The president of the largest marijuana retailer in Canada – the Ontario Cannabis Store – is blaming excessive shipping delays on licensed MJ producers for mislabeling some of their products.
Some customers who ordered recreational cannabis on the first day of legalization – Oct. 17 – have yet to receive their products, despite expected shipping times of three days or less and charges already made to credit cards.
In an Oct. 31 note to dissatisfied consumers, Ontario Cannabis Store President Patrick Ford said some items from licensed producers were “mislabeled” and “this delayed our ability to ship your order to you.”
The government-owned and -operated OCS is currently the only sales channel for legal marijuana sales in Ontario.
The OCS previously blamed delays on demand “beyond what we anticipated” and a labor dispute surrounding its exclusive shipper, Canada Post.
The OCS had said a “contingency plan” was to be implemented in the event of a Canada Post strike, but the retailer did not confirm whether the plan was ever carried out. The store noted it had “adequate product supply” to fulfill orders.
Experts worry the OCS is already suffering long-term damage to its reputation as a business.
They fear the monopoly retailer will see fewer repeat customers as a result of the inability to fulfill customer orders, which would be a boon for competing illicit-market players.
“If it is too much of a headache for consumers to switch to the legal market, they will not convert their regular shopping habits,” said Abi Roach, director of the Ontario Cannabis Consumer & Retail Alliance.
“Hence, the entire purpose of legalization has been missed, and the opportunity of a large redirect of consumers has been missed.”
Eyes on private sector
The onus will fall on the private sector to pick up the slack if the OCS fails to accumulate meaningful, sustainable market share from the illicit sector in the coming months.
Experts foresee a frenzy of applications out of the gate, as analysts say a fully private cannabis sector in Ontario could support at least 1,000 outlets.
Saskatchewan saw 1,500 submissions for just 51 licenses.
The Alcohol and Gaming Commission of Ontario (AGCO) will be in charge of licensing, regulating and enforcing the sale of recreational cannabis through privately run stores.
The AGCO said it anticipates beginning to accept applications in December.
A leading investment bank, meanwhile, is warning investors that it is “increasingly clear” recreational marijuana sales this year will come in much lower than expected.
“The extremely limited distribution network in many provinces, fulfillment challenges in Ontario, inventory shortage in Quebec and (licensed producers) coping with limited availability of excise stamps may take several months to be resolved,” GMP Securities analyst Martin Landry wrote in a research report.
The OCS did not immediately reply to queries from Marijuana Business Daily.
Matt Lamers can be reached at mattl@mjbizdaily.com
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