There are fifty new cannabis retail stores about to open this month in Ontario and perceptions regarding their value are slowly changing. It seems landlords are now very interested in having a cannabis retail location due to the high rents and increased foot traffic but it really depends on which province you are opening in. As to date Alberta is reporting the highest sales in their cannabis stores with $123 million in sales followed by Ontario with $122 million whereas British Columbia has only seen $19.5 million in sales.
If you were a national chain of cannabis retailers then you would think British Columbia and Ontario would be your biggest investments due to population but these two markets are proving to be volatile to say the least. Who would have thought Alberta would be the best in Cannabis Sales? No one. The reasons behind these sales are simple — government and black market.
Alberta and British Columbia have about the same population but Alberta has six times the sales compared to British Columbia. Why? The government of Alberta took the opening of retail locations head on and allowed hundreds of legal government locations to open in the first year whereas British Columbia is very much like Ontario and limiting their locations. All the experts are looking at Alberta as the model to give as much access as possible to be successful in curbing the black market and increasing market share.
If you were to compare Alberta with over a hundred stores to Toronto with less than a dozen stores you realize how messed up it is. They both have the same population but access to the product is very different. Ontario should be in the $400 million dollar range in sales but somehow the government actually lost about $42 million this year selling cannabis. The black market will continue to flourish in British Columbia and Ontario until they both get legal stores open by the hundreds to give safe access to cannabis.
Landlords are seeking out dispensaries now due to increased foot traffic which helps the surrounding businesses, plus some charge higher rents since they believe prime locations can get higher rents. These new dispensaries can become anchor tenants who will be around for decades and always be able to pay their rent and will attract other tenants who will want the foot traffic to sell their wares.
Retail cannabis may be an industry that revives the brick and mortar small shop retailer who has slowly been dying over the years. So if you are keeping track cannabis is changing our medical landscape, farming landscape, industrial landscape and now reviving our retail landscape. Pretty impressive how a plant that has been criminalized for over a hundred years will change the landscape as we know it. V
by Darrin DeRoches
Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at email@example.com.