Vancouver, British Columbia, experienced the lowest per capita spending on legal adult-use cannabis products among Canadian cities last year, according to data from Statistics Canada, indicating the city has a long way to go before regulated storefronts are competitive with the entrenched illicit market.
Spending on legal marijuana in Vancouver’s census metropolitan areas totaled 105.6 million Canadian dollars ($85.5 million) in 2020, which amounts to only CA$38 per person on average, the lowest among the nine largest census metropolitan areas tracked by Statistics Canada.
Edmonton led Canada in per-person spending at CA$128.85, while Calgary was second at CA$99.61 per person. Alberta led Canada in the number of licensed cannabis stores last year.
But rather than the data showing that people in Vancouver consume less cannabis compared to those in other cities, the data suggests that the unregulated market remains much stronger in the West Coast city, according to Colin Bambury, head of marketing for South Vancouver retailer THC Canada.
“The obvious (factor) here is the entrenched legacy market. Everyone either grows or has connections,” he said.
The store has been around since 2016 but transitioned to the fully legal market last year.
“Anecdotally, a lot of customers that come into the store, their main source of buying cannabis is in the legacy market still,” he said, suggesting that B.C. customers are still experimenting in the regulated market with smaller purchase.
Vancouver’s relatively slow start also reflects the limited number of provincially regulated stores open in the city throughout the year, experts say, which in turn might be a function of the city’s sky-high store license fees.
In February, City Councilor Rebecca Bligh noted that a CA$33,958 annual fee imposed by Vancouver on legal cannabis retailers was six times higher than a business fee charged by Victoria.
According to Bligh’s motion:
“The extremely high size of the municipal business license fee for cannabis retailers acts as a significant barrier to entry for businesses seeking to join the legal market, which can incentivize them into operating illicitly, requiring additional enforcement and compliance costs, increasing the risk to public safety, and undermining the operations of the legal businesses who have paid the exorbitant licensing fee.”
The City Council unanimously supported the motion to review the fee.
The motion said the review is intended “to better align it with other retail license fees in the City of Vancouver and support businesses seeking to enter the legal cannabis retail market, with recommendations to take effect by the next renewal of the business license fee.”
British Columbia’s own statistics show that 33 cannabis store licenses had been approved or approved in principle as of January 2020 in the greater Vancouver/Sunshine Coast area, rising to 47 closer to the end of the year.
As of early April 2021, 84 store applications had been either approved or approved in principle.
For comparison, Calgary and Edmonton had 148 and 120 regulated cannabis providers, respectively, in April.
The relatively low number of legal stores in Vancouver represents an opportunity for cannabis entrepreneurs – at least when excessive business fees are lowered, experts say.
“There is a huge opportunity in this province,” said Jaclynn Pehota, executive director of the Association of Canadian Cannabis Retailers, which represents a group of mostly independent marijuana retailers in British Columbia.
Roughly CA$105.6 million worth of legal recreational cannabis products were sold in Vancouver last year, according to the Statistics Canada data.
Sales are bound to rise as new stores open.
“What we need to do is treat cannabis as an opportunity instead of a problem,” Pehota said. “We’re talking about an industry that represents billions of dollars of economic activity and tax revenue that we’re not capturing.”
Matt Lamers is Marijuana Business Daily’s international editor, based near Toronto. He can be reached at firstname.lastname@example.org.