Immediately after Ontario announced its regulations for cannabis retail stores in the province, Dave Martyn inked a deal with investors that he hopes will make his pot retailer a dominant player in the burgeoning legal market.
Martyn, president of Compass Cannabis Clinics, says he now has the financial backing to open 75 cannabis retail stores in Ontario this April, the maximum amount allowed by the provincial government according to new regulations announced late Wednesday.
“We’re going to create north of 500 jobs in the next year in Ontario,” Martyn told BNN Bloomberg in an interview. “This is going to be exactly like what Alberta’s oil boom did for their economy.”
The Ontario government said private sector cannabis stores will be able to open their doors on Apr. 1 and interested retailers can apply for licenses on Dec. 17. Prior to that, residents in Ontario can only buy their legal cannabis from the provincially-run online Ontario Cannabis Store.
The stand-alone stores can be open any day between 9 a.m. and 11 p.m., but they must be at least 150 metres away from schools and bar entry to anyone under 19 years old.
Martyn and his franchise partners expect to invest about $600,000 per store, most of which will be under the Starbuds brand, and has already hired legal and sales teams eager to ramp up development.
“It’s going to be competitive but it’s ultimately going to be good for consumers in Ontario,” he said.
Mark Goliger, chief executive officer at National Access Cannabis Inc., which has partnered with Second Cup Ltd. on retrofitting some underperforming coffee shops to cannabis dispensaries, said the new rules are better than previously expected. Second Cup executives stated they expect to convert at least 20 stores into pot shops, but Goliger expects that number to be much higher.
“We plan on having 75 stores but we just don’t know what’s going to be Second Cup [remodels] and what’s going to be organically[-grown] stores that we open ourselves,” Goliger told BNN Bloomberg in an interview.
However, there remains some uncertainty with the regulations, notably how involved a cannabis producer can be with its retail strategy. According to early regulations published last month, the Ontario government opted to limit producers to one retail outlet at the facility where it grows its cannabis.
A spokesperson with the Ontario government didn’t provide an immediate comment for clarity on its position on affiliate ownership of pot stores within the province.
However, many Canadian pot retailers have taken investments from producers ahead of the rollout of retail regulations, leaving some wondering whether they can set up shop or are disqualified from doing so.
“Until those regulations are written, we have explored a diverse number of options and we’re prepared for a diverse number of outcomes,” said Alan Gerner, chief retail officer at Canopy Growth Corp. in an interview with BNN Bloomberg.
Trevor Fencott, chief executive officer of Fire & Flower Inc., which has received a series of minority stakes from several cannabis producers including Aphria Inc. and Hexo Corp., is also looking for further details on Ontario’s pot regulations.
“You can’t invest in uncertainty. There has to be some structure to it,” Fencott said in an interview with BNN Bloomberg. “However, we have enough at this point to action a good portion of our plan.”
Each investment in Fire & Flower is below the 10 per cent threshold required to disclose the investor, which is purposely done to ensure the retailer complies with provincial regulations, Fencott said.
Fire & Flower, which has already opened eight cannabis stores in Alberta, expects to hire as many as 1,000 people for 75 stores in its effort to dominate the Ontario market, Fencott said.
“It’s a very large investment that we’re prepared to make in the province,” he said.
Cannabis Canada is BNN Bloomberg’s in-depth series exploring the stunning formation of the entirely new – and controversial – Canadian recreational marijuana industry. Read more from the special series here and subscribe to our Cannabis Canada newsletter to have the latest marijuana news delivered directly to your inbox every day.