'We’re in crisis mode'

The Manitoba government’s temporary pause on the approval of some new cannabis retail outlets has left some retailers in peril as they wait in limbo for approval to open their doors.

Manitoba-based c-store and gas retailer, Domo Corporation Ltd., had been working for almost a year to outfit some of its retail locations for the sale of cannabis. The c-store and gas station entered into an agreement in June last year to sell Wowkpow Inc. cannabis products at its stores. 

Since then, the retailer had been working to outfit its retail stores as they waited to obtain licenses from the government. 

The licensing pause was announced on April 24 this year, alongside a bill to lift the province’s ban on homegrown recreational cannabis that Justice Minister Matt Wiebe introduced to parliament. 

“Domo was very disappointed to learn that the Provincial Government has paused the issuing of licenses for controlled-access cannabis stores,” Douglas and Kate Everett, the chairman and president of Domo, said in a joint email to Convenience Store News Canada. 

The temporary pause on new licences applies to “controlled-access” stores in urban areas that sell cannabis. Unlike stand-alone cannabis stores that only admit adults, controlled-access stores include retailers like c-stores and gas stations, which are open to all ages, but put cannabis products out of the reach of customers, similar to how cigarettes are sold in c-stores. 

“After a year-long, extremely detailed application process, Domo was in the final stages of obtaining Controlled Access Retailer Licenses for our five stores when the Government derailed the process,” reads the email from Domo. 

Domo, which is in its 66th year of operation in Manitoba, had been working with Wowkpow for almost nearly 12 months to launch the cannabis in its stores, pending its license. 

“We’re in crisis mode. We’ve already had to lay off some people,” says Edwardo Famakin, owner of Wowkpow. 

Famakin says that his company and Domo had already completed the bulk of the pre-licensing work including site inspections with the Liquor, Gaming and Cannabis Authority of Manitoba (LGCA), and Manitoba Liquor and Lotteries (MBLL), which distributes and sells liquor and distributes cannabis to retailers on behalf of the province, when he found out about the provincial pause. 

“I found out about it from an article,” says Famakin. 

The article he references was published by StratCann, a magazine for the Cannabis industry, and used a photo of one of Domo’s c-gas stores in Manitoba as the header. Before the article was published, Famakin says the impression he was left with was that the company was only a few weeks out from obtaining its license when the pause was put in. 

Domo and Wowkpow had been working on outfitting five Domo retail stores with Wowkpow cannabis. According to Famakin, the company thought it would obtain those licenses and begin selling its cannabis in-store by mid-May this year. 

Beginning June 1, 2020, businesses could apply directly with the MLL for a cannabis store retail agreement and then with the LGCA for a licensing agreement to sell cannabis in the province. 

There are currently 11 controlled-access outlets, like c-stores, that already have the licence to sell cannabis in urban areas in Manitoba.

Famakin says both Domo and Wowkpow executives carried out multiple joint meetings with the LGCA and MBLL ahead of their anticipated debut in Domo stores this May. 

Sara MacIntyre, vice-president of Western Canada for the Convenience Industry Council of Canada (CICC) says the pause in licensing is a blow to the entire c-store industry, especially at a time that the industry has been struggling as the contraband tobacco market continues to grow unabated. 

“This particular case put a damper on any innovation in the c/gas-industry channel. The government needs to be clear on what led to this change,” she says. 

Wowkpow, which already sells its cannabis products to a few retail stores in Manitoba, had upgraded its 6,000-sq.-ft. cultivation lab in Steinbach, Man., and invested in a new 5,000-sq.-ft. processing facility in Oakbank, Man., since its partnership with Domo. The new processing facility was 99% complete when the government changed its rules, says Famakin. 

“We also hired several people,” says Famakin. “The process was capital and logistically intensive for both us and Domo, and we needed more people as we prepared for our May launch in stores.” 

Famakin says the company has already laid off two people and is considering laying off more as they deal with this. 

Wowkpow is based in Winnipeg, Man., and its cannabis is locally grown in Manitoba. According to Famakin, most of the cannabis that is sold at stand-alone cannabis stores is grown outside of Manitoba and brought into the province. 

The moratorium on new licenses to c-stores was welcome by Raj Grover, the CEO of High Tide, who told StratCann, “These licences were intended to provide access to legal cannabis in rural communities without an established legal retail cannabis store; however, many of the controlled access licences were granted to convenience and grocery stores within downtown Winnipeg. We hope that the six-month review will help establish important guardrails to ensure that these licences are limited to under serviced communities only, as was originally intended.”

“This was partnership was a chance to sell cannabis grown in Manitoba at an iconic, family-owned Manitoban c-store, to Manitobans,” says Famakin.