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Opening a cannabis store during COVID-19

December 11, 2020  By Lucas McCann

When done correctly, not only can a retail store open in a pandemic period, it can also come out successful. (Photo: Adobe Stock)

Opening a cannabis store in the middle of a pandemic could be daunting, but it is possible.

Applications are actually being approved much faster now than they were at the beginning of the year. Despite two rounds of shutdowns, operations continue to open their doors depending on provincial rules. And there’s a good reason for this: recreational cannabis sales continue to grow, with Statistics Canada noting that consumers spent 74 per cent more on legal cannabis between April and June 2019 than during the same period last year.

Though there are still opportunities in the cannabis retail space, Canadian operators must understand that there are added complexities in the opening process due to our current circumstances. For example, ensuring the health and safety of the workers would involve a significant number of parameters to keep in mind. When done correctly, not only can a retail store open in a pandemic period, it can also come out successful.

1. Do extra research
Whether you are launching a store during the pandemic or in more stable times, the first key to success is to do your research. Without proper analysis of the market, a business is sure to enter the space underprepared. The industry does its part to spread market knowledge, with several groups and organizations hosting info sessions or sharing helpful information.


The second wave of shutdowns further demonstrates the uncertainty of when we’ll return to some slice of pre-COVID normalcy. As such, any store opening – be it established or new – must consider the costs associated with store design to control the flow of foot traffic and allow for customers to observe physical distancing throughout their experience.

Your budget forecasting also has to factor in the inventory and personal protective equipment (PPE) supplies and staff training needed to keep everyone safe. SmartTending budtender training, anyone?

2. Pad the budget
There are also the general considerations for a retail launch. Your business has to account for every likely expense that comes along the way. The cost of licensing, branding and trademarking fees are just as important as taxes, rent, utilities, staffing needs, and so much more. Each task adds up.

Sometimes, even your best efforts won’t yield the answers you seek. Unfortunately, some governing bodies don’t provide concrete answers on licensing and build costs, and instead offer only estimates. Keep these fluctuating figures in mind. Miscalculating these fees can upend a well-planned budget in short order.
Budgeting for operating for a year with zero revenue is realistic, if one considers the construction timelines and the queue for a licence approval. An opening plan and its budget must factor in operational costs on a continuous basis.

Operational costs like taxes and salaries cannot be overlooked. A failure to factor in recurring essential payments will sink a company in no time — and could land you in trouble with the law in some cases.

3. Strategic location
If everything checks out to this point, a business always has to consider store size, location, product distribution, environment and staffing when opening. The pandemic adds more requirements to this list, as the virus complicates location selection in a considerable way.

An operator seeking a large space in the heart of the city may want to rethink this plan, if the pandemic continues on for a prolonged period. Is now the time to pivot to a smaller store to avoid wasted store space resulting from having to limit the number of customers shopping at any given day?

Unfortunately, there is no clear answer. Larger spaces increase lease payments, as does situating yourself in the heart of heavy foot traffic. Consider the costs and what makes sense for your bottom-line.

4. Self-fund versus build capital
With many of the cost considerations in the plan, an operator now has to ensure that the capital is in place. In some cases, ventures are not self-funded. In those instances, the owner needs to have his or her financial ducks in a row before moving forward with plans. Have all the money in place to earn your licence and secure your location.

Those unable to self-fund need to secure outside funding. As a nation that has legalized cannabis, Canada offers businesses the opportunity to obtain its funding through numerous means, including traditional bank financing through some institutions. Other methods include private financing, business credit lines, loan options and private equity. Don’t forget crowdfunding, which could work if you can garner the hearts of the public.

5. Take care of your staff
Lastly, consider a homogenized onboarding program and implementation of a robust set of standard operating procedures for new staff. In the world of compliance, one cannot afford to make mistakes (especially avoidable ones). You could face fines, suspension, or in serious cases, licence revocation.

The impact of COVID-19 contributes significantly to operational costs. Not only does a company need to worry about the standard payments, but it must also account for the expense of purchasing PPE, increasing sanitization efforts and other additional costs associated with operating a dispensary during a pandemic. Each adds up and can’t be skimped on.

The pandemic certainly changed the preparation process in opening a store, but it hasn’t altered it in unimaginable ways. Instead, companies must still think about the costs that arise during the startup phase and those that are ongoing.

Today, the information that cannabis operators gather must include regional health and safety procedures for COVID-19. Your business must remain compliant to stay open, just as your employees and customers need you to adhere to the rules so that everyone remains safe.

Lucas McCann is the co-founder and chief scientific officer of CannDelta Inc., a Canadian regulatory and scientific cannabis consulting company, where he provides scientific oversight on all projects.

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