Alcohol retailers remain eager to sell recreational cannabis despite the B.C. government’s decision to forbid retailers from selling cannabis alongside tobacco or alcohol in the same store once the federal government legalizes adult use of the drug later this year.
For private liquor store operators, that means either hiring construction crews to build walls and split stores into separate spaces or leasing new space.
“I’ll be able to carve off not a huge portion, but I think I could pull out 500 square feet from my 2,500-square-foot store in Burnaby and it will still leave me with a good-sized liquor store,” said Oliver Twist Liquor Store owner John Johnson.
He estimated that building a wall would cost him less than $10,000. Because his current Edmonds Street store has three entrances, he wouldn’t need to build a new entrance for his future cannabis store.
Johnson’s Langley liquor store is in the Willoughby Town Centre neighbourhood, where many young families are moving, so he expects that he will keep that store as is.
“The demographics of Langley and Burnaby are different,” he said. “I will have way more cannabis users in Burnaby around Edmonds than I will in the new subdivision area where my Langley store is.”
Other private liquor store owners, whose stores are not suited to being chopped in two, told Business in Vancouver that they remain interested in also retailing cannabis.
“For us, it would mean leasing new space,” said Mike McKee, who is CFO of the Jak Group, which operates 11 private liquor stores in Metro Vancouver.
He said the Jak Group intends to have its first cannabis store open within months of the federal government authorizing recreational sales across the country.
McKee then foresees his company having about seven stores by the end of 2019 and between 10 and 15 stores by the end of 2020.
“We feel that this is, obviously, the Wild West,” he said. “From a landlord’s perspective, everyone under the sun is asking them about potentially opening a cannabis location at one of their malls. A lot of these malls – the good ones – are owned by pension funds, and they have pretty significant assets. They are very cautious about who they are prepared to lease to. We’ve been in the liquor business for more than 30 years. We know what’s involved in retailing [controlled substances].”
Jeff Guignard, executive director at the association for private liquor store owners, the Alliance of Beverage Licensees British Columbia (ABLE BC), said most of his members remain interested in selling cannabis.
“Many of our members definitely will [sell cannabis], though probably that number is less than if a licence to sell cannabis had been tied directly to their liquor store licence.”
ABLE BC has held two conference calls on the general topic of retailing cannabis and more than 100 store representatives took part each time.
To keep its members aware of some industry companies and to steer those members to reputable brands, ABLE BC has also started to sign memorandums of understanding with a variety of producers, including Maricann Group Inc. (CSE:MARI), Supreme Pharmaceuticals Inc. (TSX-V: FIRE) and Sundial Growers Inc.
It has also signed a letter of intent to be a partner with the scientific testing company Abattis Bioceuticals Corp.
Guignard said that licensed producers will be responsible for testing products to ensure quality but that liquor store owners might want to conduct their own testing as a backup.
“The supply agreements are not that big a thing,” he said. “If you compare it to the liquor industry, it’s sort of like if Labatt were suddenly introducing beer to B.C., and we got together and said, ‘Hey, we’d like to sell your brands.’”
The B.C. government has set a number of new rules for retailers.
As with alcohol, the B.C. government has made clear that private cannabis retailers will have to buy all of their products through the British Columbia Liquor Distribution Branch.
While the BCLDB plans to have an e-commerce website for cannabis, private retailers and licensed producers will not be allowed to sell their products online, nor will they be allowed to deliver products. •
gkorstrom@biv.com
@GlenKorstrom
