Most legal cannabis stores in Canada barred from delivery, hampering retailers’ ability to serve customers

Ryan Roch, owner of Lake City Cannabis in Alberta, is one of about 700 cannabis business owners not allowed to sell products online.

As Canada’s federal government urges Canadians to stay at home to combat the COVID-19 pandemic, the vast majority of private-sector cannabis stores in the nation have long been barred by provinces from offering home cannabis delivery services to customers.

As of now, only cannabis retailers in Saskatchewan and Manitoba may offer full e-commerce.

That could be problematic for the nearly 700 privately owned recreational cannabis retailers in other provinces as demand shifts to e-commerce.

The economic fallout felt by those stores could be more acute the longer personal distancing measures are in place, business leaders told Marijuana Business Daily.

When Canada legalized adult-use cannabis in 2018, the federal government maintained its regulatory grip on production while provinces were given control of sales.

Most provinces started their own wholesale and online channel monopolies.

Sales bump short-lived?

Some retailers are warning that the recent surge in in-store transactions could be short-lived as the country hunkers down for a prolonged fight to stem the spread of the virus and sales shift to online.

That would prove problematic for the many private retailers unable to serve those customers through online service and home delivery.

Ryan Roch, co-owner and director of Lake City Cannabis in Alberta, does not expect the surge of in-store transactions to maintain legs over a period of time.

“We can’t expect that people will continue to be coming through the doors in droves. I’m enjoying a short-term bump as much as other people. But they are 100% short term,” he said.

“It’s nice to see the bump in traffic. It makes us all feel better. It makes us feel more secure, but it’s as simple as this: I don’t know if we’re going to be shut down today, tomorrow, next week, and I completely expect that we will be.”

Andrew Gordon, senior vice president at Kiaro, said the British Columbia-based retailer is following all the health and safety guidelines put in place by the Canadian public health agency.

He said the sales surge could be short-lived as more people self-isolate and social-distancing measures become enforced.

“While we do see a bump in sales here and transaction volumes, I am expecting to see a bit of a tapering off as we do move further into this challenging time for people economically,” he said.

“People are going to be under a significant economic strain during this time.”

Benefits of delivery

In the prairie provinces of Manitoba and Saskatchewan, provincial regulations allow private-sector cannabis stores to offer a full e-commerce experience where customers order online and get cannabis delivered right to their door.

Darren Bondar, CEO of retail cannabis store operator Inner Spirit Holdings, said the company’s Saskatchewan outlets saw a huge bump in online orders for home delivery last week.

“Saskatchewan’s definitely seen an uptick in e-commerce, I’d say almost 500%, where customers are choosing to stay at home and have product delivered to them instead of visiting us in-store,” Bondar told Marijuana Business Daily.

In Manitoba, Delta 9 Cannabis CEO John Arbuthnot said his company’s retail arm has been aggressively marketing its online ordering and delivery options at its physical retail stores while they remain open.

That push includes in-store promotions with sales representatives from delivery service Pineapple Express who have been distributing marketing materials to in-store customers.

“(We’re) really just trying to create awareness as the situation evolves … that there will be options, that people don’t need to leave the house,” Arbuthnot said last week.

Delta 9’s online cannabis sales have at least doubled in the face of the pandemic, Arbuthnot said. As the pandemic evolves, Arbuthnot said Delta 9 might consider free delivery to keep online orders flowing.

Provinces respond

Some provinces mindful that most stores can’t engage in e-commerce took quick action to support cannabis retailers while promoting social-distancing measures.

British Columbia on March 20 started allowing regulated cannabis stores to accept product reservations online and over the phone.

However, reserved products will still have to be picked up and paid for in regulated stores, according to the directive.

The government of Alberta is focusing on “immediate health and safety needs” and is “not currently considering changing regulations to allow private retail sales of cannabis online,” a spokesperson for Alberta’s Ministry of Treasury Board and Finance wrote in an email to MJBizDaily.

In a move not related to the COVID-19 pandemic, Ontario recently started allowing regulated store owners to offer click-and-collect services.

Steven Fry, CEO of Ontario-based retailer Sessions Cannabis, said allowing curbside pickup would be beneficial to both public health and the bottom lines of stores.

“Right now, we’re not allowed to deliver outside the store. The transaction has to be made inside the store. But can we make arrangements to do curbside pickup? So we’re asking these questions,” he said.

“We want to help contribute to social gifting, but you’re not giving us a lot of tools to do that within the current regulations.”

Solomon Israel is a reporter for Marijuana Business Daily, based in Winnipeg. He can be reached at [email protected]

Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at [email protected].

For more of Marijuana Business Daily’s ongoing coverage of the coronavirus pandemic and its effects on the cannabis industry, click here.

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