N.L. Liquor Corp calls for proposals from stores who want to sell pot
Sales structure and 8 per cent commission a downer for St. John's retailer
As Canada rolls closer toward marijuana legalization, the Newfoundland and Labrador Liquor Corporation has put out the call for potential retailers, and the proposed sales structure is not sitting well with one St. John's man with plans to open a cannabis store.
"I don't want to eat peanut butter sandwiches to sell marijuana in Newfoundland," said Ross Barney, who along with a partner has spent about the last eight months preparing to open a stand-alone shop in the city's downtown core.
Barney was reacting to a new website launched by the NLC, which will license and regulate the sale of all cannabis products in the province.
The site lays out the types of businesses that will be allowed to sell cannabis and the breakdown of approximately how many marijuana retailers will exist in a given region.
The NLC has issued a request for proposals, with a March 29 deadline, saying retailers will get an eight per cent commission on cannabis sales.
The liquor corporation has not set a price per gram, but Barney expects it to be about $10 a gram, which means he would make 80 cents for every gram sold.
"If I sold one pound of cannabis in Newfoundland in the course of a work day, which is very difficult unless you're a Tim Hortons, then I would probably make $360 off that," Barney told the St. John's Morning Show.
The CEO of the Liquor Corporation, Sharon Sparkes, said nobody really knows the volumes that will be sold yet, so it's hard to say exactly what kind of businesses will benefit from an eight per cent commission.
"My view of this right now is that we've put out a very flexible model such that individual retailers can look at their models and see if this will be something that will work with their business," she said.
"Depending on their circumstances that eight per cent might be quite attractive and depending on other circumstances maybe not."
The NLC said it envisions four different store designs, or tiers, when it comes to the sale of cannabis.
The first design is for stores that will be dedicated to selling cannabis and related accessories. Customers must be 19 years old and the store can't have cross-access with any other type of retail operation.
Store within a store
This would be a completely enclosed area inside of an already existing retail space. The enclosed area would sell cannabis products and nobody under 19 would be allowed to enter that space, even if they are allowed in the larger retail store that houses it.
Dedicated service desk and cash counter
Think of this as the post-office model of cannabis sales. In this case, there would be a discreet location within an existing retail space, away from the main cash counter. Cannabis products would be stored out of sight in a secure wall-mounted or under-cabinet area.
Behind the counter
This is similar to how convenience stores sell tobacco products now, with one counter selling cannabis in addition to whatever else is for sale in that store. Like the previous example, all cannabis products would have to be hidden from view and clerks would have to be 19 or older.
The NLC breaks the province down into 34 regions, divided by postal codes. Its initial estimates have 41 licences distributed across those regions.
The northeast Avalon, for example, gets seven licences, the Northern Peninsula four.
NLC said its supplier, Canopy Growth Corporation, is also allowed four retail locations including its main production facility. The remaining three locations have not yet been determined but NLC said it could be in areas where other licences have been awarded.
The Crown corporation said it reserves the right to add more licences as it sees fit.
Dreams up in smoke?
Barney feels government was misleading in the early days of announcing its pot plan, and he expected there to be two tiers instead of four when it comes to store types.
The Costco of cannabis might open down on the waterfront, and all my hopes and dreams will dissipate.- Ross Barney
With the low commission and the possibility that pot could be sold at convenience stores, Barney said it's going to be very hard for dedicated stand alone shops to survive.
"We built an exclusive model just to serve cannabis, and we understood in the initial stages when the NLC discussed it, that any situation where a cannabis retailer wasn't available, that the NLC would step in and create a satellite location. I only expected tow tiers, this is a big surprise," he said.
Barney also worries about allowing Canopy to open its own stores in areas like downtown St. John's, which would be extremely hard to compete with.
"Tomorrow, for all I know, the Costco of cannabis might open down on the waterfront, and all my hopes and dreams will dissipate," he said.
With files from St. John's Morning Show