Pubdate: Tue, 18 Oct 2016
Source: National Post (Canada)
Copyright: 2016 Canwest Publishing Inc.
Contact: http://drugsense.org/url/wEtbT4yU
Website: http://www.nationalpost.com/
Details: http://www.mapinc.org/media/286
Series: O Cannabis: Part Three of Six
Series: http://news.nationalpost.com/features/o-cannabis
Author: David Akin
Pages: A2-A3

POT'S RETAIL THERAPY

TORONTO - It's a hot, sunny Thursday afternoon on the hard edge of Queen 
Street West, and the foot traffic at Eden, a pot dispensary, is brisk.

Retailers along this strip of trendy clothing stores, bars, restaurants, 
shoe shops, tattoo parlours, hairstylists, comic stores and coffee 
joints cater to the urban hip, and Eden is no different. lnside, 
iceberg-blue lights illuminate jewel-case cabinets with the product - 
glass vials of Hindu Kush, El Hefe, Organic Blue Dream - artfully 
displayed.

On the aquamarine-blue wall at the front are two white iPads, for 
customers who need quick access to the Internet to check product 
information.

The place is spotless, sharp. And the air is heavy with the 
unmistakeable sweet smell of cannabis.

Behind the counter, two clerks, a man and a woman both in their 20s, 
both dressed like their customers, are filling orders, taking cash.

The average transaction, those in the business say, is $50. A pre-rolled 
joint is $12, but Alicia, the manager, says they won't start selling a 
lot of those until the evening, when the university crowd and the kids 
from the suburbs come downtown.

The afternoonwalk-ins are largely cannabis users who rely on the 
flowers, ointments, teas, and oils to ease some chronic ailment, or they 
are creative types - writers, graphics artists, filmmakers - who find 
extra insight and energy through cannabinoid stimulation. They all have 
prescriptions from a licensed physician.

The product mix and retail approach at Eden's downtown store is 
different than what you will find at the company's newest outlet a few 
blocks north near Bayview and Eglinton. There are more seniors and aging 
baby boomers in that neighbourhood so the store opens earlier and closes 
earlier.

The Eden outlets are among the 100 or so pot dispensaries in Toronto, 
but there is easily demand, those in the industry say, for 1,000 such 
businesses.

They are owned and operated by a mix of campaigners and capitalists.

The campaigners have been working for years to legalize marijuana use. 
They believe in the huge potential for the drug to manage pain, ease 
anxiety, and help many to a more productive, happy, creative and healthy 
existence.

Tania Cyalume and Brandy Zurborg opened their storefront dispensary, 
Queens of Cannabis, on Bloor Street West just north of Little Italy in 
February.

"I guess when you believe in a product, you really believe in it because 
you've seen the way that it affects people," said Cyalume.

The products Cyalume and Zurborg sell and their approach to retailing 
match their personal philosophies and lifestyles. Both are vegans, and 
the edible cannabis products they stock are vegan and  pesticide-free.

Their crusade is about serving patients because they are patients 
themselves, and use cannabis products regularly to treat their own 
chronic pain and ailments.

"We're patients and we believe in it. We also believe that patients have 
the first right to access before recreational. There is only so much 
supply, and there is a huge demand," said Zurborg, who trained as a 
certified management accountant designation and was  an auditor with the 
Canada Revenue Agency.

Their goal is not necessarily to get rich. They speak of one day being 
able to use the proceeds of their retail operation to help fund 
outreach, at hospices for example, where they can spread the word about 
the life-changing value of cannabis products.

Marina, who preferred her last name not be used, is a capitalist. She 
and her husband have had as many as seven dispensaries, some through a 
franchise model they were trying to build. When she got into the 
business a few years ago, she approached with a capitalist's zeal and 
eye for profit.

The woman has agreed to talk about her industry at an upscale diner set 
among the forest of steel-and-glass condominium towers where Lake 
Ontario meets the Toronto suburb of Etobicoke. She arrived in a gleaming 
white SUV. Petite, direct and energetic, Marina makes no bones about the 
fact she got into the business to make a pile of cash.

"There was a massive market available," she said. "That definitely was 
the original motivation. But as I got more into it, and as I started 
interacting with more patients on a daily basis and seeing the 
difference (cannabis) made, it has motivated me even more. But 
originally, it was purely the business side of me that saw a huge market 
gap."

Before becoming a cannabis retailer, Marina, who has a business degree, 
had run her own promotions company.

Both campaigners and the capitalists are eager for the Trudeau 
government to do as it promised and remove the legal prohibitions 
hanging over their retail operations. But they are suspicious that 
Ottawa's still-under-discussion plans for legalizing marijuana will 
favour corporate interests and freeze out the independents.

"I don't really know what to expect from the Trudeau government. What we 
thought was going to happen and what has happened thus far are just 
completely opposite sides of the spectrum," Marina said.

Marina, the Queens of Cannabis, and other operators of pot dispensaries 
fully expect that large, well-financed companies will muscle their way 
into the retail space once recreational marijuana sales become legal. If 
not them, it may be government agencies with a model similar to 
provincial liquor commissions.

And why wouldn't they? Studies in the U.S. and Canada have shown in 
terms of annual sales per square foot, a pot retailer is a top-tier 
operation.

