‘VERY HISTORIC MOMENT’: BIRTH OF AN INDUSTRY
Customer experience is the buzz word as city’s new cannabis stores open
One store will have a DJ on site and give away free T-shirts for those waiting in line.
Another has high hopes of making Tommy Chong its first marquee customer.
Canadian retailers are boldly entering a new frontier Wednesday with the debut of legalized cannabis sales, featuring a splash of razzle-dazzle and a whole lot of pot for consumers.
The only two stores in Calgary ready for the launch will open at 10 a.m., trying to carve out a niche in a soon-to-be cluttered retail environment.
The beginning of legalized marijuana sales is not only a social and political phenomenon for Canadians, but it marks the birth of a new industry — storefront cannabis sales — and the start of a battle to see which companies survive and thrive.
“I am going to be watching the big players,” said Brad Poulos, an expert in the cannabis business and a lecturer at the Ted Rogers School of Management at Ryerson University.
“It will be interesting to watch them duke it out and see how much they can differentiate their strategies.”
The Alberta Gaming, Liquor and Cannabis Commission expects up to 250 retail stores will open across the province during the first year of legalization.
However, only 17 stores are ready and licensed for this week’s launch, including two in south Calgary just a few blocks away from each other. (Another eight or nine will open in the city in the coming weeks.)
A look inside the Nova Cannabis store at Willow Park Village reveals a sleek 5,000-squarefoot outlet with plenty of bright lights, flat-screen televisions, a cool blue curtain (so the public can’t see in) surrounded by five trees inside that provide a soothing natural look.
If it wasn’t for the assortment of accessories in display cases and product cards on the walls — the packaged cannabis is locked away in a secure vault — it could easily pass for an upscale mobile phone outlet.
“There is a lot of mystery, perhaps some stigma associated with cannabis still. When you see our store, when you see the environment that we’ve been aiming to create — it is a retail store, it looks like a retail store, it feels like a retail store,” said Shelley Girard, a vice-president at Alcanna Inc., which operates the Nova Cannabis chain.
“It’s a retail experience that feels familiar.”
Of course, it’s not familiar terrain yet for consumers to casually enter a store and walk out with up to 30 grams of Easy Cheesy, Banana Split or Blue Dream, which sells for $9.95 a gram.
Canadians who previously purchased pot on the black market or medicinally will have an entirely new experience at a store.
On the walls of the Nova shop — one of five the company will open this week in Alberta — rest an assortment of small cards with the names of different cannabis strains, such as Sunday Special or Western Sunset, along with a brief description and rating of its tetrahydrocannabinol (THC) and cannabidiol (CBD) levels.
“Mothered by a cross of White Widow and Super Skunk, Western Sunset produces a strong odour of earthy hash with floral and lemon undertones,” reads one card.
Upon entering the store, located in a strip mall on Macleod Trail, customers will be asked for identification to prove they’re 18 or older.
At Nova, about 25 “customer experience representatives” will staff the outlet.
Don’t expect to see mounds of marijuana on the store counters; only sealed transparent “sensory jars” with a cannabis flower inside will be visible.
At a front counter, customer orders will be filled from the vault.
All marijuana sold in Alberta stores is sourced from the AGLC, which has agreements to purchase cannabis from 15 federally licensed producers. This means retail outlets will have access to similar products at similar prices.
Girard said retail prices will vary depending on the strain and quantity, “but it’s important for us that we have at least one product in our store at all times that is … a little bit more aligned with what current prices are on the black market.”
That means one product will sell for $6.95 a gram. According to recent Statistics Canada data, the average price for cannabis was $6.86 per gram in the first nine months of 2018.
But that sets up a critical business question. How does one retail outlet set itself apart from another, particularly with government-imposed limitations on advertising ?
Store location will be one critical factor, said Poulos. The in-store service will also be paramount.
For Nova, the biggest thing is making sure people feel comfortable and have a positive experience, said Jerell Mananghaya, who previously worked in the medical marijuana industry and is now a cannabis educator at the Nova shop.
“We are bringing cannabis to more of the mainstream, versus the back-of-alley pickup kind of thing,” he said.
On Monday, Girard was busy preparing for a final inspection and working with staff to merchandise accessories — such as pipes and childproof cannadors — in cabinets and on the floor space.
For the opening, a DJ and some swag — such as water bottles and shirts — along with coffee and hot chocolate will be given out to early customers.
North on Macleod Trail, Four20 Premium Market is also gearing up for Wednesday’s opening.
Company president Jeff Mooij was hoping Calgary-raised Tommy Chong will be the store’s first customer, reflecting the entertainer’s long history cracking jokes about stoner culture. (Chong was uncertain Tuesday whether he’d make it back to Calgary in time from the United States. See related story on A6)
Including the capital expenses and inventory costs, the price tag on the 4,000-square-foot location will approach $1 million and it will have about 80 different products to sell.
“It’s not cheap getting into this business and the margins aren’t what everybody is expecting either. So you have to be efficient, you have to know what you’re doing,” Mooij said.
“This isn’t your bong shop, this is something different.”
Analyst Greg McLeish of Mackie Research expects Alberta customer demand to reach roughly 85,000 kilograms annually, worth an estimated $765 million.
If 250 stores are operating in the province next year, that would mean average store sales for cannabis around $3 million.
As for Wednesday’s launch, Mooij has an app that tells him exactly how many hours, minutes and seconds there are before the store opens, and the retail cannabis business officially takes off in Canada.
“It’s a very historic moment,” he added.
“This is going to be an event that any of the staff and everyone around here will be telling their grandchildren about — how I was there Day 1.”