Across Canada, cannabis is being sold legally in retail outlets and online. However, there’s one model that, to date, has had limited uptake: farmgate, wherein a licensed provider can sell directly to the consumer at the point of production.
“I think this would be a really cool and fun thing to do,” says David Lynn, Chief Operating Officer of GTEC Cannabis Co in Kelowna, BC. “It’s an opportunity to sell directly to the consumer without going through a middleman. In this way, you can receive consumer feedback in person, via direct dialogue, which is quite valuable.”
The OCS is ready to onboard any farmgate store as soon as the licensed producer is ready and has received the appropriate regulatory approvals from the Alcohol and Gaming Commission of Ontario (AGCO).Daffyd Roderick, Ontario Cannabis Store (OCS)
GTEC wholly owns operations in BC, Alberta and Ontario, and distributes into recreational, medical, and B2B channels. For farmgate, Ontario appears to be moving faster than other provincial jurisdictions. This means that for GTEC the opportunity would arise from its 15,000 square foot facility in Kincardine, Ontario, which operates under GTEC’s wholly-owned subsidiary, Grey Bruce Farms.
“We just launched with the Ontario Cannabis Store (OCS) this month, and we have some interest in farmgate from our Grey Bruce Farms facility, though we aren’t pursuing it now,” says Lynn. “Nonetheless, it’s very positive from a policy perspective, and a good option to have.”
Ontario is further along in developing a plan for farmgate than many licensed providers may realize.
Canopy Growth has been in talks with the Government of Ontario concerning the establishment of a farmgate store at our Smiths Falls facility, and to date our conversations have been encouraging.jordan sinclair, canapy growth corporation
“The OCS is ready to onboard any farmgate store as soon as the licensed producer is ready and has received the appropriate regulatory approvals from the Alcohol and Gaming Commission of Ontario (AGCO),” says Daffyd Roderick, Director of Communications at the OCS. “The OCS has engaged with approximately 10 licensed producers on their potential interest to open a farmgate store.”
So far the OCS’s engagement with licensed producers has been of a preliminary nature. No licensed producer has a farmgate store fully built out yet, and no Retail Store Authorization has been issued. Nonetheless, the OCS has engaged with licensed producers large and small, and while it would not reveal to StratCann the names of those producers, one of the biggest players in Canada was happy to discuss the matter.
A farmgate store would extend the guest experience to the Tweed Visitor Centre, which offers a cannabis educational experience and features windows into multiple grow rooms.jordan sinclair, canapy growth corporation
“Canopy Growth has been in talks with the Government of Ontario concerning the establishment of a farmgate store at our Smiths Falls facility, and to date our conversations have been encouraging,” says Jordan Sinclair, Vice President Communications, Canopy Growth Corporation, in Tweed, Ontario. “We welcome the opportunity to offer our products from this location when the regulatory framework allowing farmgate stores is finalized.”
Canada already has a tradition of farmgate – or direct producer sales – in areas as divergent as raw agricultural fruit and vegetables, meat products, cheeses, beer, and wine. Though the revenue from these practices may not always have a big impact on the bottom line, they can act as an important form of community engagement. Specific to cannabis, the opportunity to tie a direct consumer experience with cannabis education might have significant benefit.
“A farmgate store would extend the guest experience to the Tweed Visitor Centre, which offers a cannabis educational experience and features windows into multiple grow rooms,” says Sinclair. “This visitor centre sits on the same patch of land that once housed the well-known Hershey’s Visitor Centre.”
Due the restrictions in place from the pandemic, the move to embrace farmgate operations has slowed. As well, given that the OCS only began to engage with licensed producers in the Spring of this year – essentially, when the pandemic was taking off – it is understandable that the optimism hasn’t been met with an equivalent sense of urgency.
In the case of Canopy Growth, for example, the company’s Tweed Visitor Centre is temporarily closed due to Covid-19. Nonetheless, there is no doubt that the opportunity will be embraced, with Ontario possibly acting as a model for other jurisdictions.
“We’re ready to onboard Ontario’s first farmgate store – and therefore perhaps Canada’s first farmgate store – as quickly as licensed producers are ready,” says Roderick from the OCS. “However, we understand that for many licensed producers there are decisions they have to make around limited spacing requirements at their facility, implications on their federally licensed space, and interest among local populations relative to the location of their facility.”
One thing that the OCS is clear about is that opportunity exists for any licensed producer, large or small, and could be a real benefit for those smaller companies working to develop a niche brand. GTEC’s cultivars, for example, are whole plant, hang-dried and hand-trimmed, with the company committed to delivering a premium product. Given that GTEC’s Grey Bruce Farms facility in Kincardine produces about 1,640 kilos annually, farmgate could play an important role in creating a “destination” retail experience.
“We operate out of some small population centers, and there is a lot of buzz around our brand,” says Lynn from GTEC. “People might be more inclined to travel to buy our products, based on our premium portfolio and strong brand reputation. But the challenge is that there is so much happening in this space that when an opportunity like this comes along it doesn’t always make it to the top of the priority list.”
As of now, it is unclear when the first farmgate outlet will be ready to open its doors in Ontario. However, the OCS informed StratCann that several licensed producers are hoping to open a farmgate outlet before the end of 2020. If so, this may support a whole new world of brand engagement – and make for some pleasant drives in the country.