Consider this: the most productive retail space in Canada is an Apple 
Store, with average annual sales of $7,200 a square foot. This compares 
with $2,961 a sq. ft. at a Lululemon store and $1,490 a sq. ft. at Costco.

At the other end of the spectrum, the comparable figure for Sears, 
Dollarama and Canadian Tire is less than $250 a sq. ft. In the U.S. 
states where selling marijuana is legal, sales average US$975 a sq. ft.

Want to get into the pot retail business? You are going to be making a 
lot of money.

Of course, no one is yet sure how the retail environment will look once 
marijuana storefront operations are legal. Right now, the only legal way 
for a customer to buy pot products is through the mail from a producer 
licensed by Health Canada. Those producers will only sell to those with 
prescriptions.

But if businesses are allowed to set up cannabis shops and compete in 
the same way that other retailers do, Canadians could be buying as much 
as $10 billion worth of marijuana products a year. That estimate comes 
from Avery Shenfeld, chief economist at CIBC World Markets.

To put that in perspective, Canadians bought about $9-billion-worth of 
beer in 2015, according to Statistics Canada.

Michael McLellan, a financial consultant to the medical marijuana 
industry, thinks retail sales of cannabis products could be much bigger.

"This is a 10-year, bull-market run. You're creating a new legitimate 
legal business for what is going to be a $10-billion to $20-billion a 
year market," he said.

McLellan, who also acts as spokesman for the Toronto Dispensaries 
Coalition, is a chartered financial accountant. He spent a decade 
running a publicly traded company in the energy and technology sector.

He is certainly a campaigner for legalization, but he is also 
campaigning for capitalism to be let loose in this space. He plans to 
make money selling pot.

"I'm not a big user of marijuana myself," McLellan said. "But I intend 
to invest some of my own money and some of my family's money in the 
stock market in licensed (marijuana) producers or other companies that 
are going to service . the future recreational marijuana space."

For his work with the dispensary coalition, McLellan figures he is now 
spending about half his time thinking about the new opportunities and 
challenges that will come when the Trudeau government finally legalizes pot.

Everyone expects there to be plenty of retail competition when pot is 
legal and, as a result, smart retailers will be aiming at profitability 
by doing what any retailer does: get the right product mix at the right 
location in the right retail environment sold by knowledgeable, friendly 
staff.

Alicia, the regional manager for the Eden dispensaries in Toronto, came 
from David's Tea. She can see the irony in moving from a high-end retail 
chain that sells dried leaves to discerning tea customers to what could 
be the next-generation of high-end retail chains selling dried herbs to 
discerning cannabis customers.

The store on Queen Street is one of five dispensaries operated by the 
(for now, at least) not-for-profit, Vancouver-based Eden Medicinal 
Society, but Alicia - she asked a pseudonym be used - is already 
scouting other locations in Toronto.

She is also looking for new staff who will earn a premium wage because, 
like those at David's Tea or, for that matter, the Apple Store, they 
need to have training and specific expertise with twhat they sell.

McLellan says good pot retailers like Eden will take care to match a 
customer's desired experience with the right product. It is an act of 
salesmanship that draws more on art, empathy and, let's face it, the 
seller's personal experience with many cannabis products.

The mix might best be described as a cross between a pharmacist - 
customers using new products or new doses will definitely benefit from 
clear instructions from the retailer on safe use - and a sommelier 
recommending wine pairings.
But while the sommelier is selling an "experience," it's not like the 
"experience" that a pot retailer is selling. Drink a bottle of Chablis, 
cabernet franc or pinot grigio and the effect on  your body will be 
largely the same.

"With cannabis, it's not quite like that. There's differences in the way 
(strains) smell, the way they taste, and the way they affect you," 
McLellan said.

Perhaps you are a recreational user who wants a high that makes you feel 
good, lifts your spirits, and might even make you want to dance. Your 
pot retailer is likely to recommend a sativa - perhaps a little Laughing 
Buddha, Blueberry Dream, a Lime Haze, or maybe some Alaskan Thunder F-k.

If you're a creative type looking to get some work done with a little 
chemical assistance, your retailer may point to some other sativas, such 
as Cinex, Super Jack or Candyland that produce a high but won't have you 
wanting to nap every 20 minutes.

Beyond a bewildering array of strains, there are an increasing number of 
cannabis products: creams, tinctures, oils, gels and, of course, baked 
goods such as brownies, all designed to get the drug into your body in 
different ways and to different effects.

"The current retailers that sell the product, the current dispensaries 
that have the best level of customer service and the most knowledgeable 
staff are the ones that are surviving. The ones that don't have that are 
closing their doors," McLellan said.

In other words, a pot shop is like a shoe store or a travel agency. 
Lousy customer service will kill the business. Excellent staff will help 
it flourish.

McLellan and pot dispensary retailers are looking forward to a future 
they hope is only months, not years away, one in which Canadians can 
purchase cannabis products with the ease and convenience of buying 
groceries or wine.

"What the market is showing it wants is a clean, friendly environment, 
professional, where they see the quality product and they get a good 
customer experience," McLellan said. "This is a brand new marketplace."
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MAP posted-by: Matt