More growing pains ahead for legal cannabis market
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The cannabis industry endured gruelling growing pains in 2019.
A slew of delivery, supply, and logistical issues have plagued the rollout of cannabis products across Ontario since legalization in October 2018.
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More than a year after the legal market was set up, the Ontario Cannabis Retail Corp. — the Crown corporation that acts as the Ontario Cannabis Store — reported a $42-million loss when its fiscal year ended on March 31.
“As an emerging market, challenges are to be expected,” Michael Lickver, a senior vice president with the cannabis firm Auxly, told the Toronto Sun.
The new year brings cannabis lovers across Ontario an initial offering of 59 edible, extract, and topical products that go on sale at government-sanctioned pot stores later this week.
“We have been preparing for months for this launch and have a number of procedures in place to ensure our product is available for Canadians who want to purchase,” Lickver said.
According to the OCS, the new products will range in price from $4 to $125.
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Despite all the planning and preparation, OCS vice president David Lobo told reporters the initial supply of Cannabis 2.0 products will be “very limited” in variety and quantity.
Supply issues in Ontario’s legal weed market have so far been disappointing for customers and those trying to establish their products.
However, the province insists there’s a reason for optimism, noting its plans to open up the market to those wishing to open retail cannabis stores. So far, retailers wanting to open a pot store had to win a licence in a lottery.
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The AGCO will begin accepting retail store applications on Jan. 6 and start issuing store authorizations on March 2 with an eye to approving 20 stores a month.
Whether the number of stores and supply is increased quickly enough to placate an already frustrated consumer base remains to be seen.
The number of weed shops operating at the end of 2020 will depend on the market.
“There’s a lot of speculation on numbers of stores. We’ve heard people say in the marketplace say anywhere from 500 to 1,500,” Lobo said. “From our perspective, we’re not going to drive that, it’s going to be the market deciding how many stores to open.”
Larger cannabis companies will likely be able to ramp up their number of storefronts the quickest, Lobo said.
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Meanwhile, the price issue of legal cannabis will remain a thorn in the side of consumers who often choose to pay less on the black market.
Given the ongoing supply and price issues, it’s clear that there will be more growing pains ahead.
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