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After a year of legal cannabis, Hamilton shops get set for ‘Phase 2’

THE CANADIAN PRESS IMAGES/Lars Hagberg

It’s been a year since recreational cannabis was legalized in Canada, but only six months since Hamilton‘s first legal pot shop opened its doors.

Steven Fry, the owner of Canna Cabana, said it’s been a whirlwind experience since day one.

“It was like opening a brand new business on steroids,” said Fry. “The time restrictions I had were just absolutely immense.”

Canna Cabana, located at the Centre on Barton, opened on April 20 — a day that’s celebrated in cannabis culture. The city’s second store, Hello Cannabis, opened in Dundas less than a week later on April 26.

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

Fry said his store has been one of the busiest in Ontario and he credits that to a strong support for recreational pot in Hamilton.

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“I’m very thankful Hamilton has not let me down,” said Fry. “Hamilton certainly is very big in the cannabis community. The city has embraced us, the local officials have embraced us, it’s been a really wonderful experience. But it hasn’t come without its own challenges.”

One of those challenges was a lack of supply from the province. It had a major impact after only a month, forcing Canna Cabana to close on Sundays and have shorter hours two other days a week.

“I’m really happy to report now that supply is no longer a challenge,” said Fry. “A lot of the work that we did to lobby the government to get more cannabis for the city of Hamilton was successful.”

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

The city’s legal storefronts have also been competing with a strong black market that has been able to offer cannabis at a lower cost.

Over a six month period, the price difference between the legal product and the illegal product has shrunk significantly, according to Fry.

“Not down to the point where we’re directly competing with the black market, but they have gone down considerably since we first opened up. And that’s largely due to two things: 1) supply opening up, and (2), us getting a better sense of who’s purchasing and some of the demographics that are looking for cannabis.”

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Taking stock of the Canadian cannabis market
Taking stock of the Canadian cannabis market

Hamilton has been home to a tenacious black market for marijuana. According to the Cannabis Costing Report from the most recent Hamilton Police services board meeting, there were 53 illegal dispensaries in Hamilton during the summer of 2018.

The report indicated that the most effective method of shutting down those dispensaries came in the form of legislation in February of this year, which allowed police to seize properties that were being used for the illegal storefronts.

However, that process didn’t come cheap for the city. A breakdown of the costs associated with shutting down the dispensaries, including extra officers and wages, storage, legal proceedings, came out to a total of $602,171

The first year of legal recreational cannabis has also been costly for the province. Last month, the Ontario Cannabis Store (OCS) said it lost $42 million in the latest fiscal year. Although it reported revenues of $64 million for the year ending March 31, it also racked up a total of $106 million in expenses during that same period.

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READ MORE: After a year of legal weed, some questions we’ve answered and some we haven’t

As Canada enters the second year of legal pot, consumers will also soon see an increase in the variety of products available with the rollout of cannabis edibles and extracts.

Fry said he’s looking forward to that, calling it “phase two” of legalization.

“It will be a whole new learning curve,” said Fry. “There will be a whole new refresh for our staff and all the new products coming to market to make sure that we can appropriately guide people and give the right experiences. But it’s going to be exciting. It’s a whole other catchment of consumers I suspect we’ll capture, pursuing new consumption methods.”

Hamilton will also be getting three new stores in the second year of legalization.

The province’s second cannabis lottery selected 2249364 Ontario Inc. with a listed address on Upper James Street, as well as Eleonora Plata, who is registered with an Ancaster address on Wilston Street, and 11535951 Canada Corp., which will be based at the Winona Crossing shopping centre in Stoney Creek.

Olivia Brown of Professional Cannabis Consulting thinks the province needs to do away with the lottery system.

“We need a different way of rolling out who gets assigned these dispensaries,” said Brown during an interview on Global News Radio 900 CHML’s Scott Thompson Show. “Perhaps instead of the lottery system, we’ll encourage people to apply on merit. I believe that’s where they’re going to see really good returns — when they give the licenses to people who actually really, really want to open these types of stores.”

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For his part, Fry said he’s not worried about competition. He said he’s already on good terms with Santino Coppolino, the owner of Hello Cannabis.

“It’s no secret that Hamilton is a really big city, and I think it does require more stores,” said Fry. “I’ve actually reached out to a couple people that are opening the stores and offered my assistance in terms of helping them get off the ground and running.”

“I think eventually we’ll see at least as many stores as there are LCBOs in the city or across the province. It’s just a natural saturation of the market.”