Former Ottawa business attorney Koby Smutylo was one of many entrepreneurs prepared for that auspicious day on October 17, 2018, when it became legal to sell recreational marijuana in Canada.
He was very knowledgeable and experienced in the emerging industry and raised millions of dollars through investors. He began leasing downtown storefronts and hiring staff – only to pursue his plans for his cannabis startup, Ouid, when the Ontario government changed the rules. It temporarily limited the number of stores that could open and introduced a controversial lottery system that granted licenses to 25 stores across the province.
Ouid wasn’t one of them. However, it was far from the end of the roller coaster ride for Smutylo, his partners, and countless other retail entrepreneurs looking to get into the emerging sector.
The province announced that it would lift the temporary cap in late 2019, which meant Ouid could get the government-issued license last year and begin launching its first cannabis dispensary, which is expected to open in June.
You are ready to enter an increasingly crowded market where cannabis dispensaries are as common as coffee shops in some neighborhoods.
The space previously used by The DryCleaning Co. is in the early stages of opening as a True North cannabis store on Wellington Street West next to the High Ties cannabis store. Photo by Caroline Phillips
According to the Ontario Alcohol and Gaming Commission (AGCO), 642 authorized retail cannabis stores were open in Ontario in late April. That equates to more than four stores per 100,000 people in the province.
Ottawa has more than 100 cannabis stores that are either open, about to open, or being advertised to the public.
“Soccer mothers and hockey fathers”
Ouid (pronounced “weed”) positions itself as a “lifestyle” brand specializing in herbal smoke mixtures that can be added to cannabis to reduce the intensity of cannabis, or that can be smoked yourself. It sees its target market as soccer moms and hockey dads.
“A lot of women enjoy cannabis but don’t necessarily want to get ‘couch lock’,” said Smutylo, referring to strains that make you so high that you can’t get off the couch afterwards. “Maybe you want to feel more relaxed and still be functional.”
The company is now less interested in doing business downtown. It takes care of the suburbs. The 3,400 square meter flagship store will be located at 34 Highbury Park Dr. opened in Barrhaven. The address is in a square managed by the commercial real estate and property management company Huntington Property Group. Huntington’s partner Derek Noble, who sits on the board of BGC Ottawa and co-chairs CHEO’s largest one-day fundraiser, Ski For Kids, is also one of Ouid’s business partners.
Huntington also rents to Superette, one of the first cannabis stores to open in Ottawa in Wellington Village. After Noble saw how well it was going, he wanted to enter the lucrative market.
He was introduced to Smutylo by mutual friend Jeff Parkes of Taggart Realty, and the rest is company history.
“It’s funny how the stars line up sometimes,” said Smutylo. “Sometimes things go the way they should.”
Smutylo describes Ouid’s approach to business as more cautious than in 2018 when it placed high financial risk on its investors with the goal of opening 11 stores right outside the door.
“The way we do it now, it’s really a more traditional way of building a good, sustainable business.”
Two more Ouid stores are to be opened by the end of the year. one in Kanata and one in Stittsville.
“We’ll see how they work and scale accordingly,” said Smutylo, who said he has identified a total of five possible locations.
An online map on the AGCO (Alcohol and Gaming Commission, Ontario) website showing the location and status of cannabis retail stores in Ottawa.
Since February, the AGCO, which regulates the cannabis industry, has increased the pace of cannabis business approvals from 20 to 30 per week. Smutylo doesn’t complain.
“Are there too many cafes, yoga studios or nail salons? I mean it’s a free market. How do you define ‘too many’? “, Asked he. “Is it that they are not viable businesses or are they causing a social problem?
“Cannabis has become increasingly popular. People use it for a variety of reasons, to sleep, to be sick, to entertain, to relax. What’s great is that people who have been using it for decades and are now facing criminal repercussions at least have one open and safe way to use it. “
If all of the upcoming Ottawa stores open as planned, Ottawa will have twice as many cannabis retail stores as LCBO and The Beer Store combined, according to leading cannabis lawyer Trina Fraser, partner at Brazeau Seller Law.
The downtown store presence has not yet reached saturation point, she believes, “but we are getting there.”
“At the moment, the choice of location is becoming very critical. It’s about finding those little pockets and areas that are still underserved, ”she says.
Downtown retailers have the advantage of attracting customers from Gatineau, where product restrictions are greater and the legal age to purchase cannabis products is 21, compared to 19 in Ontario, she said.
Leading cannabis expert Trina Fraser, partner at Brazeau Seller Law in Ottawa.
Fraser believes the Ottawa cannabis market will continue to grow and develop as societal attitudes and stigma about cannabis continue to relax.
“It was really about making the whole process of buying cannabis accessible, normalized, and comfortable. Not secretly. People’s pre-2018 experience was about going to illegal pharmacies that showed up and went down, came up and went down.
“Now the market is starting to mature,” said Fraser, who says companies are finding ways to differentiate themselves from their competition.
Superette is in the process of opening its third Toronto location and its second Ottawa location in upscale Glebe near the corner of Bank Street and Fifth Avenue. The cannabis industry is just getting started, believes Mimi Lam, co-founder and CEO of the company.
“We’re just getting started,” said Lam, who is “not very concerned” about the presence of three other cannabis retail stores in the Glebe.
If there are too many cannabis stores in certain neighborhoods, the market will correct itself.
“It’s growing up. It will normalize. It will shake out. There will be companies that ultimately fail and fail. There will be stores that won’t open. There will be companies and businesses opening all over the place.
“That’s normal, to be honest.”
Superette opened its first location on April 1, 2019 at 1306 Wellington St. W. and is in the process of opening its second location in Ottawa in the heart of Glebe.
Lam believes the public really noticed the rise of cannabis dispensaries in Ottawa because the store fronts have such a noticeable presence compared to, say, new developments in the tech industry.
“You can see this growth, but it’s not like your face, like business after business after business. You turn around and there’s another cannabis shop, ”she says.
As for the Glebe, the businesswoman said her main focus is on becoming a good business neighbor and making positive impact. As a former resident of the Glebe – she used to live in an apartment above Wild Oat Bakery – she has a penchant for the neighborhood.
“I believe that Superette will continue to stand out in so many different businesses because we have a team that is extremely knowledgeable and ready to help any customer who comes through the door.”
However, there is still the uncomfortable situation of private retailers having to buy their cannabis from the state-run Ontario Cannabis Store, the only legal online recreational cannabis retailer in Ontario. In the meantime, consumers have a choice of buying from private retailers or the OCS. In addition, retailers must be subject to strict restrictions, including restrictions on how they can advertise their products and services.
“Is the industry perfect? I wouldn’t say that, ”says Lam, who believes private retailers are the best option for consumers. “There is a specific interface that you have with a budget tender that can support you in your purchasing decisions. Ultimately, customers need to feel empowered in their choices, especially with a product like cannabis. You don’t get that (experience) online. “