Booming Alberta Cannabis Sales Leave Store Shelves Half-Empty

Booming Alberta Cannabis Sales Leave Store Shelves Half-Empty
Booming Alberta Cannabis Sales Leave Store Shelves Half-Empty

Cannabis was legalized nationally in Canada (in Phase 1) on October 17, 2018. In terms of cannabis sales, the first six months of this new era was a disappointment, to consumers, to cannabis companies, and to their shareholders.

It is now a matter of public record that the primary reason for the anemic pace of sales in these early months was the abysmal rate at which most of Canada’s provinces have been opening up retail storefronts for legal cannabis sales.

This problem is now at least partly resolved. Canadian cannabis sales have been growing at a double-digit rate since April. With the most recent data from June, that means (at least) three consecutive months of this robust growth.

It is also a matter of public record that one province has been leading the way in legalization: Alberta. Unlike all its peers, Alberta was prompt and efficient in opening its own cannabis stores.

Indeed, the one “problem” with retail cannabis sales in Alberta has been trying to keep these stores supplied as Canadian LP’s ramp up their cultivation. This caused the province to put a temporary moratorium on new cannabis stores.

That moratorium was ended in June. Since then, there has been a further explosion of growth in Alberta retail cannabis. Heather Holman of Alberta Gaming, Liquor and Cannabis (AGLC) provides the numbers, in an article from The Growth Op.
 
“We have 277 retail cannabis locations throughout the province which I think is a good indicator of increased production and being able to provide adequate supply for retailers.”

That total of 277 retail locations exceeds the number of outlets in Canada’s other provinces, combined. Ontario, despite hosting 40% of Canada’s population, has a mere 22 cannabis stores. While the AGLC considers Alberta’s cannabis shortage “to be over”, retailers paint a slightly different picture.

Ryan Roch of Lake City Cannabis (near Calgary) offered these observations.
 
“We’re currently seeing shortage on quite a few licensed producers (LPs) — there’s a lot of overstock of certain items, and very little or no stocking of quite a few…I would say anywhere close to 60 to 70 percent of the stock that I want to try to bring in.”

Even with these 277 retail locations, Alberta’s cannabis demand is growing so rapidly that stores have difficulty keeping their shelves stocked. That sends two clear messages, one to other Canadian provinces and one for cannabis investors.

The message to these other provinces (especially Ontario and British Columbia) is simple: get your act together.

Alberta successfully launched hundreds of cannabis retail outlets within the first year of legalization. There is no reason why other provinces couldn’t have matched at least half that total (assuming a sufficient consumer population).

The message for investors is also simple. As a whole, Canadian cannabis retail sales are still just the tip of the iceberg in terms of the total consumer dollars available.

The Seed Investor has previously reported that 72% of recreational cannabis sales in Canada in 2019 is expected to go to the black market, according to Scotiabank analysts.  In a Vice article, the same analysts predict that this could drop to 38% by 2020.

Alberta is showing that such progress is easily attainable. That translates to continued strong growth in Canadian cannabis retail sales and strengthening bottom-lines across the industry.
 

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