Cannabis Retail in Manitoba Announced
This year, the Canadian provinces are busy at work preparing for cannabis legalization ahead of July 2018. To date, only a few provinces have announced their framework for how they will regulate the sale and distribution of adult-use cannabis in their provinces, and so far these are following a Crown Corporation model. Two days ago, the Province of Manitoba announced their plans – the first framework to allow private enterprises to play a role.
The live press conference on Tuesday was being watched by countless viewers, many of whom hoping to play a role in the upcoming retail model. On social media there has been a great deal of interest in what this framework actually is, but Cannabis Compliance Inc has been digging deeper. For some companies, the framework holds tremendous opportunity – but for many, it could be disappointing. CCI has the top line summary here.
Manitoba is essentially setting the stage for large retain chains (especially those with First Nations participation) to compete for one of four master licences. That’s right – four. In other words, at this time they are not opening up the process to license hundreds of independent stores, despite the hopes of some. The Request For Proposal (10QGET-CRS-2017) outlines the detailed requirements and terms of the application process. Essentially, they will be awarding “up to four” master licences for retail operations, and each master licence would permit the successful applicant to open multiple retail locations within that master licence.
Large chain retailers will have the key advantage in this initial bidding process. In other words, companies that have an established retail presence of some kind, and/or who have the capabilities of opening multiple retail locations within a short period of time, will win the day. 60% of the deciding points will be awarded based on business plan, financial capacity and scalability of business. In other words, a small independent dispensary may have a low chance of competing in this process. Larger chains, such a high-scale grocery or even pharmacies – with an established retail presence already – will have a significant advantage in winning one of the four master licences.
It should be noted that extra points are awarded for First Nations ownership/involvement of the applicant. It seems as though Manitoba is paying extra attention to ensuring First Nations have a genuine opportunity entering this space.
The amount of documentation required is tremendous, and given the tight deadline (Dec 22/17), it is unlikely that many applications will be filed successfully. The application will need to include substantial documentation around the company’s profile, senior management and staff, established retail network, business plan, sales/marketing strategy, regulatory compliance, quality assurance program, training and education protocols for staff, social responsibility, expansion capabilities/plans, record keeping and security measures. Only the top four applicants will be notified, and in the Spring of 2018 such successful applicants will enter into a more formal agreement with the province.
Keep in mind this should not discourage entrepreneurs from attempting to enter this space. For example, a small chain of independent pharmacies with a solid plan, could very well win the day. Also it should be kept in mind that this is just the first round – the province has communicated to us that they might very well open the RFP process to more applicants down the road, depending on how the process unfolds.
It is unclear how current licensed producers may gain a retail presence in this new system. In recent news, Delta-9 and Canopy Growth have announced their intentions to submit a proposal, as has also National Access Cannabis (NAC) – the latter having a 10% ownership of First Nations communities, providing a strong advantage in the process.
Will the Manitoba retail space be dominated by a few large licensed producers and/or retail chains? Will Manitoba have sufficient supply to meet the July 2018 target date? No one has answers to these questions, but Manitoba does appear to be taking a cautious approach in establishing its first legal cannabis retail/distribution network.
At the press conference the other day, Premier Brian Pallister commented that online resellers would be considered within the current framework, although the RFP documentation does not seem to provide more insight into how this might work.
Cannabis Compliance Inc is Canada’s largest cannabis compliance consulting firm, specializing in the commercial cultivation, quality assurance, cultivation and financial planning of commercial cannabis operations globally. CCI is actively supporting multiple RFP bids for Manitoba, and will actively support any corporations and individuals desiring to enter this space. Given the tight deadline approaching, any interested corporations or individuals wishing to recruit our help in submitting a proposal, are encouraged to do so immediately. Visit our Contact Page and let’s get talking.