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A c-store’s guide to selling cannabis accessories

marijuana-jointThe legalization of cannabis for non-medical purposes is opening up all sorts of opportunities for c-store operators that go beyond helping customers satisfy the munchies.

C-stores have long been a place to pick up rolling papers, lighters and matches for tobacco, but, with legalization, what about bongs and other cannabis-related accessories?

According to advice published on the Ontario Convenience Store Association website, cannabis accessories are legal to sell for non-medical purposes: “This means they may be sold specifically for the purposes of consuming cannabis as long as they are sold within the rules outlined in the Cannabis Act and the cannabis legislation in each Province.”

As the OCSA explains, the Federal Government has decided to regulate cannabis accessories very similar to tobacco products, with some differences. Here’s what you need to know:

  • Cannabis accessories may not be legally displayed anywhere where they might be seen by a minor, similar to tobacco.
  • The only way to promote the fact that you sell cannabis accessories, if minors are allowed in the establishment, is using a price list similar to tobacco products.
  • If minors are not allowed in the establishment, then cannabis accessories may be displayed and promoted.
  • Cannabis accessories generally cannot be advertised, promoted, discounted or be subject of inducements of any type (contests, giveaways, etc).
  • Cannabis may only be sold my licensed retailers, however cannabis accessories may be sold by anyone.

Ontario to issue 50 new cannabis store licences: What could this mean for c-stores?

cannabisOntario is set to get 50 more cannabis stores starting in October, and applicants will have to first show they have their finances and retail space ready to go.

The announcement June 26th comes as some of the first 25 of the province’s legal pot shops that were supposed to open April 1 are still not up and running.

Those initial retailers were chosen through a lottery to open Ontario’s first brick-and-mortar cannabis stores—when the drug became legal recreationally last October it was only available online through the government-run Ontario Cannabis Store—and that lottery system has faced criticism for not including a merit component.

In other Canadian jurisdictions allowing for the private sale of cannabis, successful retailers often include convenience stores. For instance, of the 24 retailers selected to qualify for cannabis sales in Newfoundland and Labrador, one is a convenience store in Labrador City. Last summer, a Co-op gas-bar in Calgary was given the green light.

Convenience operators in Ontario are watching the situation. One of the questions is whether the government will allow cannabis stores-within-a-store or insist they be entirely separate.

Either way, convenience-store operators like Alimentation Couche-Tard, which has a large number of Ontario locations, are well positioned.

“We have the ability to sell this product while meeting all government requirements (and) we can train our staff on verifying the identity of all consumers, regardless of their age,” Couche-Tard founder and executive chairman Alain Bouchard foreshadowed at the company’s 2017 annual meeting.

In February 2019, Alimentation Couche-Tard Inc. entered into a multi-year trademark license agreement with Canopy Growth Corporation, one of the winners of the Alcohol and Gaming Commission of Ontario’s Expression of Interest Application Lottery, who was preparing to operate a “Tweed” branded retail store in London, Ont. The store opened in May in a shopping plaza that is also home to Walmart, LCBO, Beer Store, Movie Theatre, Farm Boy and others.

In a release, the new partners stated: “Through this partnership, Alimentation Couche-Tard is aiming to lean on Canopy Growth’s cannabis expertise and leverage its experience with other age-restricted products to focus on the safe, responsible and lawful sale of cannabis, consistent with the legislation enacted by the federal and provincial governments. As two Canadian-made and globally-positioned companies, the London location will serve as an important entry to market that could lead to future international opportunities.”

“Alimentation Couche-Tard is excited about taking a leadership role in the development of cannabis retailing excellence in this major Canadian market. We believe the Ontario Cannabis Store and private retailers will co-exist under a tightly regulated framework with common goals to protect public health and safety,” said Couche-Tard president and CEO Brian Hannasch.

The Alcohol and Gaming Commission of Ontario will hold a lottery on Aug. 20 for the next 42 retail store authorizations. Another eight stores will be located on First Nations reserves through a separate process.

For this lottery, applicants will have to show evidence that if they are selected, they have already secured retail space that could be used as a store and that they have enough capital to open it, the AGCO said.

One licenced cannabis producer said the latest initiative will position the industry for significant sales growth in Canada’s largest province.

“After the first 25 stores began to open in Ontario, the industry saw overall sales of cannabis basically double,” Dr. Avtar Dhillon, executive chairman and president of Emerald Health Therapeutics said in a statement.

