Pot store closures ‘absolutely inevitable’ due to saturation

Twenty one provincially-approved cannabis stores in Guelph, with four more making their way through the process

It’s only a matter of time before licensed cannabis stores closing start in Guelph, believes an industry expert, as the local market is over-saturated with locations.

Several local store owners agree.

“It’s not sustainable. There’s not enough business,” said Bradley Poulos, an industry expert who regularly lectures at Toronto Metropolitan University (formerly Ryerson University). “Any way you slice the numbers, 25 stores in Guelph is ridiculous.”

Poulo is cited on the school’s website as an expert in the cannabis industry as well as entrepreneurship strategy and small business.

There are currently 21 cannabis stores “authorized to open” in Guelph identified by the Alcohol and Gaming Commission of Ontario website, with another four making their way through the process. Then there’s also the online Ontario Cannabis Store, which delivers.

By comparison, there are five LCBO locations in the city, along with four The Beer Store spots, plus wine stores and brewery/distillery sales.

“There’s way more people who drink beer than smoke pot,” noted Poulo, adding cannabis store closures are “absolutely inevitable” at this point.

Several local store owners wouldn’t be surprised to see it happen either.

“Eventually, slowly you’ll start to see a lot of these shops closing down, and certain big players will stand still towards the end of it,” said Mohamed Hajjo, the general manager of Fire & Flower on Stone Road. “It’s definitely a competitive industry that we’re in right now.”

He said it’s mostly the smaller shops that will dwindle, noting how selective ordering is and making a note of the profit margins in the industry.

But that’s not always going to be the case. Bud’s Cannabis Store on Stone Road, which was among the first to launch in Guelph, is independently owned. Since opening here it has expanded with locations in Milton and Baldwin, near Newmarket.

“I think it’s been pretty good,” Heather Conlon, president and founder, said of sales in Guelph, noting sales were better early on when there were fewer stores around. “Hopefully people continue to support small businesses.”

All licensed stores get their products from the Ontario Cannabis Store and generally offer a similar range of products, which limits the ability of stores to use merchandise to differentiate themselves from others.

“It’s hard to see (what’s happening) because you know that a lot of these people are going to be losing their jobs. Nobody ever wants to see that at all,” said Bernice Hopkins, the store manager at Spiritleaf on Edinburgh Road, Guelph’s first cannabis storefront, of pending store closures.

“It sucks that it (licencing) wasn’t more thought out – a dispensary per capita, or per square feet, the area of ​​a dispensary being a stone’s throw away from another one – obviously, one’s going to end up closing eventually when the market levels out.”

Mergers and store acquisitions are also to be expected, suggests Poulo.

“We are going to see a massive shake-out,” he said of smaller operations being bought by large corporations or chains.

But what’s the solution? Many feel retailers can benefit by getting the option of ordering straight from manufacturers, rather than directly from one source.

“It’s definitely a shame, that it feels like it’s a monopoly,” said Haley Savage, the inventory manager with Spiritleaf. “You can’t go anywhere else, this is the only person who you can get it from so it’s definitely unfortunate. I don’t feel like our voices are being heard when we try to express that you need more than one (place) .

“Government can still get their money all they want, but having more than one location, or at least foreseeing theses happening could’ve accidentally better planned it than hurting us for three plus weeks.”

Hajjo adds other provinces can order straight from companies, and having that kind of system could help avoid issues when the main supplier has issues.

Guelph, with its population of about 145,000, isn’t alone in having an “abundance” of pot stores, though Poulo points out there are several that decided not to allow any, such as Mississauga and Oakville, as well as some Wellington County municipalities.

In Waterloo, which has a population of about 121,000 people, there are 19 approved stores and seven more in the works. Barrie has 24 with another 12 in progress for its population of about 148,000.

With a population of roughly 136,000, St. Catharines has 24 approved stores and five pending applications.

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