‘It’s going to be last in, first out’
To get an idea of how two cannabis stores in Hamilton are coping with increasing oversaturation of the market, The Spectator reached out to both Relm Cannabis Co. and Crafted Nugs on King Street East.
These are located mere steps away from each other in the International Village. Relm has been operating since December 2020, while Crafted Nugs opened its doors this March.
Speaking to The Spectator, Relm general manager Alex Boxall said seeing another dispensary open just four doors down from their store has him concerned that they’ve been “set up for failure” noting the immense costs of opening.
He also noted a third dispensary, Village Cannabis, is located just one block further east.
“I’m worried for them as individuals and local small-business owners,” said Boxall. “There is no possible way that three stores on this block can be profitable.”
He noted that since Crafted Nugs opened their doors, they’ve seen no change in their customer base or sales.
“Cannabis consumers by in large are loyal people,” said Boxall. “They tend to stick with the dispensaries they know.”
In an email response to questions from The Spectator, a manager from Crafted Nugs said they couldn’t speak to questions on competition and oversaturation as they “have only been open for a little over two months.” The manager did note they have been “very happy” with the growth of the store since opening.
“To date, we have new customers walking in daily happy with our selection and prices,” read the email. “We greatly appreciate everyone that enters our store because of the fact that they gave us a chance regardless of whether they purchase any products.”
Boxall said one of the difficulties that dispensaries face is their ability to differentiate themselves, as they all order their product through the Ontario Cannabis Store.
They could differentiate on price, that would mean “taking a bath with their margins,” he noted.
“It’s essentially a forced race to the bottom,” said Boxall.
The manager of Crafted Nugs noted “best way to differentiate and succeed” is through product knowledge, customer service, broad selection, competitive pricing and a strong team.
Boxall compared the state of the market to that of the Wild West — first the boom, then the bust.
“It’s going to be last in, first out,” he said. “We’re going to end up having a situation where we’re seeing empty storefronts on Main Street that used to be cannabis shops.”