Canada’s most populous province, Ontario, has finally surpassed Alberta in terms of the number of licensed cannabis stores that are open for business.
Despite the milestone, Ontario has a long way to go before it’s close to being saturated, experts say.
Ontario had 613 open cannabis stores as of Monday, according to the Ontario Cannabis Store (OCS), which serves as the wholesaler to those stores.
Meanwhile, 599 stores in Alberta were actively ordering from the province’s cannabis store regulator and wholesaler, the Alberta Gaming, Liquor and Cannabis Commission (AGLC), as of Monday, according to the agency.
The AGLC had issued 611 cannabis store licenses as of Tuesday, according to the AGLC licensing website. Not all of those licensed stores are necessarily open.
The new cannabis store numbers show that Ontario’s marijuana retail landscape is making progress, said Michael Armstrong, an associate professor of business at Brock University in St. Catherine’s, Ontario, who studies the Canadian market.
“Ontario’s slowness in opening stores, which is largely the provincial government’s slowness in opening the licensing process, has held back Ontario’s progress at competing with the black market and therefore indirectly held back all the licensed producers who are trying to earn a profit, because Ontario, of course, is the largest market,” he said.
“We still don’t have enough stores in Ontario,” Armstrong added. “Nobody really knows what the ‘best,’ quote-unquote, number is.
“But we’re starting to get into the half-decent range where people can get to a store but not necessarily get to a convenient store or one they happen to like.”
Per capita still lags
Alberta, the fourth-most-populous province in Canada, was the country’s early leader in cannabis retail licensing and had issued more than 500 marijuana store licenses by October 2020.
However, Ontario still lags far behind Alberta in terms of cannabis stores per capita.
With 611 stores serving a population of about 14.8 million, Ontario now has roughly 4.1 cannabis stores per 100,000 people.
That compares with 13.5 stores per 100,000 people in Alberta, which has a population of roughly 4.4 million.
Ontario suffered from a dearth of licensed cannabis stores since recreational legalization in October 2018, constraining the growth of a marijuana market where the vast majority of cannabis purchases take place in brick-and-mortar stores.
A recent OCS report found that 88% of Ontario’s legal adult-use cannabis sales were from physical retailers versus the OCS’ online retail operation.
Before legalization, Ontario’s previous Liberal government originally planned to sell cannabis through a provincial retail monopoly, eliminating private-sector retailers from Canada’s biggest market entirely.
The province’s current Progressive Conservative government scrapped that plan after taking power shortly ahead of legalization, changing the OCS’ role from a complete monopoly to an online-sales and wholesale monopoly and opening the door to private-sector retailers.
That led to a series of unpopular lotteries for limited numbers of initial store licenses and industry pressure on the Ontario government to open up the process.
More than a year and a half after legalization, fewer than 100 legal marijuana stores were open for business in Ontario.
Since then, the Alcohol and Gaming Commission of Ontario (AGCO) has increased the pace of store licensing multiple times, to 120 licenses per month as of February.
The OCS recently said that Ontario needs more physical stores in unserved and under-served communities.
Ontario’s recreational marijuana market was worth 90 million Canadian dollars ($72 million) in January.
Toronto, the largest city in the province, accounted for 43% of the total with CA$39 million in sales, according to Statistics Canada figures.
In 2020, roughly CA$334 million of regulated cannabis products were sold in the city, tops among the nine cities tracked by Statistics Canada.
While Toronto leads on a nominal basis, the city lags when it comes to per capita sales.
Toronto’s CA$50.95 in per capita sales was about the same as Montreal’s but much lower than Edmonton’s CA$128.85 per person.
That suggests there is still significant room for expansion in Toronto, experts say.
Solomon Israel can be reached at email@example.com.