“Adult-use consumers are showing a preference for going into a physical location where they can interact with educated, savvy budtenders and we anticipate that the further expansion of physical stores in Ontario and Canada will strongly serve the growth of legal cannabis sales.”

The Ontario government decided on an initial round of just 25 stores, citing national supply issues, but that appears to be easing.

“Our government is continuing to take a responsible approach to opening cannabis stores across Ontario, allowing private sector businesses to build a safe and convenient retail system to combat the illegal market,” Finance Minister Rod Phillips said in a statement.

“With marginal improvements in national supply, we are proceeding to issue up to 50 new cannabis store licences.”

Attorney General Doug Downey said in a statement that a phased approach is still necessary.

“While the federal supply issues persist, we cannot in good conscience issue an unlimited number of licences to businesses,” he wrote.

Omar Khan, a vice-president with Hill+Knowlton Strategies who advises several clients in the cannabis industry, said the announcement is a positive step, but called for further action.

“If the government wants to eliminate the illicit market they will need to ensure that consumers are able to access legal product offerings conveniently and in a timely manner,” he said in a statement.

“This means moving aggressively towards an open licensing system as soon as the national supply situation permits, and working with the private sector to significantly improve the current online customer retail experience.”

The 42 new stores selected through the lottery will be distributed regionally, with 13 in the city of Toronto, six going to the Greater Toronto Area, 11 in the west region, seven going to the east region, and in the north, one each in Kenora, North Bay, Sault Ste. Marie, Thunder Bay and Timmins.

Stores will be allowed to open in any municipality regardless of population if the community did not opt out of having cannabis stores.

The process for First Nation stores will start in July on a first-come, first-served basis.

With files from Canadian Press. 


Labrador c-store offers the unusual: Confectionery, cheesecake…cannabis

 

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Photos: Larry Jenkins

Brenda and Trevor Tobin prefers the path less travelled. While the two stores she co-owns in Labrador City are well stocked with products customers expect – beer, cigarettes and lottery tickets – they also offer up extras that get customers talking and keep them coming back – everything from classic confectionary to cheesecake to cannabis.

“We like to carry products you can’t get anywhere else in town, and we go above and beyond to get them,” says Brenda Tobin, who co-owns Tobin’s Convenience and Tobin’s Mini Mart with her son Trevor and their respective spouses Ed and Krissy.

“We’re very busy,”she adds, “because we carry everything from a toothpick to a condom.”

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The pace is likely to become even more hectic as the c-store owners move full throttle into selling cannabis. Tobin’s is the only location in Labrador where pot can be legally purchased at the moment with the possibility of another location coming late 2018 in Goose Bay – and the only store in Labrador West to be granted a licence.

The opportunity to be among the first retailers to sell cannabis was too good to pass up, says Tobin, but getting the government’s seal of approval involved a lot of hard work and long hours. “We sat down night after night after night to prepare the proposal.”

The new cannabis outlet is attached to, but physically separate from Tobin’s Mini Mart, with its own entrance, as required until the provincial licensing regulations, says Tobin. The c-store operators have received four days of training and instruction from Cannabis Newfoundland and Labrador that covered everything from lighting and security to sales.

Profit for the marijuana products is limited by the government to an eight per cent markup. “You have to sell $250,000 to make $20,000. There’s not big money in it,” notes Tobin. They are hoping, however, there will be larger margins in sales of cannabis-related merchandise such as bongs and pipes.

Meeting customers’ needs requires anticipating those needs. Tobin’s, for example, is the only location in Labrador with a Bitcoin machine. At present, customers can buy the cryptocurrency at the store. “Eventually, we hope to have a machine where you can sell Bitcoin or buy a product with the currency,” says Tobin.

Going the extra mile for customers

Tobin’s has a history of providing the unusual when customers request it.

Brenda points to the store’s selection of retro candy, a customer favourite. For those with a heartier appetite, Tobin’s has a kitchen onsite that dishes up homemade pizza and submarine sandwiches. They even deliver. A baker prepares cheesecakes, fish cakes, cookies, and mouth-watering pies. For Thanksgiving 2017 alone, 51 homemade pies were whisked off the shelf.

