Cannabis Business 101

Everything you need to know about Canada’s greenest retail industry

Attitudes toward cannabis culture are rapidly changing in this country, and so to are opportunities for success within this wave of green. Bill C-45 (the Cannabis Act) was introduced in Parliament on April 13, 2017.

On June 21, 2018 the bill received Royal Assent from the Senate. The law will fully come into force on October 17, 2018 and will officially legalize access to recreational cannabis across Canada.

There has been a feeling of eager excitement among users of medicinal and recreational cannabis, as well as among entrepreneurs who see the potential in capitalizing on this emerging market. Canadian cannabis stocks also responded in kind, anticipating the business boon headed our way.

The Cannabis climate in Canada

For the last couple years, Canadians have been reported to purchasing marijuana en masse. Last year alone, $5.7 billion was spent by 4.9 million Canadians aged 15 to 64 on medicinal and non-medicinal cannabis, according to Statistics Canada. The most telling statistic is that 90% of purchases were directed toward recreational cannabis, despite these purchases still being considered illegal.

The rapidly growing consumer market makes it obvious that there is substantial economic potential in starting a marijuana dispensary. However, the process is not for everyone, including seasoned entrepreneurs. The legalization of marijuana represents a paradigm shift in government policy; regulation and oversight means a time-consuming, expensive, and potentially frustrating application process for those who hope to stake their claim in the realm of retail marijuana dispensaries.

Rest assured, cashing in on the green rush is far from impossible – especially if you understand the following important details.

What is the legal status of cannabis in Canada?

Cannabis is currently considered a Schedule II drug, and with the exception of marijuana purchased for medical reasons (which requires a prescription and must be purchased from a licensed medical marijuana dispensary), the purchase of “black market” cannabis may result in fines and/or a felony offense.

“Black market” in this sense applies to the purchase of marijuana from any source other than medical marijuana dispensaries licensed through Health Canada.

What do I need to know to open a retail cannabis dispensary?

Short answer: a lot, and it depends on your location. Alberta is shaping up to be a highly competitive market, so let’s start there.

Everything You Need To Know About Applying For A Retail Cannabis License

  1. First major consideration: the number of licenses available is not unlimited. To start, Roughly 60 each will be available in Edmonton and Calgary, and approximately 10 each in Red Deer, Banff, and Jasper.
  2. The Alberta Gaming and Liquor Commission (AGLC) controls the wholesale distribution of recreational cannabis throughout Alberta and will be the only source of online cannabis sales. Meaning, you will only be able to get licensed to sell at a brick and mortar shop.
  3. Applicants need to apply for a business license and development permits through their municipality and through the AGLC.

For further information on the application process please check out these links below: 

To stay informed with the City of Edmonton’s activities related to cannabis legalization, you can join the stakeholder list for email updates.

Retail space requirements

  • A lease (or conditional lease) for the proposed retail space is required with the application.
  • Commercial Development Permit must be obtained before you can officially apply for the cannabis retail license.
  • A retail recreational cannabis dispensary requires a dedicated shipping/receiving area, video surveillance, secure storage, secure product display area, and point of sale area. Dedicated inventory and employee accountability systems will be essential to thriving and avoiding costly fines.

AGLC requirements

  • Extensive background checks are a necessity. This includes the applicant(s) and associates of the applicant(s) such as spouses, relatives (if living with the applicant), any individual with a financial interest in the business or premises, and any corporation with a financial interest in the business or premises.
  • The AGLC permit application takes 2-4 months to process
  • All staff must complete SellSafe Cannabis Staff Training provided through the AGLC

Cost

  • The total cost to apply for one retail location is roughly $5000 ($400 for a new retail business application, $700 annual license, and $3000 deposit for criminal background checks)

Important notes

  • Completing all of the above tasks does not guarantee a license will be provided. The City of Edmonton is utilizing a lottery system for permits for the first year.
  • All retail cannabis dispensary applications will be public knowledge and posted on the AGLC website. Anyone is free to submit an objection within 21 days of the permit application being posted on the AGLC website. Applicants are then given 14 days to respond to the objection.
  • To prevent the creation of monopolies, no single business can acquire more than 15% of cannabis licenses.

Other considerations

The city of Toronto will not be permitting the operation of retail marijuana dispensaries during the first year of legalization. This means there will be considerable pressure for entrepreneurs from Toronto to operate cannabis dispensaries in Alberta and British Columbia. A business does not have to be incorporated in Alberta to apply for a cannabis permit, the business just requires an extra-provincial registration.

The next year will be an exciting time to be an entrepreneur in this province. Pursuing a retail cannabis dispensary is a high risk, high reward venture, however, completing the necessary due diligence and aligning your business with proven systems can allow for the rewards to far outweigh the risks.

What do you feel is most important to know about the cannabis dispensary business? Let us know here.

One Reply to “Cannabis Business 101”

Leave a Reply

Your email address will not be published. Required fields are marked *