With retail store authorizations (RSAs) soaring past 1,600, the opportunity to carve out your niche in Ontario’s booming cannabis industry is ripe. If you’re a retail store owner looking to open a dispensary, this guide is for you.
We understand the journey may seem daunting, but with the correct information and a well-devised strategy, your vision of owning a dispensary in Ontario can become a reality. This comprehensive guide will walk you through the licensing process, help you identify the perfect location, develop an effective operations strategy, and inspire you with marketing strategies tailored for Ontario’s cannabis market.
Read on and get ready to open the doors to your own dispensary in Ontario, joining the ranks of successful entrepreneurs in this rapidly growing industry.
Seizing the Opportunity: The Growing Cannabis Market in Ontario
Ontario’s cannabis market is demonstrating robust growth and competitive dynamics, creating an exciting landscape for new players looking to establish a foothold in the industry. In 2022, residents purchased over $1.8 billion of legal cannabis, a 38% increase from the previous year. Despite closing some retail stores due to a hypercompetitive retail market, the sector continues to expand, with nearly 1,600 legal cannabis stores currently operating in the province.
New growth is sprouting across various parts of Ontario, a positive sign for market participants aiming to capture market share against the illicit market. The Ontario Cannabis Store (OCS) adds approximately 20 new licensed producers as provincial suppliers each quarter to meet consumer demand. Plans are in place to decrease the margins on legal cannabis products sold to retailers, a strategy expected to drive an additional $60 million in sales to licensed cannabis producers and reduce the number of cannabis products sourced from illicit operators, which currently accounts for an estimated 40% of all sales in Ontario.
While the potential is ripe, the path to establishing a successful cannabis dispensary in Ontario has its challenges. It’s a highly competitive space, with many retailers and producers vying for market share. However, the opportunities are vast for entrepreneurs who come prepared with a sound plan, understand the licensing process, choose their location wisely, and strategize day-to-day operations well before opening day.
Building a comprehensive operations strategy is crucial. This should cover everything from inventory management to backend business operations, even signage. Furthermore, understanding your target audience and their preferences is vital for creating a successful dispensary.
How to open a Dispensary in Ontario
Step 1: The licensing process
Retail Operator License
The first step in the licensing process is obtaining a Retail Operator License. This license is issued by the Alcohol and Gaming Commission of Ontario (AGCO), responsible for overseeing the cannabis retail sector under the Canadian Cannabis Act of 2018.
Every applicant for a Retail Operator License is subject to strict eligibility requirements. These include background checks for the applicant and key stakeholders in the business. The AGCO is mandated to ensure that the applicant exercises sufficient control over the business.
In terms of financial obligations, the applicant should not be in default on taxes with the Canada Revenue Agency. Additionally, a licensed producer should not own more than 25% of the company. The fee for the Retail Operator License starts at $6000.
Retail Store Authorization
Once you have secured a Retail Operator License, the next step is to apply for Retail Store Authorization. Unlike the Operator License, Store Authorization is required for each retail location. If you plan to open multiple stores, you would need a separate authorization for each one.
The Store Authorization covers aspects of the physical layout of the storefront and its location. Applicants must adhere to provincial and municipal guidelines on where cannabis shops are allowed to operate. For example, there are basic requirements, such as the store not being within 150 meters of a school. However, specific municipalities may have additional stipulations.
They strongly encourage applicants to read through and adhere to the detailed requirements within the Registrar’s Standards for Cannabis Retail Stores.
Please note that these are the broad strokes of the licensing process, and there may be additional details and requirements that you need to consider based on your specific situation.
Step 2: Selecting the right location
Selecting the right location for your cannabis dispensary is paramount and involves considering several factors.
Local Regulations:
The Ontario regulations require individuals who plan to operate a cannabis store to apply for a Retail Operator License and then a Retail Store Authorization for each location. The AGCO also examines if you “exercise sufficient control” over the business. The Retail Store Authorization, which is on a store-by-store basis, covers aspects of the physical layout of the storefront and its location. You must consider the provincial and municipal guidelines on where cannabis shops can operate and undergo a 15-day public notice process. The AGCO recommends having approval for your new location from your municipality before applying.
