Pump up the volume – the influence of corporate cannabis in Alberta

November 25, 2024 | Jonathan Hiltz

Being a smaller player in Canadian cannabis is not for the faint of heart. Alongside the same laundry list of regulations that every other company deals with, as well as the ongoing illicit market, you need to swim in the pond with some very large, very influential fish.

Take Alberta, for example.

Alberta’s cannabis retail market is among the most competitive in Canada, with over 700 licensed stores, the highest per capita in the country. The lion’s share of these sellers belongs to large chains, including Canna Cabana, Value Buds, and Spiritleaf, which collectively own hundreds of retail locations.

There’s nothing unusual about having corporate entities in cannabis or any other sector for that matter. However, various independent cultivators, manufacturers, and retailers feel that these giants are unintentionally but unfairly influencing the flow of products.

“I don’t think [the AGLC] has come to terms with the fact that they’re supplying inventory for the entire province,” said Dan Dowber, Owner of Off The Record Cannabis.

Dowber added that when the AGLC is deciding which products to carry, it seems like they are making choices based on the volume of inventory moving the most, and the retailers moving the most volume are the chains.

Off The Record Cannabis has been able to survive and thrive in a challenging retail landscape because Dowber has chosen to differentiate its inventory with options that corporate stores are known to overlook. “I [want] the best-quality products I can find in any category. I want the very best of the best,” he said. “All these great new products come to market, but the corporate stores won’t carry them because they’re not interested in the product, they’re interested in selling and shareholder value.”

For example, Dowber mentioned a line of rosin gummies manufactured by Rubicon Organics, which are made with “the best inputs you can get,” he said. “We sold a ton of them, and then the AGLC delisted it. They said it wasn’t meeting their criteria, but I sold over 1,200 units in a year.”

*Off the Record Cannabis in Grande Prairie, Alberta*

The rule of three

Ryan Roch is the owner of Lake City Cannabis with two locations in Alberta. Roch feels that in the province there are three types of retailers.

There are the small business retailers who work with everyone. They are interested in the success of the industry and have no hold-backs in terms of product diversity in their stores.

Then, there are the “basic” retailers, as he puts it, who “move product in and move product out” and they do not care what these products there are. They just sell whatever they can.

“Then you have your large corporate retailers,” said Roch. “Unfortunately there are not many of us left that aren’t large corporate retailers.”

He mentioned High Tide as an example, which has many locations across the province. When they order a case of product to each one of their stores, the product flow-through for those cases is very large. “The AGLC looks at that and will prioritize those [items] for product calls. So we have this inflated data that’s making decisions.”

Roch also highlighted the fact that the AGLC does make efforts to work with small growers to get products in stores, and they also do look at individual products on a case-by-case basis, but the system seemingly needs some tweaking.

“The reality is, prioritization of these products is given inside the system, which holds back smaller companies. The feedback we get from growers is that it’s overall much more difficult and far less profitable to spend time in Alberta.”

Growing pains

To that point, what is the word on the street from craft and micro-growers on this topic?

StratCann spoke with Kevin Cowan, the Operations Manager and QAP at Bud Mountain Aeroponics in Calgary. Although Bud Mountain is a cultivator and processor in Alberta, they have chosen to stay out of their domestic market for the time being.

Cowan pointed out that the apparent prioritization of high-volume products makes it near impossible for smaller growers to keep up with the level of production that qualifies them for retail.

“If they make an order for a PO and you do not fill it, you can be charged for the amount of that PO,” he said. “We wouldn’t be able to supply as fast as AGLC wants for them to want to buy it, in which case we would have to wholesale purchase other cultivators’ product and process it ourselves to fill POs.”

Ryan Roch at his Lake City Cannabis location in Chestermere, Alberta

Any suggestions?

Cowan and his fellow growers would like to see a tweaking of the system in Alberta to level the playing field as best as possible. This would include “loosening some of the restrictions” on how cultivators can do business in the province.

He pointed out that in Alberta, he has three checkpoints to get product into the hands of the consumer: the AGLC, the retail store, and finally, the customer. The challenge is that Cowan only has control of the product until it goes to the AGLC. “We’ll have people who want our cannabis but we have to hope that a cannabis store that’s near them buys it from [the province].”

Cowan cited the Saskatchewan model as something that has worked well for them. “You can go there as a federally licensed producer such as ourselves. Then, after the SLGA has approved us, we are able to sell directly to the stores there, or we have the option to sell it to one of the distributors they have there.”

Cowan concluded by saying that looking at the number of Albertan companies and micro-growers that have failed despite doing everything right on paper, he sees a clear indication that there is something wrong in this market.

What does the AGLC have to say?

StratCann reached out to the AGLC for their comments on the issue.

“Alberta has a wide range of products available for retailers and consumers. Currently, AGLC works with 142 licensed producers of all sizes, of which 38 are from Alberta, and from these LPs we offer over 1,300 unique products,” said Karin Campbell, spokesperson for the AGLC.

Campbell added that Alberta retailers can partner with LPs to private-label products that are exclusive to their stores.

“Additionally, AGLC continuously reviews our cannabis product listings in order to streamline our supply chain, manage inventory, and ensure retailers and Albertans have access to a variety of quality cannabis products.”