changed

British Columbia has a very sophisticated illicit market, said Alex Shiff, senior consultant for Navigator, a Vancouver communications firm.

“On the ground, I sense that there is also much less novelty to the concept of legal cannabis because, for Vancouver residents, cannabis has seemed to be de facto legal for years – with the presence of brick-and-mortar cannabis stores exceeding Starbucks in many areas,” he said.

The market was “pretty much status quo” on the day legalization launched, according to Travis Lane, founder and cultivation specialist at Victoria, B.C.-based Levity Solutions, “with a few people like me having switched off the tap months ago to prepare for the long licensing process and a few good shops shutting down during the retail licensing process.

“It is extremely exciting in theory, but the actual day of legalization changed very little out west,” Lane said.

Matt Lamers can be reached at [email protected]

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13 comments on “‘Horrifying’ marijuana sales in British Columbia a wake-up call for regulators
  1. Monica Pua on

    Reading this article, I remembered the police raids against the “Cannabis Culture” dispensaries that were shut down, and their owners and managers arrested.

    Months later we know that prohibition and the police departments that enforce this criminal laws, are and have always been on the wrong side of the equation.

    Let’s not move from a prohibition that in a nutshell said “NO”, to a Prohibition 2.0 that has 1,200-page long laws and regulations for a medicinal plant, and that still includes raids, jail and police violence.

    Reply
  2. Freddy O on

    The problem is the price. I live in Ontario but still buy from BC. I receive it within 4 days, for half the price of any govt weed. You need brick and mortar stores, as we do in Ontario. Alberta was the only province that at least opened 30 to 35 stores. Not nearly enough, but at least a start. Ordering on line is slow and should be available like beer and alcohol is. Should be able to pick up on your way home from work.

    Reply
  3. Michael Davis on

    Of course with heavy regulation and taxing the Black Market is maintained. In 2017 the Black Market in the USA was a $44 billion operation while the legal industry was only $10.6 billion. The government would collect 5 times the revenue if the plant is regulated by the USDA and taxed as a farm commodity. This would require also that the processed products would be regulated and taxed exactly like alcohol by the ATF and not by the FDA and DEA as dangerous drugs. It would also allow the industry to probably be a $300 billion a year operation rather than just $55 billion as it is now with the Black Market dominating 80% of that Heavy regulation and taxing is what fuels and maintains the Black Market whether, Canada, USA or UK.

    Reply
  4. Mark Conlin on

    The problem is that every level of government wants to be “a dealer “. By the time the product reaches the consumer, it’s WAY overpriced and, often, under weight.

    Reply
  5. Maxcatski on

    The only way to eliminate the black market is to price it out of existence.

    With unlimited production in Canada, that day will come soon enough.

    Reply
  6. Dave on

    The application process for micro licenses is far to restrictive and complicated. You have to prove you qualified staff and zoning when you apply and the wait a year? As a small business you are supposed to hire highly qualified staff and then keep them on a payroll for a year while you wait with no income stream? And build or lease a facility in the accepted zoning and sit on it for a year? Absolutely no sense of how small businesses operate.

    Reply
    • Adam Swan on

      This is exactly where we are (Paradise City Growers) in Kelowna. I am about to sign a lease JUST so I can complete the Micro Application. Investors don’t want to invest till you HAVE the license and the Government takes its time. I have people coming on board but am scared I will lose them if it takes too long. Anyways Stay Stoned my friends. Sorry for the shameless plug lol..

      Reply
  7. Mike on

    i won’t ever buy “legal” cannabis. I know who built this industry and Im not going to give my business to some second rate hacks who were able to funnel some money together from their millionaire friends.

    Reply
  8. Daniel kilpatrick on

    Oh gee, BC had no sales really? I wonder if its because they raided a bunch of stores in BC? I wonder if it’s because our governments did nothing to create stores and ease of access? You make one store and are baffled you had no sales? Who are these people running the show? How is it everyone knew that would happen, but them… it’s like they’re totally inept to everything regarding sales and distribution of cannabis. Theyre oobviously creating a captive market but they dont even know how to do that.

    So easy
    Give growers licenses.
    Create testing facilities
    Noone can sell their products without it being tested first.

    With how many growers are in bc, if they allowed this all the stores would be packed. People would want their fav growers stuff and growers want to be legal but keep getting labeled criminals.

    The government has yet to grasp the entirety of it’s own ineptitude, hopefully they make strides in the right way sooner than later.

    Reply

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