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The Green Rush & The Unpredictable Outcome of Cannabis Retail in Calgary

Posted by Victoria Price on 2018-03-23
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It’s undeniable that in every province, city, and town across Canada, there’s something happening that evokes the entrepreneurial spirit that accompanied the gold rush of yore, and the history along with it – this rush however, is greener, more pungent, and might in fact be enjoyed more by those who are fans of Rush*.

*That will be the only Rush joke/reference in this blog entry. (Photo source)

With the legalization of marijuana looming, that entrepreneurial spirit is alive and well in retailers looking to establish themselves and secure licensing from the AGLC here in Alberta as quickly as possible. This fervor is also being met enthusiastically by local landlords who are banking on the profit and success that claims to follow closely at the heels of legalization. Mark Biglow, Vice President of JR Mercantile sent this Calgary Herald article around the office yesterday, sparking an interesting discussion around the current state of the game in Calgary when it comes to retail and weed.

It’s difficult to predict what the outcome of just about anything will be; from that ridiculous birthday game at the Stampede, to how profitable the recreational marijuana industry in Calgary and Alberta will be, the fact is: No one really knows how it’s all going to pan out.

For this reason, along with the processes and licensing requirements already set in place by the Province, we as retail leasing professionals don’t think it’s prudent at this time for landlords to scramble for cannabis retailers: Just like any entrepreneurial venture based in the demand, change, and distribution of a product, some operators will find success, but many will not. Here are a few reasons why we’re of the mind that Calgary landlords will be served best by keeping their powder dry:

  • No Municipal Bylaws: As of this writing, the City of Calgary still has not approved or implemented a concrete plan for the land use bylaws that cannabis retailers will have to adhere to in order to occupy a space. The Province has ruled that a cannabis retailer must be a minimum of 100 metres away from a school or healthcare facility. While this narrows down prospective options for retailers and gives them some place to start in their quest to find the ideal space, there is nothing barring city bylaws that require a further distance: Rumours abound that the City of Calgary is eyeing a 150 metre minimum distance from both schools and healthcare facilities. What becomes of the landlords whose spaces have been already taken by cannabis retailers that are in line with the Province, but not the city?
  • Bro, Do You Even Enforce?: If a retailer and a landlord has agreed to the leasing of a space up until this point, and the retailer has submitted for a licence, there really isn’t much the city can do, due to the lack of bylaws to date: There’s nothing saying a business owner can’t make moves and sign documents to secure a space, but there’s also nothing saying that they’ll actually be able to use it once legalization rolls around: This can result in lost revenue for both landlord, and business.
  • The Process Itself is a Bit Backwards: To even apply for a license from the AGLC, a retailer has to submit an illustration of their proposed floor plan, an illustrated site plan that includes surrounding businesses, and (the kicker) an Offer to Lease a landlord’s space. Retailers have to have a site chosen and signed off on before they can even apply to be licensed. In cities like Calgary where bylaws haven’t been decided upon, this obviously makes for a bit of a guessing game, and one that could seriously impact the bottom lines and success of both retailers, and the landlords who have leased them space.

Ultimately, it’s up to everyone involved in this industry – whether they’re only keen to dip their toes or have this planned out for generations to come – to take a step back and consider the current nature and reality of the cannabis industry in town: The use is not yet legalized; the rules not yet finalized. Most of the players haven’t been determined, and while planning, strategy, success, and build-up are afoot – the potential risk of these successful players being bought out will remain. Really, it’s comparable to playing Monopoly for the first time, sans rules and with the addition of a blindfold (I know what I’m doing this weekend.)

The cannabis industry is a brave new world with too many unanswered questions, unclear processes, and risk/reward ratios that don’t quite add up to us just yet. For now, we’re looking forward to continuing to provide exceptional results in the retail sector based on our experience and confidence with rules and processes that allow us to secure only the best for our clients.