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Hamilton’s legal pot stores frustrated with supply issues in the first month of business

WATCH: (May 14) Marijuana is touted for its medicinal benefits, but plant compound CBD is the focus of a nationwide shortage

Roughly a month into selling cannabis in their storefronts, both of Hamilton’s retail outlets say they’re feeling the pressures of balancing supply and demand.

On Friday, Steven Fry, the owner of Canna Cabana on Barton Street, told Global News he’ll be closing his store on Sundays until the province changes their model on supplying him with pot.

Fry says the 25-kilogram limit per week he’s allowed to order from the Ontario Cannabis Store (OCS) is not enough to keep his dispensary open seven days a week.

READ MORE: Hamilton’s first licensed cannabis store opens for business on Saturday

He also cut hours between Monday and Wednesday, shaving an hour off each of those days to accommodate the same supply issues.

“We average about five kilograms in sales per day,” said Fry. “If you do the quick math, we run dry before the end of the week. It’s very frustrating.”

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The Alcohol and Gaming Commission of Ontario (AGCO) limits customers to 30 grams of dried cannabis per person per visit. Canna Cabana’s owner says a typical customer purchases between one and seven grams per visit.

Fry points to two significant problems with the province’s model. The first is that smaller markets have the same supply maximums as the bigger cities.

WATCH: An explainer on the health effects of cannabis

An explainer on the health effects of cannabis
An explainer on the health effects of cannabis

“Niagara Falls is a tenth of the size of Hamilton, but they’re allowed the same 25 kilograms a week,” said Fry. “That’s not practical if you ask me.”

Another issue is lost product in failed orders due to lack of supply from the OCS.

“For example, if I order 10 kilograms of Category A, and they can only supply me with five kilograms, that’s all I will get,” Fry said. “I lose five kilograms off my maximum order. I can’t order five kilograms of Category B as an alternative to replace it.”

Meanwhile, Hamilton’s second pot store echos similar issues a little under a month into the business.

READ MORE: Hamilton’s second licensed cannabis store opens for business

Ryan Caruso, chief operations officer of Hello Cannabis, says it seems the OCS has issues keeping up with demand for the most popular cannabis products.

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“For example, CBD oil, which seems to be something that customers come in and ask very frequently for, and certain flower products that are just sort of hitting it on all levels with good quality, good packaged-on date and good price. Those types of products, of course, there’s going to be shortages on,” said Caruso.

When asked whether Hello Cannabis would consider scaling back hours in light of shortages of certain products, Caruso said higher-priced pot products won’t sell out entirely in a week, which leaves inventory available for sale at any given time.

“The other stores that seem to be changing hours are in a much more densely populated area than where we opened up, so I don’t foresee a challenge for us right now. We’re quite busy but I don’t think we’re in a slow phase just yet,” said Caruso. “Certain prices on products just might be unobtainable for certain customers.”

Michael Armstrong, Brock University associate professor at the Goodman School of Business, says the shortages are due to the federal government making a decision to follow the medical-pharmaceutical model for production.

LISTEN: Michael Armstrong, Associate Professor Goodman School of Business Brock University, talks about the short supply of Cannabis in Ontario

 

“The main problem is that the industry is basically starting up almost from scratch,” said Armstrong. “They wanted strict growing conditions, lots of testing, lots of licensing. So when legalization came in October they just didn’t have enough production capacity.”

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Armstrong goes on to say that the government may have also missed the mark on estimates of the supply needed to fulfill the actual demand.

“The government had some pretty good estimates in 2018,” Armstrong said about a recent health study prepared for Health Canada that “suggests the demand per month is around 77,000 kilograms.”

“That’s for all types of cannabis across the country. Production capacity, unfortunately, is only about a fifth of that in the legal industry.”

WATCH: Hamilton’s second licensed cannabis store is open for business

Hamilton’s second licensed cannabis store is open for business
Hamilton’s second licensed cannabis store is open for business