If customers have a special item they’d like to see in the store, every effort is made to acquire it. Recently, for instance, a customer requested Blue Raspberry Crush. Now the c-store owners have 24 cases on hand.

While the product lines may change, one thing at both Tobin’s c-stores remains constant: fast, friendly customer service. Respecting and relating to customers is a staff requirement, says Tobin. “We greet people as soon as they come in the door.”

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Tobin’s Convenience’s tips for a successful store:

Treat customers like family. Making customers feel welcome and valued is not just a nice thing to do, when it’s genuine, it’s smart business. If a customer needs tea bags, for example, and Tobin’s is waiting for its next shipment, Brenda Tobin will walk back to the store kitchen, grab a few, put them in a baggie and hand them to the customer. No charge.

Respect your staff. Employees are the backbone and the face of a store. Treat them well, says Tobin. Their c-stores, for example, offer staff the option of full benefits including life and health insurance.


NSLC to sell cannabis edibles, extracts and topicals before end of the year

The Nova Scotia Liquor Corporation will sell cannabis edibles, extracts and topicals when the products become legal later this year.

Finance Minister Karen Casey says the government had great success with NSLC when they were asked to take on the retail for cannabis last year.

“They’ve proven they could take on the cannabis and so we asked them what it might look like if they were given the expanded mandate for the edibles, extracts and topicals,” Casey said Monday in an interview.

“They came back with the same kind of parameters and the same kind of priorities that we wanted, and that was that they would do education and awareness with their staff. They want, and we want, the staff handling the products to be comfortable doing that and to be knowledgeable,” she said.

Casey said there have been ongoing discussions with the private sector and First Nations, but for now, the government needed a retailer who was ready and could follow the same retail model set out for cannabis.

She said the new products will be sold in the same 12 NSLC stores that currently sell cannabis.

Casey said the NSLC said it will be able to handle the new products in the existing stores with very little capital costs.

Amended Health Canada regulations governing the sale of edibles, extracts and topicals come into force on Oct. 17.

However a 60-day review process for new products will mean they won’t be ready for sale until at least mid-December.

“As soon as the product is available, we’re going to be ready,” Casey said.


Study: Younger generations show preference for cannabis over alcohol

cannabisConsumer preference has reached an intersection. A decreased stigma and greater access to legal cannabis products are shaping the way younger generations spend money, a new study from New Frontier Data, a data, analytics and business intelligence firm for the cannabis industry, shows.

“Young adults approaching legal drinking age represent new potential consumers for alcohol brands, but New Frontier Data’s research reveals a noticeable shift in younger generations’ preference of cannabis over alcohol,” noted Giadha Aguirre de Carcer, founder and CEO of New Frontier Data. “Whether such a shift is indicative of potential sustained behaviour over time or a short-term spur in consumption remains to be seen, and is something we are currently looking into, but in the meantime, it could materially impact the alcohol industry.”

Some of the key findings of Cannabis Consumer Series: Alcohol vs. Legal Cannabis Consumption in North America include:

  • 45% of those surveyed said they were likely to replace some of their drinking with cannabis in the future.
  • 65% said, given a choice, they prefer cannabis to alcohol.
  • 47% said their drinking had not changed in the past two years.
  • 31% said they now drink less than they used to, and 23% said they drink more.

Edibles, other pot products, will hit shelves after mid December: Ottawa

Canadians looking to buy cannabis-infused brownies or lotions will find a “limited selection” in legal stores in mid-December at the earliest, the federal government says, but industry players expect the full rollout of next-generation pot products to come in 2020 or later.

Health Canada on June 14 released its final regulations governing the new classes of cannabis-infused goods, including topicals and vaporizable concentrates, and indicated the rules will come into force on Oct. 17—exactly one year since the legalization of recreational pot in Canada.

However, the Ottawa-based agency noted that after the law takes effect, federal cannabis licence holders must provide 60 days notice to the agency of their intent to sell new products.

That means that they will hit legal retailers’ shelves no earlier than mid-December.

“As with any new regulatory framework, federally licensed processors will need time to become familiar with and prepare to comply with the new rules and to produce new products,” Health Canada said in a statement.

“Provincially or territorially authorized distributors and retailers will also need time to purchase and obtain the new products and make them available for sale.”

The final regulations, which will be formally published in the Canada Gazette on June 26, have been highly anticipated by pot industry players as well as a flurry of food and beverage companies that have announced plans to cash in on the anticipated demand.

