The cannabis market in Manitoba is becoming increasingly competitive, with retailers struggling to keep up with the demands of the industry. Business owners say that the current retail structure is working against them, and they are calling for changes to help them survive. High fees, long delivery times, and other constraints are making it difficult for retailers to compete with the illicit market. In this article, we explore the challenges faced by cannabis store owners in Manitoba and the changes they are advocating for to achieve market stability.
The Current Retail Structure
The province of Manitoba has introduced legislation to eliminate the social responsibility fee, which takes six percent of a store’s gross sales to use for public education, safety, health, and addictions associated with cannabis legalization. However, retailers say that this is not enough to ensure market stability. Along with the social responsibility fee, cannabis retailers are charged a licensing fee, excise tax, and a wholesale markup from Manitoba Liquor & Lotteries. This is in addition to taxes imposed on cannabis producers, which affect prices before retail stores even order product.
Melanie Bekevich, co-owner of Mistik Cannabis Co., said that heavy fees imposed on cannabis retailers are having a huge impact on their store. She stated that “It [makes] it very difficult to compete against the illicit market, who are not subject to any of those licensing fees or taxes.”
The Need for Changes
For cannabis retailers, the high fees and taxes are a major challenge in competing with the illicit market. According to Bekevich, if stamping out the illicit market is a priority for the government, they need to review those fees and taxes. She is not alone in advocating for changes. Tom Doran, who owns Jupiter Cannabis with his wife, America Fernandez, said he’s concerned for independent businesses that are shouldering additional constraints that don’t apply to bigger businesses. “There’s just some things that I think need to change in terms of creating a level playing field,” he said.
Doran said larger brands can negotiate discounts directly with suppliers because they’re purchasing big quantities for multiple stores. However, smaller independent businesses do not qualify because they do not purchase enough inventory. He said these “predatorial business practices” are making it difficult for small businesses to compete in an already ultra-competitive and oversaturated market. He wants to see changes to the cannabis agreement between Manitoba Liquor & Lotteries and private cannabis retailers to address supplier discounts.
Logistical Issues
Retailers are also experiencing logistical issues with getting orders from out-of-province suppliers. According to John Arbuthnot, CEO of Delta 9, orders can take three to five weeks to get to the store, but retailers have to pay for their orders right away. This often leaves them with neither the money nor the desired inventory for long periods of time. To address this issue, Arbuthnot is petitioning the government for new licenses to allow distributors to warehouse inventory so they have it in stock when they need it.
“We need to ensure that retailers … are accessing the full suite of cannabis products from the industry’s leading suppliers, and that lead times for those retailers to access those products are as short as possible,” he said.
Manitoba Liquor & Lotteries, which is in charge of distribution licenses, said it aims to make changes so retailers can access products faster but did not say when or what changes can be expected.
The Way Forward
To achieve market stability, cannabis retailers need changes in the retail structure that will make it easier for them to compete with the illicit market. They need a level playing field where small businesses can also negotiate discounts directly with suppliers. The logistics of getting orders from out-of-province suppliers also need to be addressed to ensure retailers can access products faster and with shorter lead times.
Finance Minister Cliff Cullen said he is optimistic that repealing the social responsibility fee will allow stores to lower their prices and help drive cannabis sales away from illegal sources. This is a step in the right direction, but it is not enough to achieve market stability.
In an oversaturated market, it is important to create conditions that support and encourage competition, innovation, and growth. Cannabis store owners in Manitoba are calling on the government to take a closer look at the retail structure and make necessary changes to create a level playing field.
The cannabis industry in Manitoba has the potential to create jobs and contribute to the economy. However, this can only be achieved if retailers can compete with the illicit market and have access to a fair retail structure.
In conclusion, the challenges faced by cannabis store owners in Manitoba require a concerted effort by the government to review the current retail structure and make necessary changes. This will not only help businesses survive but will also contribute to the growth of the industry and the economy.
FAQs
- What is the social responsibility fee?
- The social responsibility fee is a fee that takes six percent of a store’s gross sales to use for public education, safety, health, and addictions associated with cannabis legalization.
- Why are cannabis retailers calling for changes?
- Retailers are calling for changes because the current retail structure works against businesses, making it difficult to compete with the illicit market.
- What challenges are cannabis store owners facing in Manitoba?
- Cannabis store owners are facing challenges such as high fees, long delivery times, and constraints that do not apply to larger businesses.
- What changes are cannabis store owners calling for?
- Cannabis store owners are calling for changes that will create a level playing field, allow them to negotiate discounts directly with suppliers, and ensure faster access to products.
- Why is achieving market stability important?
- Achieving market stability is important to support and encourage competition, innovation, and growth in the cannabis industry, which can create jobs and contribute to the economy.
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