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Cannabis retailers think Cambridge market is over saturated

There are nearly 1,500 cannabis retailers in Ontario and another 450 applications in progress according to the Alcohol and Gaming Commission

Over the last year, Cambridge has increased its number of cannabis retailers to 17 with more applications in the works.

The competitive market has forced some stores in Waterloo region to close up shop, and left some local retailers questioning the future of their businesses.

Ramandeep Gill is the owner of Hespeler Village Cannabis on Pinebush Road. He thinks there are too many pot shops condensed in one area, making it harder for stores to thrive. 

“There are like six shops in a mile radius from here,” Gill said. “We really have to rely on our service to keep up.”

Only being in business for six months, he makes a point to try and create the best customer experience possible to compete with the larger franchised stores.

After a purchase, Gill offers water and chips for free to help with the munchies and to connect on a more personal level with his customers. He said more stores will close if they don't have good customer service or try to be different from other stores.

"Why would someone come to your store if you have the exact same stuff as everyone else and your service sucks?" asked Gill. 

With almost 20 stores in a city like Cambridge, sales growth has started to slow a bit, especially with inflation and the rising costs of goods.

“It’s starting to pick up, slowly, but we are doing better, 5 to 7 per cent growth monthly,” said Gill. “It’s better than what we were doing a few months ago.”

Ronin Cannabis on Jamieson Parkway is another locally-owned independent shop positioned farther away from the density of a downtown core.

Despite being farther away, the fear of a big box store undercutting them still looms over them like a cloud of purple haze. 

"The fear is always going to be there that those companies are just going buy out this store and it end up being, you know, a Fire Flower or a Value Buds," said Dave Allen, manager of Ronin Cannabis. 

Just like Hespeler Village, Ronin wants to create relationships with their customers and set up personal profiles and engage with them on a level Allen said, these big box stores just don't do.

"They want to get you in and out as fast as they can," said Allen. "We have a certain loyalty from our customers and that's what keeps the lights on at the end of the day."

Ronin's Guelph location is in the middle of a downtown core that has seen the shops spread like weeds, creating a dense population of cannabis retailers.

Some of these bigger retailers are able to undercut the prices of their product, leaving the little guy trying to match as much as possible. This is why service is the key for independent shops.

Allen said they can do their best to match the price of these big box stores, but the intangibles that they offer are worth more to their customers than saving a few bucks.

The cannabis industry as a whole has been up by a narrow margin of one per cent according to statistics from the Ontario Cannabis Store (OCS), the agency that oversees sales throughout the province.

In the last quarter of 2021, the cannabis industry in Ontario sold nearly $400 million worth of cannabis related products.

With a record of 59 million grams of cannabis sold throughout the province, OCS says the legal market keeps growing and is outpacing illegal streams of cannabis. 

“Thanks to the resolve of the industry and dedication to continuous improvement, Ontario’s adult consumers continue to choose tested, traceable, quality controlled legal cannabis products,” said OCS in its latest market report. 

There are nearly 1,500 cannabis retailers and another 450 applications in progress according to the Alcohol and Gaming Commission of Ontario. This would push the total number of stores to 1,900 across the province and provide about one pot shop for every 7,869 people in Ontario.

According to Cannabis Retailer Magazine, Ontario’s sales increased 3.67 per cent to $150.2 million in April, the latest month with sales data available. In the same month, 31 new stores opened across the province.

But while having an abundance of stores creates easier access to legal weed, Gill thinks this will make it harder for his business to survive.

“I think there should be a limit on how close shops can be together, it doesn’t make sense to have them so close together. It’s not good for business,” he said.

Allen thinks location should be left up to the municipalities and with an emphasis on smaller mom and pop shops. 

"It should be up to them if they want to have those big stores in or if they want to give the opportunity to the young, independent, entrepreneurs," Allen said. "Maybe these municipalities might not want a pot shop in a certain location, but they should be able to choose."

Being a local business, one of the most important things to be competitive is to have a good reputation and to build a community said Gill.

“We will continue to create a good customer experience and get these people to come back. We want them to feel comfortable here, that’s what it’s all about,” he said.

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Joe McGinty

About the Author: Joe McGinty

Joe McGinty is a multimedia journalist who covers local news in the Cambridge area. He is a graduate of Conestoga College and began his career as a freelance journalist at CambridgeToday before joining full time.
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