For example, Toronto-based Greenhouse Juice Co. said it plans to develop beverages infused with cannabidiol, or CBD, helped by an investment by Canopy Growth Corp.’s venture capital arm. Quebec-based Hexo Corp. has also partnered with alcohol giant Molson Coors to form a joint venture called Truss to make and sell cannabis-infused, non-alcoholic beverages.

A recent report by Deloitte estimated the Canadian market for these pot products is worth about $2.7 billion annually, with edibles contributing more than half of that amount. That’s on top of the roughly $6-billion estimated domestic market the consultancy had already estimated for recreational and medical cannabis.

The major rollout of this next wave of pot products will likely happen further into 2020, said Jefferies analyst Ryan Tomkins in a note to clients before the government announcement.

“We are likely to only see the first products launched late into December… with regulators likely to review numerous details of proposals including testing, manufacturing and packaging procedures as well as product data and ingredient specifications.”

Ottawa-based cannabis lawyer Trina Fraser expects a “handful” of these new cannabis products from the bigger industry players to hit the market in December, with more in 2020. She notes that there is a broader licensing backlog, and companies will need to get amendments approved before being able to produce these goods.

“There will be lots more new products coming onto the market in 2021, mostly due to regulatory delays,” she said.

Health Canada in February wrapped its public consultation on the draft rules for these additional cannabis products, and the final version is largely in line with what the agency had proposed.

Edible cannabis, whether food or beverage, will have a cap of 10 milligrams of tetrahydrocannabinol _ the high-inducing compound known as THC _ per package. Cannabis extracts for inhalation or topicals, such as pot-infused lotions, will have a cap of 1,000 milligrams of THC per package.

These products cannot contain nicotine, caffeine or alcohol. As well, no elements on these products would associate them with alcoholic beverages, tobacco products, or vaping products. All packaging must be plain and child resistant, and must not be appealing to young people.

Whether an edible cannabis product is reasonably considered to be appealing to kids would depend on various factors including its shape, colour, flavour, scent and how it is packaged, a government official said on a media briefing on Friday.

The determination of whether a product does violate the guideline will be made on a case-by-case basis, the official said.

The intent is the “protection of our kids,” Organized Crime Reduction Minister Bill Blair said last week.

“Gummy bears, for example, or things that represent cartoon characters… is clearly aimed, at a younger market or a younger audience – our children,” he told reporters. “And we are very much putting restrictions in place to ensure that does not happen.”

Omar Khan, a vice-president with Hill and Knowlton Strategies who advises several clients in the cannabis industry, said there were few surprises in the final regulations.

Health Canada continues to take a cautious approach which focuses on harm reduction, he added.

However, “there needs to be room for legal brands to develop consumer loyalty if the illicit market is to be eliminated,” Khan said. “This is something government needs to consider as the Cannabis Act regulations come up for review in a couple of years.”

Hill Street Beverage Co.’s chief executive Terry Donnelly had hoped that the final regulations would not require separate manufacturing facilities for cannabis-infused goods, but he was pleased to see the final regulations will now allow for the sale of multi-pack drinks.

A six-pack of cannabis-infused beverages would be permissible, for example, as long as the overall package has no more than 10 milligrams of THC.

This change is “allowing us to create products that kind of mirror what people are used to buying,” said Donnelly, who is also co-founder of the Cannabis Beverage Producers Alliance.

Hill Street, which plans to launch a line of cannabis-infused, non-alcoholic beverages, may have some products ready by December but is aiming for next spring, he said.

Greg Engel, the chief executive of licensed producer Organigram, said he had hoped each individual container in a multi-pack could have five or 10 milligrams of THC each, as is available in other markets such as Colorado.

Still, the regulations were in line with what he expected, he said. The licensed producer expects to have vaporizable products ready by December, and pot-infused chocolates by then or early next year, he said.

Engel expects a staggered rollout of Cannabis 2.0 products, which are more challenging to produce at scale than the initial classes of cannabis that hit the market on legalization day last October.

“The reality is that these forms are going to come to market in a more measured fashion.”

 


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Convenience meets cannabis?

In July 2018, the federal government will legalize the production and distribution of cannabis. Between now and then, the provinces and territories will have to decide how to adapt to this legislation. Convenience stores should be part of the discussion. Read more