Cannabis Store Saturation Intensifying in Toronto

The New York Times reported on the increased competition for cannabis retailers in Toronto.

The Breakdown

• Despite a significant number of businesses closing due to repeated lockdowns caused by the pandemic, cannabis retail stores have been a noticeable exception to this and have been opening across the city at a frenetic pace.
• Only 12 stores were open in March 2020, there are now over 430 cannabis retail stores across the city with the repot highlighting the abundance of stores in the Queen Street West neighborhood of Toronto.
• The reason behind the proliferation of stores according to the article include “loosening license restrictions, a surge in available storefront space and the government’s decision to allow cannabis shops to operate during lockdowns”.
• Sales have declined drastically for many retailers because of increased competition and inability to differentiate themselves.

Our Perspective

Ontario, and Toronto in particular, has seen significant growth in the amount of cannabis retail stores popping up across the city. It’s not uncommon to hear residents complain when a new cannabis store is about to open. These concerns are understandable as it’s clear some areas are oversaturated and changing and negatively impacting the dynamic of the neighborhood in some people’s eyes. However, with the many challenges faced by cannabis retailers, unfortunately some businesses simply won’t make it and forced to close due to market pressure, meaning this perceived problem will be temporary. With that said, there are still many neighborhoods and municipalities that restricted cannabis stores and therefore still don’t have proper access to recreational cannabis.

Increase in Cannabis-Related Cases Referred by Health Canada to Federal Police

Health Canada referred nearly 500 cannabis business-related cases to the Royal Canadian Mounted Police (RCMP) over a two-year period ending in March 2021 according to MJ Biz Daily.

The Breakdown

• According to Health Canada, the referrals typically consist of illegal cannabis retailers or sales, including physical locations and online sales, illegal cultivation operations and/or illegal delivery or distribution services.
• No case referred to the federal police service in fiscal 2019-20 directly involved federal license holders or personal/designated medical growers (1 case involving a federal license holder was not captured in the data due to an administrative oversight).
• Despite being unable to provide a breakdown of the cases, the RCMP did acknowledge it filed 6,259 charges related to cannabis from 2019-2021 however it’s unknown if any of these were related to regulated businesses.

Our Perspective

It might come as a surprise that Canada’s federal police have laid over 6,000 charges related to cannabis since legalization took effect in Spring 2019. As the cannabis culture and community finishes up its 4/20 celebrations, this is as an important reminder that the legacy of harms from prohibition are not entirely in the past. As a result of the poor record keeping practices and disjointed databases mentioned in the report, there is still no clear path for expungements and no specific policy established that will automatically clear records.