Retailers in BC Concerned with Lack of Inventory from Strike

The British Columbia General Employees’ Union (BCGEU) set up picket lines at four BC Liquor Distribution Branch (BCLDB) wholesale and distribution centers on Monday, per CBC.

The Breakdown

• The BCLDB announced that its cannabis distribution centre will be suspending the receival and shipment of any orders and it’s unclear how long the cancellations will last.
• Retailers are worried that if the strike lasts more than two weeks, they may be forced to close until deliveries resume.
• BC also just launched its direct delivery program (more on that below) but it’s unclear if the strike will impact the new program or not.

Our Perspective

This latest disruption to the provincial cannabis distribution system, following last weeks cyber attack on the OCS third-party distributor, has only increased criticism towards a single, centralized distribution network. There is clearly a need for contingency plans when issues like this arise, but a potential benefit of this recent development could be that retailers that initially weren’t interested in participating in direct delivery, may take a closer look at it now. Moreover, as cannabis Policy Analyst David Brown points out, despite its flaws, a centralized distribution system does have value and points to some of the issues we’ve seen in Saskatchewan that has a completely privatized model and no centralized distribution.

Mixed Reactions to Direct Delivery in BC

Launched on August 15, the direct delivery program allows some cannabis producers to ship products directly to private retail stores in BC without needing to go through the province’s centralized warehouse, per StratCann.

The Breakdown

• No products have yet to be listed, but retailers have been told by a representative of the province that products should be available by the end of the week.
• Products that are eligible for the new program are required to be grown in the province by companies cultivating no more than 3,000 kg a year but can be packaged and processed by a producer outside of BC.
• Producers are required to handle delivery to retailers and report sales on a weekly basis to the Liquor Distribution Branch (LDB), which still takes its 15% “proprietary fee”.
• Producers that are accepted into the program will have freedom in terms of the SKUs they choose to list, which could also help specific retail stores stand out in a crowded market.

Our Perspective

Despite the mixed reactions, this is likely a net positive in the long-term for producers and retailers in BC. It is unfortunate that despite the increased responsibilities being placed on producers participating in the program, that could potentially change in the future as the program becomes more established. What’s truly exciting is the opportunity for producers to work with specific retailers and bring exclusive offerings to the market.

How Excise Tax is Killing the Industry

In case you missed it, we released our first episode of Behind the Smoke, a new series that takes a deeper look at some of the major issues impacting the cannabis industry. Check the video out down below and let us know what you think!