Cannabis store owner links black market to slow Sask. sales

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Cannabis store owner links slow Sask. sales to black market
WATCH: The owner of cannabis store Eden believes the factors contributing to slow sales in the province are supply, price and the black market. David Baxter reports – Feb 26, 2019

Business has slowed down “significantly” at Eden, a cannabis store located just outside Pilot Butte and the first to open in the Regina area, since Oct. 17.

This isn’t a surprise to owner Allen Kilback. He’s familiar with the post-Christmas retail slump in his other ventures with the New Horizon Group of Companies.

Three more cannabis stores have opened in the Regina area since Oct. 17, pulling some business away from Eden, but Kilback believes there is another player picking up business in the cannabis sector.

“I think they’re still purchasing, whether it’s the black market or they’ve got to be coming from somewhere because our sales are definitely too low for the amount of consumption there is in Saskatchewan,” Kilback said.

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According to Statistics Canada data, 16 per cent of Saskatchewan’s population say they use cannabis. Alberta has the same percentage of users, and the national average is 15 per cent.

Despite having the same proportion of cannabis users, Saskatchewan’s sales are significantly less than Alberta, even accounting for the population difference.

Between Oct. 17, 2018 and the end of December, Saskatchewan saw just under $2.5 million in sales. Alberta stores racked up nearly $33 million in sales.

Even Prince Edward Island, with a population of 150,000 people, generated over $3 million in cannabis sales.

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A spokesperson for the Regina Police Service said they have not seen much change in the illegal cannabis market. Marijuana still appears occasionally in other investigations, but the drug unit has not done focused cannabis enforcement since busting illegal pot shops last year.

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Supply issues have been no secret in the Saskatchewan cannabis market. Store openings were delayed for some, and Kilback counts himself as fortunate to not have had to temporarily close due to shortages.

John Thomas, co-owner of Jimmy’s Cannabis, said these shortages delayed the opening of their Estevan location by over a month and their online store by four months. Their Battleford and Martensville locations opened on Oct. 17, but had issues selling out of product.

Both Kilback and Thomas agree supply challenges do play a factor in Saskatchewan’s slow sales.

However, Thomas added that if slow sales continue, he doesn’t think supply can be blamed.

Price has been another consumer complaint. Kilback said they are trying to lower prices, but it is difficult with a product that includes an excise tax in addition to provincial and federal sales taxes.

It’s much different when you have a facility like this and 14 staff and a lengthy supply of product that you buy ahead of time to compete against someone that’s maybe working out of a car as one person. The cost structure is not the same,” he said.

Kilback added he and staff are going over sales data to determine what products are most popular and better meet customer needs.

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Another hurdle Kilback sees in Saskatchewan sales is the inability to use Canada Post for online sales. Due to needing someone over 19 to sign off, they have to rely on Purolator. However, if a rural customer is not home, the package is sent to Regina or Moose Jaw for pick-up.

Eden recently had some of its employees licensed to deliver cannabis, and offers regional rural deliveries in an effort to drum up sales.

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