Alberta one step closer to private retailers taking over online sales

| David Brown

Alberta has moved one step closer to allowing private retailers to take over online cannabis sales from the provincial distributor. 

Alberta’s Bill 80, the Red Tape Reduction Implementation Act, 2021, includes potential changes to the province’s cannabis regulations. The legislation passed second reading this week and will now proceed to the Committee of the Whole. The legislation is not limited to cannabis and proposes changes to nine pieces of provincial legislation.

The omnibus bill was tabled on November 4 and includes language that would dismantle the AGLC’s own online cannabis sales platform, allowing private retailers to fill this role instead and to carry additional cannabis-related items like branded apparel.

Up until now, the only way for people in Alberta to order cannabis online and have it delivered to their homes was through the AGLC’s own online portal,

… how will they ensure that that is being done legally? What additional enforcement costs, if any, are going to be related to this decision, or what kind of enforcement program are they even going to put in place to make sure that this is happening? 

Marlin Schmidt, MLA (Edmonton-Gold Bar)

It was introduced by the current government, formed by the United Conservative Party and sponsored by UCP MLA Tanya Fir, to make changes to The Gaming, Liquor and Cannabis Act put in place by the previous Alberta NDP government. The goal of the change, say UCP MLAs, is to create new business opportunities for private cannabis retailers to save the government the cost of managing the program themselves.

The Committee of the Whole is made up of all the Members of Alberta’s Legislative Assembly and will entail a discussion of specific clauses of a bill. While the NDP says they think managing cannabis sales in a fashion similar to alcohol makes sense, some members of the Legislative Assembly say they want to see the cannabis-related portion of the bill examined in the committee.

Marlin Schmidt, an NDP MLA (Edmonton-Gold Bar) who was the acting Minister of Justice at the time of legalization, says the original decision to have online sales be run by the province was the best way to properly manage these types of sales in a safe and responsible way.   

“I think it’s wise for members to vote to put this bill to committee so that we can ask questions of the government as to what changed between 2017 when we introduced this framework, and now.”

“In his statements on this topic, the Finance Minister has said that he’s very concerned about squeezing out the black market in online cannabis sales. I don’t understand how opening up online sales to any kind of provider actually accomplishes that goal. This proposal certainly runs counter to the advice that we received when we created this system, so I’m interested in knowing what changed, and I think that by referring this bill to committee, that would give the members of the Legislature the opportunity to ask the right questions.”

Schmidt also hinted that he would like to see department officials called to committee to provide the data and analysis that was done to support the proposed changes to online cannabis sales. He also asks what the cost of enforcing this type of sales model will be.

“How is the government going to ensure that the cannabis that is sold online through this private system that they are proposing to operate—how will they ensure that that is being done legally? What additional enforcement costs, if any, are going to be related to this decision, or what kind of enforcement program are they even going to put in place to make sure that this is happening? 

“I think it’s only fair for the government to come forward with its evidence and analysis to support this move, how it supports the elimination of black market cannabis sales, how they plan to enforce the rules around private sales, and what those enforcement costs are going to be. Let’s make sure that the people of Alberta understand exactly what’s at stake with this decision”

Another NDP MLA, Nicole Goehring (Edmonton-Castle Downs) questions how much the government could stand to lose in revenue for public coffers if online sales are moved to the private sector. 

“…(W)e’re getting rid of the income from online sales of cannabis. That’s revenue. Why would the government take that out? It doesn’t make sense.”

Another concern raised by Goehring is if the move will impact communities without access to a cannabis store. 

“It made sense for the government to be able to distribute online cannabis, and lots of the feedback that we heard (when the province was developing their regulations prior to legalization) was that not everybody would have access to a local store. People that lived in places that perhaps didn’t have a cannabis store located in their community could easily go online. It’s regulated. It’s safe. The government was making a profit from that. Why is that being removed? It’s put in here without any explanation.”

Irfan Sabir, the NDP MLA for Calgary-McCall expressed similar concerns at second reading. 

“…(G)overnment is getting some revenues from online cannabis sales. I guess taking that revenue stream out is somehow red tape reduction in the UCP’s mind. I’m pretty sure that the Minister of Finance is in a better position to include that in some budget bill or some other money bill, that this is the revenue that was coming in and we would no longer collect it, and give some intelligent reason why they’re not doing it anymore. What I’m trying to say is this, that I don’t know how that is red tape reduction.”

According to the AGLC, online sales were just 1.1% of total cannabis sales for year-to-date (April 1 – Oct 31) in the province. Alberta sold just over 83,000 kg of cannabis worth almost $470 million in the fiscal year ending March 2021. Online sales of cannabis are managed by most provinces, and sales numbers are similarly low in those jurisdictions as well. 

When the bill was first introduced, its sponsor, Tanya Fir said one of the goals was to provide more opportunities for private retailers. For their part, many cannabis retailers in Alberta say they are happy with the plan

The AGLC also sent out a questionnaire to retailers earlier this year gauging their interest in selling products online and in selling non-cannabis products. A representative for the AGLC told StratCann this summer that the agency does not have a set release date for the summary document but says it will most likely be late Fall 2021.

Alberta NDP Finance Critic Shannon Phillips says the party is ultimately supportive of the proposed change to online sales, but still has questions and wants to ensure any such changes are watched closely. 

“Moving rules for cannabis sales closer to those resembling the sale of liquor makes sense.”

“However, I do want to see the UCP ensure local businesses and local ownership are priority. We will continue to monitor this change as this government has shown they have higher interest in big chains than in small, locally-owned retailers.”

Alberta now has more than 700 private cannabis retail locations. While there are many independent cannabis stores with only one or a handful of locations, much of Alberta’s market is controlled by a handful of large chains. 

According to Alberta’s public listings, Canna Cabana is currently the largest chain of cannabis stores in the province with 58, followed by Value Buds with 57. Spiritleaf has 50, Fire & Flower has 42, Plantlife has 31, FOUR20 Premium Market has 24, and Choom has 15. Cannabis House recently converted some of its stores to Cannabis Discounter, with a total of 17 locations combined.

Other Provinces and Territories

Yukon passed their own legislation recently that will allow the handful of private retail stores in the territory to do online sales and delivered, and Ontario announced plans earlier this year to make direct delivery and online sales permanent for private retailers in that province.

BC began allowing retailers to deliver products to consumers in July of this year, although they do not allow mail delivery, only personal delivery. The province still manages their own online store

All qualified designated retail cannabis vendors in the Northwest Territories are also now eligible to operate an online store to serve NWT customers. At the moment ReLeaf NT, is the only currently active retail cannabis store in NWT that has expressed interest in operating an online store. 

Saskatchewan and Manitoba have always allowed their private retail stores to do online sales and neither province runs their own online store.