The Calgary Journal
The Calgary Journal

Since October of 2018, Calgarians have been living in a post-marijuana prohibition world. The momentum of cannabis legalization, a lengthy and tedious process, has led to retail shops popping up across the city, but there is still much to be understood about the city’s marijuana marketplace.

Recently, however, that momentum has hit a snag. Last November, the Alberta Gaming, Liquor and Cannabis commission (AGLC) issued a temporary pause on cannabis licenses. Since then, a limited batch of 10 were given out, but as of February 2019, the suspension remains in effect.

Of Alberta’s 75 cannabis licensees, 24 can be found in Calgary. Several categories of distributors emerge from this list. The first subset is large scale, cannabis-only chains, including Nova Cannabis, NewLeaf Cannabis, and Four20 Premium Market. These companies may have the largest presence in Calgary, but they are not alone.

The second category consists of independently-owned businesses, such as Queen of Bud, Green Earth Cannabis, and Sweet Tree Cannabis. The third group has grown out of popular grocery chains. Calgary Co-op set the ball rolling in this category, with other chains such as Shoppers Drug Mart and Real Canadian Superstore planning to follow in the near future.

All of these retailers, regardless of their size, started from virtually the same place: the city’s approval process. However, a further examination of this process demonstrates that, like with search engines and social media, this is a market where the first ones in, win.

cannabisDeskMurray Ost, in the meeting room of the Glenbrook Community Association, presents plans for a cannabis retailer soon to open in the community. Photo by Noel Harper.
“Anyone in that first, initial stage of those development applications that came through that are open and running right now, are going to make substantially larger profit margins than what will happen down the road, when a multitude of retail outlets open up,” according to Murray Ost, president of the Glenbrook Community Association.

Ost rifles through a storage box and unearths the single document he is looking for: the application for the first cannabis retailer to open in the southwest Calgary community. It is a location of Nova Cannabis attached to a London Drugs, currently under construction.

Ost has held the role of president for over 10 years. It’s a position that, since early 2018, has tasked him with overseeing requests to open marijuana-related businesses in his neighbourhood. He remarks on the gaps exposed by this process in the city’s development policies.

“We saw a huge trend, from a community’s point of view, where we saw larger corporate businesses that had applications for cannabis distribution would appeal a smaller, local business application,” Ost said.

"For every one smaller business application or independent retailer, we probably saw two that were larger business corporations,” he said of the community’s cannabis hopefuls.

As the marketplace develops further in 2019, including by the legalization of cannabis edibles arriving one year to the date of initial legalization, Ost hopes for a happy medium between the levels of marijuana vendor.

“A nice blend of both, it gives people options at the retail end for purchasing, and I think it’s good for business, whether you want to own your own business or you simply want a job working within the industry,” he said.

As more shops open, Ost continues, “I hope we don’t see the same appeal process, trying to keep people out of the business ... but it wouldn’t surprise me if we do.”

Sweet Tree Cannabis is one of the smaller brands. It has opened two locations and is “ready for five more in the very near future, in Calgary and the surrounding areas,” according to CEO Tony Balakas, who founded the company with his brother Jason Balakas.

Despite a very competitive marijuana market, with new policies and delays at nearly every corner, Balakas has high praise for the legalization response from both the city and province.

“Alberta and Calgary both ... in my opinion, [have] done an excellent job with everything that they’ve been faced with,” he said.

“With everything considered,” Balakas continues, “Alberta is probably, actually number one in the country.”

Sweet Tree is vying for success in a risky and crowded industry. Crowded by omni-present chains such as NewLeaf, retail staples such as Co-op, and various other local shops. What does Balakas see as his foremost concern? None of these.

Canada’s Cannabis Act, in part, is meant to crack down on the black market. According to minister Bill Blair, it remains worth between $6 and $8 billion.

“We’re creating a new industry that will actually follow some rules, when there’s oversight, testing, and accountability,” Blair said at a CBC town hall.

Despite these efforts, Balakas names the black and grey markets as his greatest competition.

“Right now, basically any Calgarian can get not only cannabis, but cannabis extracts, oil, edibles, delivered to [their] door in an hour,” he said.

“That’s a massive piece that, obviously, will hopefully get controlled, but ... that’s a massive part of it.”

While these underground markets are a considerable threat, Balakas also pays attention to the legal cannabis marketplace, including larger corporations.

“They’ll be able to, probably start gauging in some serious discounts. Even if they take it at a loss-leader, the corporations can afford to do that for years. Private, more oriented, shops can’t necessarily afford to do that.”

Jim Riege, Senior Director of Cannabis for Calgary Co-op, said independent retailers have “absolutely” had the same opportunities as larger chains.

Co-op received 12 licenses within the city, after deciding to enter the business in 2017, granting them “another offering that we wanted to have for our customers,” Riege said.

cannibis1Jim Riege, Senior Director of Cannabis at Calgary Co-op, at the only currently open location of Co-op Cannabis on Macleod Trail. Photo by Noel Harper. Riege gives off an impression of confidence. He is not fazed by the private chains or the rest of the marketplace.

“We run our business, they run their business, and the customer will ultimately decide,” he said.

Furthermore, Riege has “no problem” with Calgary as a location to enter the cannabis industry, reiterating that Co-op is “a local company in Calgary ... we employ people, we pay taxes here.”

The playing field is levelled in that the impact of a commodity downturn is the same across the board.

Last November, when the Calgary Journal visited the store, Co-op Cannabis was “getting less and less availability, and I would guess by early next week, we’ll be down to less than a handful of varieties,” according to Riege.

Around the same time, Balakas’ shop was also hit hard. According to him, the company is still paying rent on stores that aren't in operation but he did expect some level of adjustment.

The shortages were also foreseen by Nathan Campbell, who has worked as a marijuana producer for six months, and serves as president of the Olds College Cannabis Society.

“It was to be expected, but I don’t think people expected it to be this soon,” said Campbell.

“I honestly think that they’re impacting all the retailers, you know, not necessarily just the ones attached to larger chains, but also the ones that are the independent mom and pop shops.”

Campbell expects that the shortage will hurt independent shops more quickly than the bigger, more established retailers.

cannibisSupertoreA Real Canadian Superstore location at Signal Hill Shopping Centre that will soon be home to a cannabis retail shop. Photo by Noel Harper.

Working in Olds, referred to as “the Silicon Valley of Cannabis”, Campbell also sees Alberta as “a really good spot to get into cannabis ... whether it is going to be retail, or whether it is going to be a licensed producer.”

All in all, Campbell wants an equal chance for every retailer, whether independent or attached to a larger chain.

“I hope that they get the same opportunities, because it is all one product that everybody is wanting to buy. It is all cannabis.”

Editor: Alannah Page | This email address is being protected from spambots. You need JavaScript enabled to view it.