Pot entrepreneurs eager to find niche in legal world
Firms looking beyond the smoke in bid to join expected bonanza
Canada will legalize recreational marijuana in less than two months, and a variety of Edmonton firms are working hard to find their place in one of the world’s newest major industries.
A recent study by American firms Arcview Market Research and BDS Analytics predicted total Canadian pot sales will balloon to US$5.5 billion in 2022 from US$569 million last year, which would give Canada 17 per cent of the entire world market.
Local companies want a slice of that giant pie once weed goes legit Oct. 17. While major players such as Aurora Cannabis have drawn attention for constructing massive growing facilities, Edmonton has other opportunities for profiting from the reefer bandwagon.
Here’s what people in a few of those fields are doing:
Cam O’Neil and Keenan Pascal, cofounders, Token Naturals: O’Neil and Pascal started Token Naturals last year with a vision of making cannabis-infused drinks, which O’Neil says don’t have the stigma of smoking, allow more precise dosages and deliver a longer-lasting high.
They hope to start this fall retrofitting a 560-square-metre north Edmonton warehouse as a facility to extract and refine the sticky oil from cannabis plants.
The structure is expected to be ready by the end of December and will eventually employ about a dozen staff.
Token is already putting out eight types of pot-free cocktail bitters while it waits for a federal licence and Oct. 17 to arrive.
Once that magic day comes, the company plans to sell oil and capsules, but will start offering two types of pot-ables in about a year when the government is scheduled to let adults buy edibles in addition to oil and dried and fresh marijuana, O’Neil says.
One product will be drops customers can add to their drinks, and the other will be flavoured pop, juice, cold-brew coffee or other items infused with cannabis.
“(People) really don’t like smoking.… It makes them feel like a drug user, while drinking is how we consume most of our drugs — coffee, alcohol.”
The long-term plan is to set up an “innovation hub” in their building where firms can develop products, create better ways to consume cannabis, and work on ways to collect data and improve consumer information, O’Neil says.
Dennis Aubin, managing director, SVN commercial real estate in Edmonton: Aubin is arranging a lease for a cannabis shop on Gateway Boulevard and says his client hopes to take possession in September to be ready for opening day in October.
Most of the top spots on streets such as Whyte Avenue were locked up under the city’s lottery system for determining who had first crack at receiving development permits. The number of storefronts is limited by such factors as distance restrictions from schools and health facilities.
“The gold rush for cannabis locations is over. My guess is there will be winners and losers. You will see consolidation.”
The city will start taking development applications on a firstcome, first-serve basis Aug. 28.
Aubin expects pot leasing will remain a small part of his business because retail deals tend to be on the smaller side in the commercial real estate field, although there may be opportunities for better operators to take over poorly performing sites.
He’s hearing interest from people without much formal business experience.
“Sometimes you get the impression, is it former dealers trying to continue their business legitimately?”
John Radostits, founding partner, Canndara: Edmonton-based Canndara has applied to open six Canndara Cannabis Co. stores in the city and hopes all will be selling product on Oct. 17 as part of a planned chain of locations from Saskatchewan to British Columbia.
The design is intended to be warm, welcoming and comfortable, with staff focused on marijuana
Everyone’s trying to do something different to get away from the stereotypical stoner culture.
education for the many new users coming through the doors, says John Radostits, who grew his family’s grocery business into Canada’s largest Sobeys franchisee before selling it.
“We have been through 100 stores in the U.S. to see what works and doesn’t work,” he says.
“Some governments have said you have to have security guards standing at the doors, or a foyer.… We like the model that Edmonton and the AGLC (Alberta Gaming, Liquor and Cannabis Commission) have come up with.”
The city has approved about 35 applications for development permits so far, but operators also need AGLC licences before they can open their doors.
Although the provincial regulator hasn’t given the green light to anyone yet, the first interim licences allowing companies to prepare for legalization should be handed out within days or weeks, an AGLC spokeswoman says.
So far, the AGLC has received 757 store applications, including 150 in Edmonton.
The provincially run online system will go into full operation Oct. 17.
“Everybody would like to be open that first day. It’s an important day for the industry. I think it’s something all retailers will be aspiring to,” Radostits says.
Alex Morrison, account director, Top Draw Inc.: In the heavily regulated post-prohibition world of cannabis, firms must overcome lingering stigma and advertising restrictions by such major American online operations as Google to attract attention, Edmonton marketing pro Alex Morrison says.
Stores can’t put up promotional street-facing signs, they can only push particular products rather than increased pot consumption, and packages must be a solid colour.
That means one key way to stand out will be researching where customers live, what they want and who they are, then developing a brand or personification of the company that resonates with them, she says.
Businesses that start late might have an advantage because they can target groups their competitors missed.
“Many companies want an affluent, female, high-end audience … I guarantee there will be a dominant group of people who will likely be forgotten in all these new ventures,” Morrison says.
“Everyone’s trying to do something different to get away from the stereotypical stoner culture.”
Morrison has worked with several potential clients, hopes to sign up at least two of them and expects the field to continue ramping up.
Maggie Davison, vice-president, Edmonton Tourism: The sweet smell of legal weed could start luring foreigners to Canada this fall, and Edmonton is well positioned to grab a portion of that traffic, Maggie Davison says.
While pot tourism is unlikely to be more than a niche market in the area, she thinks the city ’s relatively liberal consumption and sales laws will give Edmonton a competitive advantage over stricter locations such as Calgary.
But national legalization means any extra tourists will be spread across the country rather than concentrated in one place, although Alberta and other provinces might profit at first from the Ontario government’s decision to delay opening private retail stores until April.
Cannabis visitors, anticipated to be largely direct-flight Europeans, will probably be more interested in marijuana-related experiences than just sparking up, possibly leading to production facility tours or folk festivals where smoking dope doesn’t draw police attention.
Although Davison is waiting for the hospitality industry to put together cannabis events before looking at what marketing support Edmonton Tourism can provide, she expects the market to grow quickly once legalization arrives.
“I think everybody is going to benefit from the federal law.”