As the co-founder of Superette, a cannabis retail company in Toronto, he witnessed the boom: thousands of stores opening within two years.
On Tuesday, his company announced it had acquired two other retail brands, Cannoe Cannabis and Dimes Cannabis, with two locations apiece in Toronto.
The retail sector in Ontario was initially bogged down by bureaucratic complications and a controversial licensing system.
Alberta boasted around 800, according to the Alberta Gaming, Liquor and Cannabis Commission, and British Columbia had licensed just more than 400 as of November, 2021.
The prodigious growth of the sector has led to concerns over market saturation.
As a result, the rate of expansion has slowed.
“I think the next year will be devastating for a lot of retailers,” said Lisa Campbell, founder of cannabis sales marketing company Mercari Agency Ltd.
In 2020, each store averaged just less than $1-million, according to the Ontario Cannabis Store, the provincial Crown corporation that sells cannabis to retailers.
As staying afloat has become more difficult, the number of applications to transfer a store licence to a new owner – required under Ontario law – grew gradually over the last year.
and High Tide Inc., for instance, are well positioned to gain market share and outpace the industry’s growth, Mr. Gomes said.
Raj Grover, chief executive officer of High Tide, said he is approached weekly by independent business owners interested in selling their retail stores.
While large corporate retailers currently only own about 20 per cent of all bricks-and-mortar stores across the country, he said, he expects they will take an additional 40-per-cent market share from mom-and-pop shops in the next two years.
Avi Grondin, co-founder of the Modern Day Cannabis franchise, said he knew the market was ripe for consolidation when he opened three stores in the past three months in Toronto.
But the consolidation could actually work in his favour in another way: If the right buyer comes along, he said, he would consider selling the franchise.
In Ontario, where the province only sells to customers through its online e-commerce platform, the limit on independent retailers is up to 75 physical stores under AGCO rules.
Yet some say what’s coming is not necessarily a wave of takeovers; instead, the industry could simply see a wave of hundreds of closings as operators go bankrupt.
In all but one province, retailers must buy their inventory through the Crown corporations at a markup instead of directly from the licensed producers, who grow the cannabis.