CANMORE – A national cannabis shortage and uncertainty about profit margins has forced a local cannabis storeowner to sell his business before it even opens.
Ryan Dowdell, owner of Rocky Mountain Cannabar, recently accepted an offer from a cannabis company in Calgary to buy his business on Bow Valley Trail.
“We pulled the chute,” said Dowdell, who declined to identify the company that bought his store.
“We caught wind that other retailers were basically going to be running at cost and it’s impossible to run a retail business when your margin is zero.”
His store was one of seven retail locations that are expected to open in Canmore, however his store was the only shop that isn’t owned or supported by a larger cannabis corporation.
“I think a lot of these companies have the model to try and be the last man standing,” said Dowdell, explaining that until production costs come down, mom and pop shops like his won’t be able to compete.
In September, he said the Alberta Gaming Liqour and Cannabis Commission sent retailers a list of wholesale prices pegging the average price per gram at $8.90, including taxes.
“When the wholesale price came out everybody just shivered a little bit and then when other people caught wind that other retailers were going to be selling at cost to compete with the AGLC it was just impossible for some people.”
In hindsight, he said he would have never tried to open a store if he knew he wasn’t going to be able to compete.
“No one could have ever guessed that this is how legalization of cannabis would roll out,” said Dowdell, who recently moved back to Calgary with his wife.
“There are a lot of people a lot smarter than me that put a lot of effort into the numbers and I don’t think anybody saw this coming.”
To ensure competition in the cannabis retail market, no person or entity can hold more than 15 per cent of retail cannabis licences in the province.
While tight profit margins are forcing some retailers to close before they open, a national shortage of cannabis also forced the AGLC to temporarily suspend accepting new cannabis-retail applications or issue any additional licences in November
As a result, Fire & Flower Cannabis Co. is the only store in Canmore that has received a licence to sell cannabis, however it remained closed as of press time.
The AGLC ordered enough product to support up to 250 retail stores in the first six months of legalization. As of Nov. 17 it had only received approximately 20 per cent of what was ordered.
Despite the challenges, Dowdell said he sold his business for a small profit.
“There’s growing pains to every new industry,” said Dowdell. “Market share is going to dictate how many people will be here in five or six years, but that’s capitalism.”
