Cannabis

Beating the Odds: What I learned from being one of the first legal cannabis retailers in Ontario

On April 1, 2019, Relm Cannabis made history by opening a retail store in Burlington to support the community and surrounding areas. Our mission? To make genuine connections with customers to build long lasting relationships as cannabis vendors. By all accounts thus far, this mission has been a resounding success, because when it comes down to it, we sell cannabis. It’s not complicated.

So maybe it’s not complicated, but in many ways, being a cannabis retailer comes with a host of unexpected challenges. For example, back in 2018, it wasn’t immediately clear who would be able to sell cannabis legally. On December 13 of that year, the Government of Ontario announced that a temporary cap of 25 Retail Store Authorizations (RSA) would be imposed while cannabis supply stabilized. As set out in Ontario Regulation 468/18, the government gave the Alcohol and Gaming Commission of Ontario (AGCO) the mandate to hold a lottery to determine who could apply for Retail Operator Licences. That lottery took place on Jan 11, 2019 in accordance with the Expression of Interest Lottery Rules.

The initial Expression of Interest Lottery covered a period of time from January 2, 2019, when the Rules were published, to one year from the date an amendment was filed. This period of time was referred to as the “Lottery Process.” We applied during this time and were one of the first 25 RSAs granted.

Since then, there’s been no looking back. In uncharted terrority, new business owners must remain flexible and learn on the go. In an emerging market like cannabis retail in Ontario, it’s especially essential to understand the rules and regulations. This may seem like a basic step, but simply knowing that these policies exist and actually gaining in-depth knowledge about the requirements around selling cannabis can be the difference between keeping your licence or having it revoked. Such policies include what is or is not allowed when marketing and promoting cannabis products and the business itself, and how discounts on products for staff and customers are regulated. What do the government and Ontario Cannabis Store (OCS) require if a customer is unhappy with their cannabis purchase and wants to return it? We had no idea. In many ways the legal cannabis market at the time was like the Wild West.

We learned that simply securing a licence was nowhere near enough. A well-established cannabis legacy (grey) market was already in operation. Cannabis consumers are also segmented in many ways. Some are veteran consumers who have been familiar with a particular product for decades. Others are new to cannabis. Some consume it for therapeutic reasons, while others enjoy it for recreational purposes. There is no single stereotype that fits all cannabis consumers. There are so many different kinds of people who are interested in this market that retailers must remain flexible and responsive to a diverse set of consumers.

Things can move quickly in the cannabis retail space. That means having a well-defined brand and strategy for growth right from the start is critical. It may be exciting to launch many stores after some initial success, but careful planning at the flagship store always trumps a hasty expansion. With so many competitors selling the exact same products in the market, it’s about finding what makes your store unique and then building on that identity. But how can retailers differentiate themselves?

One way is by providing exemplary customer service. This could start as soon as the customer walks in the door, where they are treated to a carefully curated customer experience, to the moment the sale is made and they leave the store. Such a tailored experience may not always be so easy to achieve though. That’s because there are simply no parallels between cannabis retail and other retail businesses. There are other challenges as well. In December 2019, the Ontario government announced its move to open the market for retail cannabis stores beginning in January 2020. After removing the temporary cap that restricted the number of cannabis stores in the province, the cannabis retail space has been booming. Presently the market is saturated, and without the ability to differentiate from a product perspective, I predict that about a quarter of these new stores will fail.

There are certainly core business principles that all cannabis retailers can fall back on to beat the odds. Respect the rules and regulations. Have your ducks in a row at your first store before you expand. Stay keenly attuned to your customers and the surrounding communities. Beyond those principles, there is no single path to success. It boils down to hard work, not resting on yesterday’s successes, and looking ahead to what’s next in the exciting world of cannabis.

Mara Connacher is the Operations Manager for Relm Cannabis, one of the first legal cannabis retailers in Ontario.