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Saskatchewan opening up retail cannabis market to help meet consumer demand

shutterstock_1140581744Saskatchewan plans to lift the lid on legal cannabis sales to help meet consumer demand.

The government says it will open the market to more retailers in the hope of discouraging competition from illegal sellers.

Last year, the province used a lottery system to select 51 retail permit applications, of which 39 have been issued and 12 are still being assessed.

Gene Makowsky, minister for the Saskatchewan Liquor and Gaming Authority, says starting in April the government will accept applications for cannabis retail permits in communities with populations less than 2,500.

In September, it will accept permit applications for stores in all communities without any cap.

Municipalities can still opt out of having cannabis retail stores if they wish.

“We believe opening the market to more retailers will help meet customer demand while also helping discourage competition from unlicensed stores,” Makowsky said in a release.

He says the supply of cannabis for permitted retailers will continue to come from permitted wholesalers and federally licensed producers registered in Saskatchewan.


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The convenience industry is ground zero for cannabis-infused product innovation

“Greenfield” refers to a virgin market yet to be commercially exploited. From a business perspective, it’s elusive and appealing because of how infrequently it occurs, as well as the potential for windfall results.

Greenfield opportunities are generally not for lack of foresight, but rather a function of structural, technical, regulatory or other barriers. When circumstances change, competing parties typically scramble for prime positioning. 

The passing of Bill C-45, The Cannabis Act, in 2018 ushered in a new age of cannabis legalization in Canada. Legal sales of cannabis via retail outlets, as well as limited personal production, opened up for the first time, setting the stage for future cannabis-related innovation. 

On Oct. 17, 2019, the commercial sale of cannabis-infused edibles (baked goods, drinks etc.) became legal, however there was already much work ongoing to define a framework for what many see as the next greenfield opportunity. For instance, CBD-infused products will start hitting store shelves before the end of of the year.

This is no doubt of interest to the convenience industry and c-store operators, who may be uniquely positioned to grab a piece of this greenfield market.

Screen Shot 2019-10-18 at 3.45.57 PMIt’s also welcome news to consumers. According to a study out of Dalhousie University in Halifax, of the 68% of participants who were in favour of legalizing cannabis in 2017, 93% were also very likely to try at least one edible product, while 46% of all Canadians would try cannabis-infused food products if they were available. 

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Consumers have a taste for cannabis

Earlier this year Deloitte surveyed 2,000 adult Canadians regarding cannabis and edibles consumption, concluding that edibles and cannabis-infused beverages represent a multi-billion dollar opportunity. 

The Arcview, a cannabis investment and market research company, projects the cannabis edibles market will be worth more than $4 billion in Canada and the United States by 2022, with Canada representing nearly 40% of the opportunity.

 As a means of projecting the potential of cannabis for the Canadian food industry, Sylvain Charlebois, professor of food distribution and policy at Dalhousie University, examined data from U.S. states that have already implemented legalization. The data pointed to rapid market penetration in Canada, with edibles sales expected to account for more than 10% of total cannabis sales within two years of opening the market.

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CBD: The first wave

The first wave of change will be food and beverage products that reference cannabis, but include non-hallucinogenic cannabidiol (CBD) derivatives and/or hemp-based products.

Hemp and CBD products became legal in the U.S. with the signing of the Farm Bill at the end of 2018. In its annual Chef Survey, The National Restaurant Association and the American Culinary Federation found that 75% of the 650 chefs surveyed said CBD and cannabis-infused food would be a hot trend in 2019.

In the U.S., legalization has sparked innovation and, ultimately, consumer demand.

Screen Shot 2019-10-18 at 3.47.46 PMThough, it is still early in the adoption process for CBD-infused foods and beverages, there are many examples of both emerging and global drink companies aligning to prepare for the coming market gap. 

For instance, L.A.-based Kickback Cold Brew offers coffee and tea-based CBD-infused beverages made with organic ingredients, 100% single origin and shade grown coffee beans, and high-grade hemp.

In the QSR segment, Carl’s Jr., a burger chain with 1,500 locations, including more than 20 in British Columbia, Alberta and Saskatchewan, recently tested a CBD Burger in Colorado. The limited edition $4.20 Rocky Mountain High: CheeseBurger Delight featured a Santa Fe sauce infused with CBD, a non-psychoactive hemp derivative. It was a nod to consumers’ pent up desire for cannabis innovation and may yet find a place on Carl’s Jr. permanent menu.

 “(It) ties back to our core strategy of being the first to bring bold and unexpected flavours, that are at the forefront of hot restaurant trends, to a quick service menu,” says Patty Trevino, Carl’s Jr. senior vice-president of brand marketing.

Cannabis express

Last year, convenience operator Kohanoff Affiliated partnered with Swissx Oil & Confectionary to distribute its Swissx CBD products in more than 500 convenience stores and gas stations across Southern California. 

