HOLYROOD, N.L. — Nearly a year after the sale of marijuana became legal in Canada, the owner of a retail outlet in Newfoundland and Labrador says provincial regulations remain a barrier to his operating a successful business.
There are 25 outlets province-wide – ranging from small, independently-owned businesses to major players, such as Loblaws – that sell non-medicinal cannabis. And figures from the Newfoundland Labrador Liquor Corporation (NLC) show suppliers have sold 2,071 kilograms of cannabis, at a retail value of more than $21 million to retailers since last October.
But at least one retailer says the cannabis regime in this province could stand some improvements.
Zach Hudson, owner of the Reef Cannabis Shop in Holyrood, said while store traffic has remained consistent, he believes he’s losing a “massive” part of his market to street sales despite the fact cannabis is now legal.
And he blames NLC regulations for this.
“Prices should be lowered, particularly the valuation on the 15 gram and 30 gram ‘bulk’ units,” he said. “A heavy consumer simply cannot afford the current pricing and will return to their prior supplier.”
The rules also prevent Hudson from expanding his product line beyond cannabis, cannabis accessories and bottled water – he can’t even sell chips and soft drinks in store.
He’s also not permitted to advertise.
“So many people come into the shop not knowing we existed, and there is no way for us to address it through advertising,” he said.
Supply shortage
Supply has also been a major issue, with retail owners such as Hudson unable to always get the products they’d like to sell. Earlier this year, the Clarenville-based owner of Puff Puff Pass blamed supply issues for the closure of her store.
Hudson said the original understanding among retailers was that they’d be able to choose from “hundreds” of items from seven licensed producers. But, for Hudson at least, that promise was never fulfilled.
“We have not placed a single order since legalization where we had full control over what (products) we carry,” he said.
“Instead, we receive an email from the producers with a list of what is available and we choose from that list. These lists are usually quite limited and we end up ordering products we wouldn’t usually carry, just to have something in stock.”
While he said there have been improvements to the distribution system, and doesn’t expect to completely run out of stock, he says the system is still incomplete. Stores are only permitted an eight per cent commission on sales, which isn’t helpful when supply is sometimes hard to come by.
Still a stigma
Hudson said there remains a stigma about the use of marijuana. He said some customers will ask to have products delivered because they don’t want to be seen going into the store.
“I thought this was unwarranted, but I have witnessed a diner in the window of the adjacent restaurant wag their chicken finger at customers entering the Reef,” he said.
He said his staff is working hard to educate customers, and he has seen many customers become more comfortable with the product.
“We hope the stigma will fade once the figures on the tax collected are released, and people can see how legalization has benefited the province,” he said.
The business currently has three employees – one full time and two part time.
“We hope to employ more people and provide a living wage to those employees, but the regulations would need to change to allow that,” he said. “Our staff has been understanding, but it has resulted in a lot of turnover.”
Concerns heard
Darrell Smith, marketing and communications manager for the Newfoundland Labrador Liquor Corporation, said retailers presented their concerns about supply to the commission.
“We’re making sure (the suppliers) are treating all retailers fairly,” he said.
When asked about whether the statistics meet NLC’s expectations, Smith says it’s tough to gauge sales potential this early in the game.
“We’re going into this with eyes wide open. We really didn’t have a clear expectation in mind, we had no set of budget projections. We’ll give it a year or two to see how it evens out.”
Smith pointed out retailers, such as the Reef Cannabis Shop, would have been aware of what they are permitted to sell when they applied to the commission. Cannabis stores that fall under tiers one and two, for example, are not permitted to sell food products.
