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May 9, 2018

RioCan CEO says legal marijuana sector 'another great tenant for us'

RioCan turns to residential properties as consumers shun retail


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The head of one of Canada’s largest real estate companies says the company is seeing growing demand from Canada’s burgeoning marijuana sector.

RioCan Real Estate Investment Trust is already renting space to two of the four Ontario Cannabis Stores operated by the Liquor Control Board of Ontario, the company’s chief executive Ed Sonshine told BNN Bloomberg in an interview Wednesday.

”They are not big users of space – they are under 1,500 square feet – [but] as that grows it’s another great tenant for us,” Sonshine said.

Toronto’s first legal cannabis store will be located in a RioCan-operated strip mall in Scarborough. 

A cannabis store in Kingston, Ont. will be located in a RioCan big box retail location that currently houses businesses such as The Brick, Home Outfitters and Five Guys Burgers.

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The province has announced locations in Guelph and Thunder Bay as well. Ontario plans to set up a total of roughly 150 standalone cannabis stores by 2020, with the first 40 set to open this year.

The stores will be run by a subsidiary of the Liquor Control Board of Ontario, and the legal age to buy marijuana will be set at 19 — the same for alcohol and cigarettes.

Ontario has vowed to not set up any cannabis stores within one kilometre of a public school. And while the Kingston location is about two kilometres away from a school, the Scarborough location is less than half a kilometre away from the nearest school.

Sonshine downplayed the risks to youngsters.

“I defy you to find a shopping centre or a retail strip that isn’t within one mile of a school somewhere in the city – I think it’s pretty tough,” he said.  “The bottom line is no one under 19 [years old] is allowed to buy [cannabis].  I mean part of the reason for them being government-controlled is they can control sale to youth. No one under 19 is allowed to buy – so what’s the big deal?”

Finding opportunities in new channels such as cannabis and housing is part of RioCan’s strategy as the real estate company – best known for its management of shopping malls – looks to shift away from Canada’s struggling retail sector.

Canadian retail centres are seeing less traffic as former anchor tenants such as Sears collapse and the sector deals with an increase in ecommerce, an aging population and changing consumer habits, said Sonshine.

“People spend a lot more on their data plans today than on buying new t-shirts,” he said. “Who had a data plan 10 years ago?”