 Earlier this year, Canada’s Alimentation Couche-Tard Inc. entered into a multi-year agreement with Canopy Growth Corp. to open a Tweed-branded cannabis store in London, Ont. “Alimentation Couche-Tard is excited about taking a leadership role in the development of cannabis retailing excellence,” says Brian Hannasch, president and CEO of Couche-Tard, adding Couche-Tard is looking at this venture as a vital entry opportunity to a new market.

Then, in July, the convenience giant announced a partnership with cannabis retailer Fire & Flower. “Couche-Tard is excited to make this strategic investment in one of the fastest growing cannabis ‘pure-play’ retailers,” said Hannasch. “This investment in Fire & Flower, with a path to a controlling stake, will enable us to leverage their leadership, network and advanced digital platform to accelerate our journey in this new and flourishing sector.”

With the legalization of cannabis, we are in the midst of a revolutionary paradigm shift. Having lived in The Netherlands during the 1990s, I was first exposed to a tolerant attitude towards cannabis: Legalization blows open the door to normalization, commercialization and potentially explosive growth. It promises to be one of the largest “land rushes” in modern memory and the time to get your claim flag in the ground is now.

 

Darren Climans is a foodservice insights professional with close to 20 years’ experience partnering with broadline distributors, CPG suppliers, and foodservice operators. His practice is to understand issue-based decisions by taking a data-driven approach to strategic decision making.


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Couche-Tard vying for piece of North American cannabis market

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Alimentation Couche-Tard Inc. wants to be one of the “key players” in the North American cannabis market by using its position in Canada – where use of the substance for recreational purposes is legal – to achieve this goal.

But the expertise to be developed by the operator of convenience stores and gas stations in selling the drug will have to be done outside of Quebec because of provincial rules limiting the sale of marijuana to government-run stores and online, company founder and executive chairman Alain Bouchard said Wednesday following its annual meeting.

“I think it’s a shame for Quebec because this expertise will go outside Quebec,” he said. “When we deploy a network in the United States or any other activities in the U.S., it will come from outside Quebec.”

Unable to penetrate the Quebec market, the Quebec multinational has invested in Alberta retailer Fire & Flower, which could enable it to eventually acquire a majority stake in this company.

This is in addition to its existing partnership with Canadian cannabis giant Canopy Growth surrounding the operation of private stores.

Even though the recreational cannabis market is still in its infancy, Couche-Tard wants to go out of its way to set up a strategy that is ready to be deployed where regulations allow it, Bouchard added.

“It’s still very small. We will learn from that and I really believe we can succeed.”

The parent company of Circle K has turned its sights to the United States, where recreational consumption of marijuana is legal in 13 states, says CEO Brian Hannasch, who noted the retailer has long experience selling age-restricted products. But it must take the time to know the rules of the game, he added.

Couche-Tard has already started selling cannabidiol (CBD) products, a compound with potential medicinal qualities but without significant levels of THC – a compound in cannabis that produces a high – in some stores in the U.S. and Ireland.

“It’s kind of the Wild West, but I think we have a place in this market,” said Hannasch. But this is only the beginning. “

By 2023, the multinational wants to double its operating profit, which was about US$4 billion last year. However, it did not identify marijuana as a growth driver in its strategic plan because of the many regulatory uncertainties.

Hannasch did not hide the fact that the market for recreational marijuana could, however, make it easier for the company, which currently operates a network of approximately 16,000 outlets in Canada, the United States, Europe, Latin America, Asia and the Middle East.

In the meantime, the retailer hopes that its organic growth will allow it to generate half of its growth target. The company particularly wants to focus on millennial customers who are “less loyal to stores, but more loyal to brands,” said Bouchard.

Couche-Tard is offering more efficient and faster payment options and has begun deploying its Lift digital platform in Canada, which sends personalized offers to consumers. The company is also testing home delivery in Texas and expanding its offering of food and beverage products.


Fire & Flower Retail Stores (C) 2019 Fire & Flower Inc. (CNW Group/Fire & Flower Holdings Corp.)

Couche-Tard’s Fire & Flower to open to stores in Edmonton

Fire & Flower Holdings Corp. and its wholly-owned subsidiary Fire & Flower Inc.has received two additional cannabis retail store licences from the Alberta Gaming, Liquor and Cannabis Commission for locations in Edmonton.

Building upon the rapid development and expansion of Edmonton’s downtown, the Rice Howard Way location at 10141 – 100A Street, Edmonton, Alberta will be the only cannabis retail store located in the city’s downtown core. This store is located in a high traffic location near major office towers, hotels and the newly built Edmonton arena district.

The Westmount store will be located at 12225 – 107 Avenue, near the high traffic 124th street area in Edmontonand will serve the vibrant residental and commercial area west of downtown Edmonton. With the opening of these locations, Fire & Flower will have nine stores in the Edmonton metropolitan region.

The company anticipates the stores will open the week of September 9.

“As an Edmonton-based company, we are thrilled to be opening the very first cannabis retail store in the city’s vibrant and growing downtown core,” Trevor Fencott, Fire & Flower’s CEO, said in a release. “These are both major locations in the key metropolitan market of Edmonton, where our company is headquartered. Customers can shop confidently knowing they are supporting their local community while being part of an Edmonton success story in this new emerging market.”

