‘Death Blow’ To B.C. Cannabis Industry

Vancouver Cannabis Store Death Blow
"City Cannabis CO." on Cambie Street in Downtown Vancouver Photo: Shutterstock

‘Death blow’ to British Columbia’s cannabis industry: Shortages amid job action not quelled by new direct delivery

Canada – A glimmer of hope is allowing cannabis retailers to bypass B.C.’s centralized distribution system and get their hands on product as negotiations between the B.C. Government Employees’ Union and the province remain at an impasse.

However, industry professionals say the province’s new delivery program is limited to a small group of producers who do not have nearly enough cannabis to supply B.C.’s shuttering stores.

As soon as Oana Cappellano, owner of Eggs Canna, was able to put in an order for inventory through B.C.’s Cannabis Wholesale website Friday she did so. Two of her three private retail locations in B.C. had already been forced to close due to a shortage of supply.

“This would have been great during the strike before retailers had to shut down, but right now, it’s not a solution,” Cappellano told Postmedia Saturday. “What I can order now will only last one of my stores a few days.”

Fewer than 50 products are currently available for ordering through direct delivery, compared to B.C.’s usual catalogue of more than 1,000 varieties.

Private cannabis stores first reported supply shortages last week, after BCGEU’s job action saw 950 workers walk off the job at B.C. Liquor Distribution Branch wholesale and distribution centres in Delta, Richmond, Kamloops and Victoria.

Licensed private retailers, including Cappellano, were previously only able to purchase cannabis from the government wholesale and distribution centres.

This led to Burb, with eight Lower Mainland retail outlets, shutting down five locations by Friday and laying off 25 staff. City Cannabis, with three stores in Vancouver, has closed all but one of its locations, laying off 40 employees.

“I’ve had to lay off around 30 staff,” said Cappellano. “Our last store that remains open is set to close up shop Saturday.”

The provincially regulated cannabis retail sector, which started after Canada legalized marijuana in 2018, has more than 400 private retail stores in B.C. and more than 30 government-owned stores, employing about 5,000 people.

Under the new provincial program, licensed retailers are able to order non-medical cannabis directly from where it is legally grown and processed.

“At the very least, we can start to get local products out, which have, up until now, just been sitting at the LBD warehouses with an expiry date,” said Jeff Guignard, executive director of the B.C. Alliance of Beverage Licensees.

However, if warehouse operations don’t resume by Tuesday, Jaclynn Pehota, executive director of the Retail Cannabis Council of B.C., estimates that 70 per cent of legal pot retailers in B.C. will have closed their doors.

“Being able to order directly from processors is a lifeline and a step in the right direction — but it won’t last the cannabis industry very long, maybe an extra week. Waiting any longer than two weeks will be a death blow to the sector.”

Pehota estimates less than 30 per cent of the retailers that shut down will reopen. By the end of August, she said edibles and vape cartridges will be virtually unavailable in B.C.

Months before the strike began, the province was preparing to allow cannabis stores to order directly from producers. However, the program — which was slated to launch on Aug. 15 — was delayed by the BCGEU’s job action.

“I hope this situation lays bare the fact B.C. needs to diversify its supply chain. Cannabis retailers have spent the last four years fighting for market share and all because of this job action it could be lost,” Pehota said.

“It’s a monopoly in terms of supply.”

Although privately-owned liquor stores in the province have more avenues to source products, they too are facing challenges from supply shortages.

While pubs, bars and liquor stores can source beer and wine supplies directly from domestic sources, international sales, including spirits such as vodka and gin, can only be purchased through the province’s distribution warehouses.

A new ABLE report assessing the job action’s impact on B.C.’s liquor and hospitality industry found that 80 per cent of 400 surveyed in the past week were “worried about the viability of their businesses.”

“We’re only two weeks into this strike and already businesses are starting to lay off workers and look at shutting their doors,” Guignard said.

The supply crunch is also costing B.C. clubs, pubs, bars, restaurants, wineries, distilleries, import agents and craft brewers. Half of those surveyed said a quarter of their inventory is out of stock, six per cent have resorted to staff layoffs and 20 per cent said they have cut back employees’ hours.

“This must stop,” Guignard said. “We need both sides to hammer out a deal now to prevent further harm to our industry.”

Tuesday, the BCGEU, which represents 33,000 workers, agreed to resume bargaining at the request of the province. What it will take to reach a settlement isn’t clear.

The union is looking for wage increases that would cover inflation, which is running at eight per cent in Canada, far from the 3.5 per cent a year increase in wages the province has offered.