Key Takeaways
- Ontario has amended Regulation 468/18 under the Cannabis Licence Act, 2018, increasing the store cap for licensed retail cannabis operators from 75 to 150.
- High Tide Inc. welcomes this change, anticipating a positive impact on Ontario's cannabis retail market and a competitive edge against the illicit market.
- The amendment is seen as leveling the playing field in Ontario and offering significant growth opportunities for cannabis retailers like High Tide.
- As of July 2023, High Tide's 50 Canna Cabana stores in Ontario outperformed provincial peers by a substantial margin.
- The company plans to expand its footprint, aiming for 300 brick-and-mortar stores in Canada.
Ontario's Strategic Move in Cannabis Retail Expansion
The Ontario government has officially amended Ontario Regulation 468/18 under the Cannabis Licence Act, 2018, effectively doubling the cap on the number of stores that licensed retail cannabis operators and their affiliates can operate.
This amendment increases the limit from 75 to 150 stores, a move well-received by major industry players like High Tide Inc.
High Tide's Response and Growth Plans
In a news release, Raj Grover, the Founder and CEO of High Tide, expressed strong support for this regulatory change. He believes that this move will bring Ontario's cannabis retail market closer to the success seen in provinces like Alberta, Saskatchewan, and Manitoba, which do not impose a store cap and have effectively captured the illicit market.
Grover also highlighted the competitive landscape in Ontario, noting that some operators using a franchise model were already approaching or exceeding the previous cap of 75 stores.
Under the previous regulations, High Tide operated 50 Canna Cabana stores in Ontario, which, as of July 2023, had an average annual run rate 3.4 times higher than their provincial peers.
With the new regulations, High Tide anticipates a significant boost in revenue and growth, aiming to establish 300 brick-and-mortar stores across Canada.
This expansion is not just a win for High Tide but also for Ontario's legal cannabis industry, as it is expected to create new jobs, increase tax revenue, and provide a stronger front against the entrenched illicit market.
What We Think
The decision by the Ontario government to double the retail store cap for cannabis operators marks a significant development in the Canadian cannabis industry.
This move is a strategic step towards stabilizing and growing the legal cannabis market, offering retailers like High Tide a substantial expansion and revenue growth opportunity. The amendment aligns Ontario with other provinces that have seen success in diminishing the illicit market and set a precedent for a more open and competitive cannabis industry.
High Tide's ambitious growth plan reflects confidence in this regulatory change and underscores Ontario's potential for increased job creation and economic benefit. This development is a positive indicator for the industry, suggesting a trend towards more progressive cannabis policies in Canada.
[Image via High Tide]