Competition:
Ontario has the most cannabis stores in the country, but there is still room for newcomers. The market is competitive, and it’s crucial to consider the competition in the area where you plan to open your store. Understand what your competitors do well and identify where to offer something better or different. This information will be valuable in your business strategy. Notably, Ontario had nearly 1,700 legal cannabis stores as of the reporting time, but about 110 stores closed their doors permanently over the past year due to a hyper-competitive retail market.
Target Audience:
It is essential to know your target audience and choose a location that will attract them. You should consider the traffic in the area (pedestrian and vehicle) and nearby businesses. Understanding the demographics and habits of the local population, such as whether you’ll hit a lunch crowd, an after-work crowd, or an evening crowd, will help inform your target audience and the busiest times for your store. Are you around a university, industry, or office building? This will also play a significant role in determining your target audience.
Step 3: Managing comprehensive operations strategy
The importance of a comprehensive operations strategy cannot be overstated. By considering some aspects of your strategy, you can ensure the smooth operation of your dispensary and its long-term success.
Data-Driven Decision-Making:
In the competitive cannabis market, having real-time, accurate data is crucial. This data can help you understand the market and customer trends, informing your inventory management. For example, if certain products are trending or famous, you’ll want to ensure you have enough stock to meet demand. Conversely, if some products aren’t selling well, you may need to adjust your inventory accordingly. Data can also help you understand peak times for your dispensary, which can inform staffing decisions and other operational aspects.
Financial Planning:
Detailed financial planning is another essential aspect of your operations strategy. This includes forecasting sales, costs, and profits and budgeting for various operational expenses. A solid financial plan can help ensure your dispensary remains financially sustainable and profitable. It can also help you identify areas where you may be overspending and where you could cut costs.
Regulatory Compliance:
Compliance with cannabis laws and regulations is another crucial part of your operations strategy. This includes ensuring your products are sourced from licensed producers, meeting all licensing requirements, and following all applicable laws and regulations related to the sale and distribution of cannabis. Non-compliance could result in fines, penalties, or even the loss of your operating license.
Customer Experience:
Lastly, but certainly not least, is the importance of the customer experience. This includes everything from the layout and design of your dispensary to the quality of your products to the level of service your staff provides. A positive customer experience can help build customer loyalty and drive repeat business, vital in a competitive market like Ontario’s.
Making Your Dispensary Look Beautiful in Ontario
While obtaining the necessary licenses and finding the right location are critical elements in opening a cannabis dispensary in Ontario, your store’s interior design and ambiance should not be neglected. The in-store experience plays a significant role in attracting and retaining customers. One way to elevate the look of your dispensary and create an engaging environment for your customers is by investing in custom dispensary display cases.
Custom display cases can significantly enhance the aesthetics of your dispensary. They provide functional storage for your products and serve as an appealing visual element that helps showcase your products in the most attractive light. These custom-made cases can be designed to match your branding and the overall theme of your store, creating a unified visual experience that leaves a lasting impression on your customers.
Seattle Products is a leading manufacturer of glass displays, service counters, and other custom retail furniture. We aim to produce high-quality products and ensure that you get durable and stylish display cases that can withstand the daily wear and tear of a busy dispensary.
In addition, Seattle Products is dedicated to investing in technology that improves efficiencies and quality. This commitment, coupled with high-quality standards, ensures that you receive top-notch products.
Investing in custom dispensary display cases from a trusted manufacturer like Seattle Products can significantly enhance the look of your dispensary.
Not only do they add an element of style and sophistication, but they also help to create a unique shopping experience that can set you apart from your competition.
If you are looking to open a dispensary in other places that have legalized cannabis, be sure to check out our guides for different areas.
Your Guide to Opening a Dispensary in Newly Legalized Minnesota
A Comprehensive Guide to Opening a Cannabis Dispensary in Arizona
Your Step-by-Step Guide to Opening a Successful Dispensary in Colorado
What Every Kentucky Dispensary Owner Needs to Know: The Ultimate Guide
