Toronto

Pot stores are now legal in Ontario — get ready for lineups, shortages and delayed openings

Just 9 of 25 licensed retailers open on Monday

Posted: April 01, 2019
Last Updated: April 02, 2019

Bundled under blankets and even a tent, some Torontonians lined up outside Hunny Pot Cannabis Co. to be the first customers at one of the city's only bricks-and-mortar pot shops. (Paul Smith/CBC)

Inside Nova Cannabis in Toronto's bustling Queen Street West neighbourhood, the shop's budtenders are crowded around a low table, taking whiffs of tiny vials and exchanging their observations.

"Slightly spicy," says one, before jotting down some notes and picking up another sample.

The first nine licensed cannabis stores in Ontario — the government had hoped to have 25 selling by this date — opened for business on Monday. But just days before, Nova Cannabis, like many of them, still wasn't quite ready for its big moment. 

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It was only a few months ago, on Jan. 11, that a lottery system determined which retailers would be eligible to apply for a licence to sell cannabis in Ontario. And the application process is time-consuming. It includes, for example, finding a location that meets certain regulatory requirements, and informing the neighbourhood that you intend to set up shop. And of course, you can't order any stock until the licence is approved. 

Nova Cannabis isn't expected to open on Monday. While anxiously refreshing her email, owner Heather Conlon is trying to visualize what things will look like once her licence and first cannabis shipment finally arrives.

"It's going to be very busy, we expect lineups, obviously," she said.

Hundreds of people lined up when Montreal's first cannabis stores opened in October. Similar waits and supply shortages are expected in Ontario this week. (Ryan Remiorz/Canadian Press)

'Few shops' expected to open 

Hunny Pot Cannabis Co. received its licence in time to place orders and schedule its final inspections before Monday. It appeared to be the only shop in Toronto on track to meet its target opening.

"It's been an amazing roller coaster," said owner Hunny Gawri, a Mississauga, Ont.,-based realtor with no prior experience in the cannabis industry.

Gawri said he was uncertain about how his store, also on Queen Street West, will manage potential lineups, and how long its first stock of cannabis will last.

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"If there's lineups, is the line moving fast enough? Are we ordering product that the customers want?" Gawri said. "Honestly, we just want to make sure that everyone who comes through enjoys the experience."

Budtenders at Nova Cannabis in Toronto smell cannabis and compare notes in a training session before opening day. (Derek Hooper/CBC)

Industry experts predict Ontario's first cannabis stores will experience many of the same growing pains as those in other provinces.

Those issues led to temporary closures and even caused some stores to go out of business entirely. 

The challenges could be even more pronounced in Ontario, where less than half of the 25 proposed stores were on track to meet Monday's target opening date.

"I think there will be few shops opening of the 25," said Jay Rosenthal, a cannabis industry watcher and co-founder of the online platform Business of Cannabis.

"The time horizon to get open by April 1st was really, really aggressive for any kind of business," he added.

Further, because those licences require stores to open on Monday, those that don't will face fines of up to $12,500 every two weeks, and $25,000 if they're not open by the end of April.

Heather Conlon, owner of Nova Cannabis, said she's concerned about possible supply shortages once her store is up and running. (Nick Boisvert/CBC)

More challenges on the horizon

Although Rosenthal expects the lines and shortages to be short-lived, experts and business owners worry that a cloud of uncertainty will hang over the industry for the foreseeable future.

Statistics from Health Canada point to a robust national supply — the federal agency says the Canada's total inventory of dried cannabis is nearly 19 times larger than total sales — but owners are worried about getting enough product into their stores.

Hunny Gawri, owner of The Hunny Pot Cannabis Co., is the only Toronto applicant to have received a license in time for opening day. (Nick Boisvert/CBC)

Retail shops in Ontario are obliged to order their products through the provincially run Ontario Cannabis Store (OCS). The OCS says it will distribute a "reasonable amount" of supply to support each store's operation, but has set maximum order sizes due to what it calls a national shortage of cannabis.

"Stores and customers should anticipate that the assortment of some products may be limited until the legal recreational marketplace stabilizes over time," OCS spokesperson Amanda Winton said via email. 

Ontario's thriving black market — which includes dealers, online stores and illegal dispensaries —  is also expected to pose a threat as the licensed stores first open.

Prices on the black market are believed to be 50 per cent lower than legal prices.

"I'm concerned about that, of course," Conlon said. She is hoping that police renew their focus on unlicensed dispensaries. "I've heard that they're going to be cracking down on those stores and hopefully keeping them closed," she added.

The licensed stores are also unable to match the range of products available on the black market, where cannabis edibles, drinks and vape pens are widely available.

Rosenthal said those products, which have not yet been regulated, make up around half of sales in the black market and U.S. states where they have been legalized.

Ontario's Progressive Conservative government has also said it will lift the 25 license cap once the cannabis supply stabilizes, though it is unclear how many new stores the province will allow.

Despite the uncertainty around future competition, Gawri is confident that his store, and others, will thrive.

"Ontario being the biggest market in Canada, there's enough business for everyone," he said.

Cannabis edibles are not yet available from licensed sellers. Experts say they are in high demand on the black market. (Darryl Dyck/The Canadian Press)

ABOUT THE AUTHOR

Nick Boisvert
Reporter, CBC Toronto

Nick Boisvert is a reporter based in Toronto with an interest in politics, civic issues and the environment. Outside work, Nick enjoys cooking, following the NBA and listing things in threes. You can reach him at nick.boisvert@cbc.ca.