One third of Toronto's cannabis stores are expected to close within the next year
If you feel like there are too many cannabis dispensaries in Toronto, you're certainly not alone, but it looks like the long-foretold industry shakedown appears to finally be taking place, to the alarm of those in the industry but the joy of some residents and other business owners.
Especially in the wake of mass closures of stores and restaurants over lockdown, it has seemed like pot shops have been popping up in vacant storefronts left, right and centre across the city, oftentimes taking over neighbourhood blocks.
But, the closures of these outlets have already begun, with experts predicting far more in the coming months.
There seems to be more cannibas stores than Starbucks, everywhere in the city— Howard Ross (@scarboroughguy3) June 20, 2021
According to recent numbers obtained by the Star, store sales are in decline, the number of new store openings has drastically slowed in pace, and more and more licenses to legally open pot shops (issued by the Alcohol and Gaming Commission of Ontario) are being cancelled — a completely new phenomenon in the GTA as of September 2021.
Saturated market! They closed my favorite Starbucks to put up one of these! I'm still fuming over it!— Fey Photeine (@fey_photeine) February 23, 2022
It's something experts have been expecting for some time, with analysts at major banks reporting last fall that Ontario as a whole was in for a huge drop in industry sales, store shutdowns and a "loss of economic viability."
Even at that time, in November 2021, legal marijuana sales in Canada were already down 33 per cent from two years earlier, with more than 1,200 retailers operating in Ontario alone, a large proportion of them (about a third) in Toronto.
While some brands have remained successful due to their unique aesthetic, retail experience and approach, the sheer number of licensed dealers has meant lower sales per location as the customer base fails to keep pace with the industry footprint, which is still growing, albeit at a far less voracious pace this year than last.
It's led stakeholders to make some unfortunate predictions for the industry; one Canadian cannabis brand's CEO forecasts somewhere around 1,000 of Canada's 3,200 or so cannabis stores will close this year, which would likely disproportionately impact larger markets in large urban centres like Toronto.
When you cannabis stores are within walking distance of each other… how do any of them pay the rent?— 🇨🇦lake (@gonefishingphd) February 27, 2022
Along with all of the factors working against these companies, members of the community have also been pushing back against openings in their area, with even Mayor John Tory saying at one point that he would be on board with more stringent approval rules in certain circumstances.
Toronto City Council also unanimously passed a motion 10 months ago to support a bill that would amend the Cannabis Licence Act and change the approval process for cannabis retailers, bringing more power to municipalities to have a say in such shops in their cities, which would likely mean fewer new ones opening in an already slowing market.
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