Fire & Flower now owns or has interest in 30 cannabis retail store licenses across the provinces of Alberta, Saskatchewan, Manitoba, Ontario and the Yukon territory.

It continues to focus on opening new retail stores across Alberta, where the AGLC continues to issue retail licences at a rapid rate, and in other Canadian provinces where private retail is permitted.

 

Fire and Flower said in a statement that: “Through its strategic investment with Alimentation Couche-Tard, the company has set its sights on the global expansion as new cannabis markets emerge.”


Couche-Tard closes cannabis retailer deal

Couche-Tard LogoAlimentation Couche-Tard Inc. officially entered the cannabis retailing sector with the closing of its investment in Fire & Flower Holdings Corp., an independent cannabis retailer.

Based in Edmonton, Alberta, Fire & Flower Holdings Corp. operates or licenses 23 cannabis retail stores in Alberta, Saskatchewan and Ontario; a wholesale distribution division in Saskatchewan; and the HiFyre digital retail platform.

Last month, Couche-Tard announced it would make a strategic investment in Fire & Flower, providing the latter with additional capital to further accelerate its expansion strategy.

Key points of the deal include:

  • Couche-Tard invested approximately $26 million in the form of unsecured convertible debentures to obtain a 9.9% ownership interest in Fire & Flower on a fully diluted basis.
  • Couche-Tard has also been issued common share purchase warrants that, if exercised in full, would subsequently increase its ownership interest to 50.1 percent on a fully diluted basis.

Following the closing of the transaction, Fire & Flower appointed Jeremy Bergeron to the company’s board of directors.

“Through this strategic investment, we reinforce our intention to become a key player in North America’s cannabis industry,” said Brian Hannasch, president and CEO of Couche-Tard. “We are excited to see what we can achieve together with Fire & Flower, as we further expand in Canada and look to leverage our presence in the United States and beyond.”

Additionally, the common shares in the capital of Fire & Flower commenced trading on the Toronto Stock Exchange as of Aug. 7.

“Combining Couche-Tard’s expertise in scaling retail stores with Fire & Flower’s retail experience and proprietary Hifyre digital platform positions our company extremely well to capitalize on new cannabis markets as they emerge,” commented Trevor Fencott, CEO, Fire & Flower.

Based in Laval, Couche-Tard’s worldwide total network includes more than 16,000 convenience stores, which primarily operate under the Circle K banner.

Originally published at Convenience Store News. 


Fire & Flower Retail Stores (C) 2019 Fire & Flower Inc. (CNW Group/Fire & Flower Holdings Corp.)

Couche-Tard makes strategic cannabis move with investment in Fire & Flower

Fire & Flower Retail Stores (C) 2019 Fire & Flower Inc. (CNW Group/Fire & Flower Holdings Corp.)

Fire & Flower retail store. 

Convenience store chain operator Alimentation Couche-Tard Inc. has made a strategic investment in Fire & Flower Holdings Corp., which will use the funds to develop its Hifyre digital retail platform and expand its network of cannabis retail stores.

Couche-Tard’s initial investment in the Edmonton-based company, announced Wednesday, will give it rights to 9.9% of Fire & Flower’s equity and the potential to increase its stake to 50.1% for a total of $380 million.

“Couche-Tard is excited to make this strategic investment in one of the fastest growing cannabis ‘pure-play’ retailers,” the Quebec-based retailer’s president and CEO Brian Hannasch said in a statement.

“This investment in Fire & Flower, with a path to a controlling stake, will enable us to leverage their leadership, network and advanced digital platform to accelerate our journey in this new and flourishing sector.”

Fire & Flower currently operates or licenses 23 cannabis retail stores in Alberta, Saskatchewan and Ontario and a wholesale distribution division in Saskatchewan.

“This strategic investment by Couche-Tard, one of the world’s largest retailers, is transformative for Fire & Flower,” CEO Trevor Fencott said in a statement.

He added that Couche-Tard’s leadership team and international footprint in major markets such as the United States, Mexico and Europe “provide us with outstanding opportunities for aggressive growth.”

Alimentation Couche-Tard is one of North America’s largest operators of convenience stores and gas bars, primarily under the Circle K global brand and under the Couche-Tard banner in its home province of Quebec.

The companies say an indirect subsidiary of Couche-Tard will initially buy about $26 million of convertible debt securities that can be converted to 24.3 million common shares at a price of $1.07 each, representing 9.9% of equity.

At the same time, Couche-Tard will receive three series of warrants allowing it to purchase more shares. It will also get the right to top up its investment to maintain its ownership percentage.

Fire & Flower’s stock is currently listed on the TSX Venture Exchange but it has received conditional approval to list its shares on the Toronto Stock Exchange concurrent with the transaction.

Fire & Flower’s stock price jumped 20% to a two-month high at $1.37 a share following the announcement, while Couche-Tard stock was essentially flat at $80.73 in early trading Wednesday.

 


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.