Indiva buys way out of Ontario pot sales box
Boxed in by a rule designed to help small retailers, a London pot producer has found a way to flex its muscle and triple its presence in the local market months before Ontario opens the industry to private sellers.
Limited as a producer to a single store to sell cannabis, Indiva is partnering with a new company to open 10 marijuana dispensaries across the province, including two more in London.
Indiva had announced plans to open multiple pot shops throughout Ontario, but the province scuttled those plans last month after releasing retail rules that limit pot producers to a single store attached to their production site.
Now, Indiva has bought a 9.9 per cent stake in Retailgo Corp., which will operate a string of dispensaries under the name Ouid when bricks-and-mortar stores open in April.
“It’s also a chance to be part of a brand new legal industry . . . There’s not too many opportunities in life where you can be part of something right from the ground floor.” said Indiva’s chief operator Koby Smutylo.
Ouid — pronounced “weed” — already has secured a lease for a dispensary at 875 Wellington Rd., just south of Southdale Road, and is eying a second location downtown.
The company’s team is meeting with municipal officials and local business associations to answer any questions they may have.
“We want to be good neighbours,” Smutylo said.
Under Ontario’s private cannabis retail framework, licensed producers can own no more than 9.9 per cent of dispensaries that aren’t attached to their production sites, a move designed to create opportunities for smaller retailers.
The province isn’t capping the number of retail licences it will award — for which the application process opens Dec. 17 — but each operator will be allowed to hold a maximum of 75.
One leading cannabis lawyer has concerns about limiting the involvement of licensed producers in the retail landscape.
“Many of these companies, these licensed producers, are well capitalized and certainly have the ability to weather the storms of supply shortages, for example, and be able to operate in a way that’s going to ensure their success,” said Trina Fraser, an Ottawa lawyer who advises the cannabis industry.
Although Fraser says she doesn’t think Ontario’s rules will affect the number of dispensaries that set up shop, she cautioned that some small retailers many not have accurately budgeted to operate in an industry that’s shunned by banks.
“I think we could have had the best of both worlds,” she said of a retail landscape that includes licensed producers and smaller entrepreneurs.
Adults in Ontario can legally buy recreational pot only from the government-run online delivery service, the Ontario Cannabis Store, until dispensaries open in the spring. The stores will be allowed to open between 9 a.m. and 11 p.m., seven days a week. The businesses must be at least 150 metres from schools and bar entry to anyone younger than age 19.
Ouid is working with a Toronto-based architectural firm to design its stores, which will carry cannabis products from Indiva and other licensed producers, Smutylo said.
“What we’re aiming for is a fairly clean aesthetic, a little bit premium, but it should be very welcoming and appeal to a broad spectrum of people,” he said.
Indiva also plans to open a retail operation at its 3,700-square-metre plant on Hargrieve Road in south London.
Egle Adomaityte is director of cultivation at cannabis producer Indiva in London. The company is in a new partnership with a retailer.