Cowen trims sales estimates on bid Canadian pot firms
Pot shop owners say they're worried they will lose customers and run out of product if a halt on Ontario Cannabis Store deliveries stretches on.
The stores said Tuesday they have been left with no other choice but to make do with the stock they have after the provincial pot distributor informed them Monday that a cyberattack faced by one of its logistics partners had left it unable to process or deliver orders to marijuana shops and customers.
"I don't like to order massive quantities of any one thing because I rotate a lot of things through, so when I get disrupted, it means that the shelves are going to be bare," said Elisa Keay of K’s Pot Shop in Toronto.
"It means that some customers are going to come in, shake their head, upset they're not getting what they want and they're going to go somewhere else because they don't want to hear that it's not my fault...and there was a cyberattack."
The OCS has said there is no indication that its systems were targeted or its customers’ information was compromised during the Aug. 5 attack on the parent company of its third-party distribution centre, Domain Logistics, but deliveries were stopped "out of an abundance of caution to protect OCS and its customers."
Domain Logistics has not responded to a request for comment
OCS CEO David Lobo said in a statement Tuesday evening that Domain Logistics and cybersecurity experts would be spending the next 24 hours assessing the logistics company's systems to ensure they are free from compromise.
He offered no timeline for when deliveries will resume, but said the OCS will fulfil orders for wholesale customers first and in the interim, manually accept inventory from licensed products and enter it into its system once Domain Logistics is operational.
The timing is terrible for Keay. In recent weeks, she's seen an uptick in sales, but not getting a delivery means she's selling through items quicker, and will be more likely to have to turn customers away if products aren't sent to her store.
Like all other cannabis stores in the province, she also can't seek cannabis elsewhere because the roughly 1,333 licensed pot stores in Ontario must buy the products they sell from the government-backed OCS.
"We're totally at their mercy," Keay said.
With no idea when deliveries could restart, High Tide Inc. has begun reallocating inventory from its lower volume Canna Cabana shops to higher volume ones, said senior vice-president of corporate and public affairs Omar Khan, in an email.
But independent businesses with single locations can't model that behaviour, noted Sean Kady, co-owner of Cosmic Charlies, a Toronto pot shop.
Independents are also less likely to have a big stockpile because most don't place huge orders.
"They're on a more tight, fixed budget, so from week to week, we can only spend so much and if you're not getting that product that you need, what are you supposed to do and how are you supposed to pay the rent?" he said.
While his store was almost "overstocked" on Tuesday, he's heard of other retailers "freaking out and pulling their hair out" because of their dwindling supplies.
The situation has created trouble for Lisa Bigioni, who owns the Stok'd cannabis chain.
She estimates she has enough marijuana to keep her stores stocked for a week but worries about the halt on deliveries continuing past that.
She's also had to put a weekend opening of a new store, complete with a barbecue and parking lot games, on hold because she's unsure when product will arrive.
"We put a lot of time and effort into planning the grand opening ... and all of that is going to have to be rescheduled," she said.
An OCS letter to retailers obtained by The Canadian Press said "as a goodwill gesture,” the OCS will waive retailer delivery fees until Sept. 30 and a $500 processing fee for one emergency order per store between Sept. 1 and March 31, 2023.
But many shop owners don't feel that's commensurate to the risk their businesses are facing.
Keay worries customers may even turn to an illicit dispensary or dealer, which the industry has been fighting against since recreational marijuana was legalized.
A customer that finds another option might be lost forever, so Keay said, "There's no sort of compensation that can fix damaging someone's business."