Canada’s provinces have been (generally) failing to open up a legal cannabis industry. The Seed Investor has been shining a spotlight on this.
These failures have cumulatively taken a large toll on the legal cannabis industry. This has resulted in a temporary glut of inventories.
The exception to this general provincial trend? Alberta.
In the nine months since cannabis was fully legalized in Canada, the province has awarded 193 cannabis licenses via the AGLC (Alberta Gaming Liquor & Cannabis). This includes over 100 retail cannabis licenses.
This is for a population base of 4.1 million.
In comparison, Canada’s largest province is Ontario. It has a population of over 14 million people. It took nearly six months for the province to open its first retail cannabis store. There are only 22 retail stores to service this entire population today.
Under considerable pressure for its failure, Ontario’s government has just announced it will award 50 new licenses for retail cannabis stores. Even after those stores eventually open, Ontario will still be way behind Alberta.
An earlier Seed Investor article noted the city of Calgary alone (Canada’s “cannabis capital”) is doing better than that. It has announced that 197 additional development permits have been released for new cannabis retail stores.
(the sharp decor of a Choom Alberta retail cannabis store)
This robust retail footprint is already paying dividends for the province itself. In just the first six months of legalized cannabis, Alberta has collected over CAD$30 million in tax revenues.
The federal excise tax in Canada on cannabis is currently set at 10%. Of this, 75% of the revenues flow to the provinces.
Retail bottlenecks in other provinces have led to an overall build-up of cannabis inventories. In Alberta it has been “full-speed ahead” for cannabis retail. How do investors cash in on Alberta pot stocks?
A number of publicly listed cannabis companies have already carved out significant markets in the province. National Access Cannabis Corp (CAN: META / US: NACNF) is the current retail leader in Alberta, with 18 retail stores opened.
Several other companies offer investors a strong presence in Alberta. Also with multiple stores already open and more on the way are Alcanna Inc (CAN: CLIQ / US: LQSIF), Choom Holdings Inc (CAN: CHOO / US: CHOOF), and Fire & Flower Holdings Corp. (CAN: FAF / US: FFLWF).
Foot-dragging by most other provincial governments in Canada has slowed the growth in cannabis retail to a snail’s pace. Alberta has shown other Canadian provinces how to open up this industry right, much like U.S. leader Colorado has been doing.
This also shows how early it still is in the cannabis industry in both Canada and the United States. Most state/provincial governments have been frustrating rather than facilitating the growth of a legal cannabis industry.
Colorado and Alberta are effectively displacing the black market with a legal cannabis industry. Other states and provinces continue to cede most cannabis revenues to the black market.
Alberta and Colorado already offer investors big retail opportunities in the legal cannabis industry. Other Canadian provinces and even most adult-use cannabis states are still just beginning to get in the game.
Last week, the Seed Investor highlighted the emergence of cannabis as a $1 billion per year industry in Colorado. In that article, we noted that other state governments (literally) can’t afford to fall further behind Colorado.
Between 2013 – 2018, 25% of visitors to the state listed “legal cannabis” as a reason for visiting – cannabis tourism. Neither U.S. states nor Canadian provinces can afford to push their own residents into spending their tourism dollars in more cannabis-friendly jurisdictions.
The cannabis industry has arrived in Alberta. This is good news for cannabis investors. It increases pressure on Canada’s other provinces to get their act together.
DISCLOSURE: Choom Holdings Inc is a client of The Seed Investor.