Cannabis stores push into malls, airports as competition among retailers increases

Toronto -

When travellers cut through British Columbia's Prince George Airport this summer, Owen Ritz and Reed Horton envision them browsing and buying more than duty-free treats and baubles.

The American roommates-turned-business partners hope passengers will stop by Copilot, a cannabis store they're seeking approvals to open and believe will be the world's first airport pot shop.

“Our goal from day one has been to create a differentiated retail experience that stands out from any store you might see downtown,” said Ritz.

Airport stores are nothing new for most retailers, but cannabis shops are seldom, if ever, seen at aviation hubs, so Copilot is a sign of the new territory pot stores are eager to break into.

In recent months, they've cropped up at malls, gas station plazas and beside breweries. Some like B.C. pot retailer Seed and Stone are even planning to open virtual dispensaries in the metaverse - an immersive and emerging digital world.

The push to get into these spaces comes more than three years after Canada legalized recreational cannabis. Since then, pot shops have speckled many cities - Ontario alone had 1,115 stores last September - and clustered so heavily in areas like Toronto's Queen Street that some are calling for legislation to dictate how close to each other stores can be.

The proximity is amping up competition among stores and has some observers predicting closures are on their way as entrepreneurs realize owning a pot shop isn't a guaranteed money-maker, when you're in a crowded market.

“The whole industry completely misunderstood what would happen because they thought the only barrier is legalization and once we're legal, people will just buy,” said Joanne McNeish, a Ryerson University professor specializing in marketing.

But breaking into airports and malls could curtail some of the disappointment by helping companies stand out from other brands with a store on every street corner and by catering to time conscious customers.

“For a user, it could make it that much more convenient,” said McNeish.

She believes these locations also help destigmatize cannabis for people who still see the substance as a stoner pastime or are intimidated by marijuana culture and terminology.

“If they're walking around Sherway Gardens and they stumbled upon it, maybe it'll be slightly less overbearing to take a step in,” said Justin Farbstein, Tokyo Smoke's vice-president of business development.

“It could give a safer, more approachable feel.”

That locale was part of why Canopy brought Tokyo Smoke cannabis shops to malls through a partnership with Edmonton Oilers owner, the Katz Group.

Now, there are Tokyo Smoke stores across eightshopping centres, including the Eaton Centre in Toronto, the Rideau Centre in Ottawa and Devonshire Mall in Windsor. At least another three are on their way.

In the few months they've been open, Farbstein noticed purchases have a “slight skew” toward edibles and drinks, but hasn't seen any particular demographic flock to the store more than others.

The company also has stores in a Scarborough gas station plaza and beside Cool Beer Brewing Co. in Toronto.

In an effort to stand out, High Tide Inc. is also moving beyond busy streets.

“On Queen Street, you've got a cluster of stores and they're all competing with each other heavily and there's just no unique edge that any retailer has,” said chief executive Raj Grover.

He's been targeting large shopping areas with anchor tenants like grocers, liquor stores or Costco because Hide Tide can typically score cannabis exclusivity there, but he's also delving into malls by opening Canna Cabana shops at Winnipeg's St. Vital Centre and Alberta's Prairie Mall.

Those locations will resemble Hide Tide's 113 stores, but leverage more digital kiosks and lockers to speed up browsing, ordering and pickup.

Their locations will also be chosen to avoid enticing children.

“Mall management is sometimes not too excited about locating a cannabis store where there's a food court or where families get together, so it can be a little bit more challenging than locating on the streets,” Grover said.

The trickiest part of opening mall locations, said Farbstein, is ensuring security cameras trace every part of the journey cannabis deliveries make from the loading dock to the store shelf - a requirement for all pot shops.

At the airport, there are even more challenges because travellers cannot board flights departing Canada with cannabis. Copilot plans to ask customers where they are headed and remind people they can't fly internationally with pot.

Several airlines don't feel those measures are enough and are worried an airport store would encourage pre-flight and on-board cannabis consumption. Air Canada and WestJet have urged Prince George's city council not to permit airport pot shops.

Horton called their concerns “really valid” and said Copilot had “productive” discussions with airlines to ensure they're able to work together.

“We want to improve passenger experiences, not make it worse,” he said.

But even Grover has hesitations about airport pot shops.

“I wouldn't rush to the airports,” he said.

“Cannabis at the airports may be still pushing the limits because it's so new and we want to be mindful of how the public would react.”

This report by The Canadian Press was first published April 3, 2022.