Ontario’s cannabis market still offering room to grow

How many's too many when it comes to pot shops?

The answer's not quite clear, especially in some areas where it seems there's an authorized dealer on every corner, though the market does seem to be narrowing.

“At the individual level, of course it's always a tragedy for a particular retailer, a particular entrepreneur to be going out of business but that is a part of how the capitalist economy works,” said Michael Armstrong, Associate Professor of Operations Research, Department of Finance, Operations, and Information Systems, Brock University.

Despite some stores closing, experts say the market itself is still quite strong and the total number of pot shops in the province is still on the rise.

“Ontario has a little over 1,600 licensed stores, there's another 400 license applications in progress, so I expect by the end of this year we'll see something like 2,000 licensed cannabis stores across the province,” Armstrong said.

That is on the whole though so it does mean a number of stores could still close, especially in areas where the market does seem a little over-saturated — something Armstrong blamed, at least in part, on the province.

He said the initial licensing process did include about a year's delay and also offered no real way for would-be entrepreneurs to see who else or how many others were also applying in the same area.

“You had all these entrepreneurs who had to pick locations so they could put license applications in, not realizing there are other entrepreneurs also saying hey, I want to be on a busy downtown street where there are lots of young adults — so you get clusters,” said Armstrong.

“That was going to happen in some extent because you're starting a new industry from scratch, there's going to be a rush for the good locations,” he said. “[But] it was made worse by the little over one-year freeze that our provincial government decided to put in place.”

At this point though, Armstrong said that isn't a major issue since it's now clear which neighbourhoods are over-saturated and which are lacking. He said there's also a lot more variety being peppered into the market itself.

“Initially a lot of the stores were going for a more upscale, boutique, Apple Store kind of appearance,” Armstrong said. “Whereas now we're seeing a little more variety.”

He said those include smaller shops with more limited offerings geared more toward customers looking for a quick in-and-out experience and ones which have tailored themselves more toward bargain buyers.

All in all though, Armstrong said despite some closures the cannabis market in Ontario does remain quite strong.

“We've got growing pains, there are some things that the governments could do to help the industry along, but I would say we are having a successful year [even though] there are things to improve.”