Max Benitah, Co-Founder and President, Cann Shop, looks at the past, present, and future of cannabis retail in Canada.
Although it may not seem like it, we’ll soon be coming up on the third anniversary of the legalization of the production, use, and sale of recreational cannabis in Canada. While the integration of cannabis into our consumer economy has not been an entirely smooth ride, especially with the additional burden of the COVID-19 pandemic on small business owners, the legal cannabis market in Canada, and especially in Ontario, touts an impressive resume and continues to gain legitimacy and widespread interest from consumers.
In a global pandemic that was a backbreaker for many retail industries, the cannabis industry was able to reach a new audience and expand its offerings in meaningful ways, and that holds true for cannabis retail more than anything else, which is currently seeing unprecedented growth amidst industry transformation.
In 2020, even amidst a global pandemic, Canada’s recreational cannabis sales increased roughly 120% from the previous year, totaling approximately $2.6 billion. Moreover, consumer interest and usage have also continued to rise, with around 20% of Canadians reporting that they have used cannabis in recent months.
With the massive growth we’ve seen in cannabis retail expansion, consumer trends have shifted as well. While at one time, consumers preferred to get in and out as quickly as possible, destigmatization and normalization efforts have entirely changed the perception of cannabis, and consumers are now looking for an elevated cannabis experience when they shop, rather than pure efficiency. Consumers now want to be educated, discover new products, and spend time browsing the store.
At Cann Shop, we’ve taken this to heart and created a 7,000 square foot integrated lifestyle and cannabis space, complete with a lounge area, café display, and hundreds of unique products. Moving forward, industry insiders expect to see retail stores continue to diversify and experiment with more expansive floor plans and more interactive experiences. We’ll likely begin to see new hybrid spaces, like cafes and lounges, in the coming years as well.
Moving forward, how can we expect the cannabis retail industry to evolve further? We can expect to see increased specialization, more private labels and partnerships, and experimentation in alternative shopping methods, including delivery.
The number of cannabis stores in Ontario doubled this past year, and with more and more products entering the market, we will likely see stores begin to specialize in specific product types, tailoring their in-store experience to their audience instead of acting as a one-stop-shop.
Additionally, the consumer demand for variety continues to provide opportunities for cannabis companies and retailers to enter the market, develop and provide a wide range of products, and distinguish themselves as a trusted consumer brand. We have already begun to see some brands employ strategies to take advantage of these opportunities and have started working with licensed producers to launch private label products. For example, some retailers have begun working in partnership with licensed producers to launch private label products, and we can expect more exclusive or high-end products to launch soon.
Finally, we’re already seeing retailers experiment with alternative shopping methods. In British Columbia, private retailers are now able to offer direct-to-consumer delivery and elsewhere in the country, some retailers have begun to explore drive-thru options as well. These are promising developments that will need to be taken advantage of for the industry to reach its full potential.
Many of these changes will rely on the provincial government and their regulations to evolve along with the industry. The biggest issue the cannabis retail industry still faces is complex and vague regulations that lack clarity or direction. While those of us in the industry work hard to destigmatize and demystify cannabis for consumers, regulations actively make the product as secretive as possible.
Our current regulations act as gatekeepers to potential new users, limiting their knowledge and information regarding cannabis products, making them feel like they’ve walked into a test they didn’t study for when they enter a cannabis retail space. Instead, we should be aiming to create retail environments that make customers feel comfortable and engaged, places where it feels good to shop.
Cannabis retail is growing at an incredible rate in Canada, and thus far, Ontario has led the charge when it comes to sales. Ontario’s innovative business economy has positioned the province to continue to lead Canada’s cannabis revolution. Still, if the aim is to maintain this position, the province’s regulatory framework will need to evolve alongside the industry it governs.