Want to Start a Retail Dispensary in Canada?

In starting a retail cannabis store, no road is easy. Where you decide to open your store will depend on the province and municipality you live in and the deadlines you need to meet when applying. Most rules on how to start are at best still unclear and at worse undefined. The best advice for anyone starting in this industry is to talk to a lawyer.

Under the new federal Cannabis Act, provincial governments and municipalities will soon be opening up the doors to issuing business licenses and setting up new rules on how to retail marijuana businesses will operate in their jurisdictions.

To add more hurdles, some provinces have even told the federal government the July 1, 2018 deadline is too soon and may act on delaying the implementation. The same is true for our Senate chamber, who said they need more time to offer their recommended changes to the legislation – suggesting a further delay. (In this author’s opinion, there is still a stigma among politicians when it comes to legalizing weed.)

With that said, here is what we know.

Where Opening is a Problem

Thinking of opening a private-run store in Quebec, Ontario or New Brunswick? Think again. Right now, these three provinces have come out with a government-run plan.

• Ontario will operate a government-run monopoly with the help of the Liquor Control Board of Ontario, which in turn will set up a subsidiary called the Ontario Cannabis Retail Corporation, to open 40 stores in 2018 and 80 more by July 2019. The latest news is that stores will be located in the Toronto, Ottawa, Kingston, Niagara Falls, St. Catharines, Brampton, Oakville, Vaughan, Ajax and Hamilton.

• New Brunswick plans to take a similar approach as Ontario, with its own New Brunswick Liquor organization running the retail operation.

• Quebec announced that their Société des alcools du Québec liquor stores, initially opening 20 retail outlets in Quebec.

With these three provinces in mind, you still have a chance to open a cannabis store in other parts of the country.

Where You Can Open

Currently, only Manitoba, Alberta, and British Columbia will allow potential business owners to open cannabis retail stores.

• Manitoba will allow retail stores to operate by the private sector. In this plan, the Manitoba Liquor and Lotteries Corporation will purchase and track the cannabis. Manitoba’s first round of retail license applications deadline ended on the 22 of December, giving only a small window of opportunity to anyone who met this short deadline. 

• Alberta is considering the possibility of permitting on-line sales by the private sector. Alberta does not run provincial liquor stores.

• British Columbia is considering a more flexible system, where government liquor stores, private liquor stores or other variations of retail operations could co-exist.

Manitoba recently received over 100 applications to open a retail dispensary, yet the province plans to select only four companies. If any company has a chance of becoming one of Manitoba’s first retail dispensaries, it is Tokyo Smoke. Tokyo Smoke, originally a Toronto-based business, won the 2017 Canadian Cannabis Awards for Canada’s Best Brand. If we can learn one thing from Tokyo Smoke, it is to plan ahead to be ready. 

How to Open a Cannabis Retail Store

If you are lucky enough to live in a province that will allow a private-run retail dispensary, here is what you can do to get ahead of the game:

1.   Setup your Business Corporate Structure early.

This means working with a lawyer to go over what it takes to:

• choose your company name,
• consider the right financing options,
• discuss partner and co-founder agreements,
• choosing skilled directors and officer roles,
• prepare Corporate Bylaws,
• get your federal tax ID number,
• open corporate bank accounts, and
• register a trade name.

Of course, this is only a shortlist of legal and business decisions you will have to make to remain in compliance with the laws. Your lawyer will guide you with why you should take any of these steps to start your business.

2.   Create your Retail Store Business Plan.

There’s a lot that goes into writing a business plan. The single most important thing you can do from the start is to write a Business Plan – especially if you need financing. You need a Business Plan that shows the costs and sales, supported by reasonable estimates for potential profits.

3.   Identify locations and whether the municipality is cannabis store-friendly.

Once you have a business plan, it’s time to start looking for a right province and municipality that will accommodate your dream of opening a dispensary. Each province will have its own licensing process. Some municipalities will be cannabis business friendly, some will not.

The biggest mistake you can make is to commit yourself to a property before thoroughly going through the local zoning and regulations. Each municipality will have the room to come up with its own zoning and bylaw regulations. In many cases, retail stores will be restricted to commercial zoned locations and required to stay 300 m (or more) from designated centers or even other dispensaries.

It is essential that you open up in a properly zoned location. You will need to agreement of the municipality before you financially committing to any location. The City of North Vancouver, for instance, will not grant any licenses until after 1 July 2018 – only after legalization. You don’t want to be caught off-guard and have to pay extra payments to relocate if the zoning rules change. Whether leasing or buying, write into your lease or purchase agreement an opt-out clause that is contingent on obtaining licensing.

4.   Acquire the necessary licenses to operate your retail store.

Once you found the perfect place, it is time to meet the local cannabis business municipal authorities to obtain the necessary licenses. The application process should be pretty straightforward. In Victoria, for example, this process should take about six- to eight- months from the time of submission. The municipality may also want to take a look at your business plan, so it is good to have it ready to present. This is also a good time to retain a local lawyer who can help to facilitate this licensing process.

5.   Install the building construction plan.

Before you open your doors, you should have a list of products to sell and furnishings for the store. Most new storefronts will need to renovate. You will need to hire a construction team to bring your vision into the final stages. You will need to get a construction permit from the local municipality. You will also need to hire an architect and contractors.

6.   Train staff on the operational practices.

Don’t forget the importance of training of your staff about the rules and regulations. Your staff need to know what to do when they meet customers, how manage inventory controls, deal with security issues, and much more.

7.   Contract with cultivators and products manufacturers.

Have the store manager and other key staff meet with sales reps, so they can listen and learn from the demonstrations. Make sure that you did your due diligence in assessing whether these product manufacturers are following the rules. You will need to establish delivery and product standard with your vendors. Have receiving and HACCP standards written into your purchase agreements. Inform staff, vendors and customers about the importance of safety as a priority, especially for edible safety.

WHAT DO YOU THINK?

Milton Wani is interested in the business and regulation side of cannabis. Learning about cannabis is new for everyone. That's why I wrote a book: Retail Cannabis Handbook. It's meant for people who want to open and run a retail marijuana dispensary and for people who want to learn about the industry. 

If you have any questions or comments, feel free to contact me at uxbigideas.com. Leave a message in the Contact Us section. You can also subscribe to the monthly newsletter and receive a selection of news stories from Canada and around the world.