Cannabis stores in Ottawa, Canada, are shooting up like weed, but the sales and revenue figures are not necessarily rising at the same rate. In fact, it seems like the stores are plunging into an increasingly competitive environment despite high initial profits for the first movers in the cannabis space. In addition, due to the (lack of) zoning restrictions, they are hardly evenly distributed.
The number of businesses offering cannabis products in Ottawa continues to grow, but this has not translated into increased consumption and sales.
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Are we approaching cannabis perfect competition in Ottawa?
On Bank Street in downtown Ottawa, there are five cannabis stores within five blocks. In addition, competition among retailers is fierce. For example, High Ties and True North are neighbors. Unable to compete on price, they have to compete on style, flavors, services, location, and brands.
A new cannabis store will be opening on the first floor of a seniors’ residence on Bank Street. Several other cannabis businesses are also scheduled to open soon in the same area. Yet despite all the stores, it is difficult to say that the business is booming.
42 cannabis stores in Ottawa
According to the Alcohol and Gaming Commission of Ontario (AGCO), the agency that regulates the consumption and distribution of cannabis in the province, there are 42 businesses operating in Ottawa or approved to open. Another 10 businesses are in the process of being licensed and another 22 have applied for licenses.
The number of stores has skyrocketed since the first businesses won the province’s lottery in April 2019. Profits, which had initially been high, are now being shared by many more establishments since the province made it easier for businesses to obtain sales permits in December 2019.
Cannabis businesses can now set up in any building in a commercial zone but must remain 150 meters from schools.
The Ontario Cannabis Corporation (OCC) has reported that sales have stagnated in Ottawa since March 2021, when there were only 28 businesses. Since the last quarter, sales have remained at $13 million and there has been no increase in sales.
Cannabis and poverty go hand in hand
In Ontario, neither the province nor any municipality has a say in the location of cannabis stores.
In Ottawa, this has led to a high concentration of cannabis retailers not only in the Glebe, but also along Rideau Street, Montreal Road, and in the west end of the city.
The two neighbourhoods with the most stores, Somerset (17) and Rideau-Vanier (11), also have the lowest median income in the city.
“The province’s hands-off approach means that municipalities are faced with the challenges of poor planning,” said Rideau-Vanier Councillor Mathieu Fleury.
Fleury has limited the concentration of payday loan establishments in his district and would like to do the same with cannabis retailers.
(Featured image by Jacob Meissner via Unsplash )
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Michael Jermaine Cards is a business executive and a financial journalist, with a focus on IT, innovation and transportation, as well as crypto and AI. He writes about robotics, automation, deep learning, multimodal transit, among others. He updates his readers on the latest market developments, tech and CBD stocks, and even the commodities industry. He does management consulting parallel to his writing, and has been based in Singapore for the past 15 years.