Getting rid of caps on Alberta cannabis store ownership

Published Oct 19, 2020 09:00 a.m. ET
iStock / AutumnSkyPhotography

On November 1st, a cap that the NDP imposed on Alberta’s cannabis store owners, prohibiting them from accumulating more than 15% of the total number of stores in the province, will be reversed. The cap also included entities separately, as they were limited to owning less than 37 total cannabis stores. Still, by the end of this month, all of those restrictions will disappear, and local investors couldn’t be happier about the decision.

Now that owning a recreational dispensary has been legal in Canada for two years, the market in Alberta is settling into a much more relaxed state that allows for a fairer playing field among large corporations and private investors who want to get in on the green business. The cap was initially designed to be only temporary, to allow small players the opportunity to enter the market with less fear of competition. However, experts say relaxing these measures is now necessary for a healthy retail trade.

How much has it risen?

There are currently over 500 licensed cannabis stores in Alberta, a number that is higher than anywhere else in the country, and the AGLC has approved a total of 527, with no intention of limiting the number anytime soon. While some retail dispensary owners in the area feel secure in their position in the market, many are concerned that lifting the cap on entities will allow chains and corporations to take over by driving out the smaller competition, with lower prices and less generously compensated employees.

Some things will stay the same

Most of the more optimistic business owners, in the providing point towards strict regulatory and fiscal hurdles and a means to restrict the number of approved licenses, as many of the rules to open a recreational dispensary in the area will remain the same like the fact that each location must be positioned a minimum of 300 meters from any other store. The only thing that will be changing is the number of stores that each person or entity can own, so it’s expected to be a relatively smooth transition for everyone involved.

The effects of such a move

Loosening the two-year-old limits should help to improve access to cannabis for Albertans by allowing a new influx of cannabis stores to shop through, and that is an excellent reason for users to celebrate. Still, unfortunately, private dispensary owners might be the ones who are out of luck. The whole reason for the cap was to prohibit any chains from entering the provincial market, as these shops tend to offer lower prices, pay employees less, and carry a lower overhead based on bulk sales. Which makes it easy for them to force other owners right out of an area.

So while residents might initially celebrate what appears to be a mall victory, their joy may be short-lived, as mom and pop shops are replaced with chains that aren’t as well known for providing consumers with top-notch service or advice. Of course, only time will tell for sure if these fears are legitimate and founded in reality, and as we await the results, many worry that this could be the end of smaller locally owned and operated cannabis stores.

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