ALL YOU NEED TO KNOW ABOUT OPENING A ......during the process of opening their retail cannabis store. To keep things simple, we’ve identified seven critical areas of To keep things

ALL YOU NEED TO KNOW ABOUT

OPENING A CANNABIS STOREIN CANADA

INTRODUCTIONWith Canada making history as the first G7 and G20 nation to fully legalize non-medical cannabis, the country’s economy is primed for a massive green injection. The Canadian cannabis industry is projected to reach CAD$9.2 billion by 2025, and new businesses are springing up literally like weeds. From federally licensed production to retail sales, entrepreneurs and cannabis enthusiasts alike are looking to get in on the business of marijuana.

Today we’re going to take an objective look at both the potential benefits as well as the risks involved in opening a non-medical cannabis retail store, and walk you through the entire process; we’ll cover everything from obtaining your initial funds, to applying for your license, all the way through opening your doors for business.

The fact of the matter is that entering the legal cannabis industry can be incredibly profitable. Recent estimates peg the rate of return on investments in the cannabis industry comparatively higher than they were at the peak of the dot-com boom. Most new retail stores are in the black within their first year of operation, and an incredible 90% of them are profitable or at least fully covering their operating costs.

Unfortunately, the grass isn’t entirely green when it comes to the landscape for starting a new cannabis retail operation; there are a number of significant challenges and risks that retailers must successfully navigate and overcome. Broadly speaking, these challenges can be categorized into four groups: legal, financial, social, and security.

ALL YOU NEED TO KNOW ABOUT OPENING A CANNABIS STORE IN CANADA 1

LEGALCannabis retail stores face a much higher standard than the average business when it comes to legal compliance. The cannabis industry is highly regulated in all provinces, and you (and everyone associated with the operation — even investors!) are going to have to satisfy some stringent requirements when it comes to residency and criminal background checks, and you will face an ongoing struggle to ensure you remain legally compliant at all times.

FINANCIALTo take full advantage of the green rush, you’re going to need to be able to raise a lot of green currency. Even a modest retail shop can easily cost upwards of CAD$250k+ to open the doors.

SOCIALJust because cannabis is legal doesn’t mean that the social stigma against it has disappeared. Make an honest appraisal as to whether this might create any personal friction for you with friends or family (though these days, you’re probably more likely to be congratulated or admired). You’ll also want to pay attention to the attitudes and perceptions of your landlord, neighbors, and the community at large.

SECURITYFinally, as the owner of a cannabis retail store, you have some significant security concerns to deal with. When thousands of dollars of your cash or product can easily be stuffed into a pocket, you’ve got to be on the lookout for theft, both internal and external – as well as robbery. You’ll also have to spring for a pretty heavy-duty security and surveillance system to stay compliant with the law.

While the list of challenges in opening a cannabis retail store is certainly formidable, so are the rewards for successfully doing so. In the next chapter we’ll take a look at some of the initial research and planning that needs to be performed prior to taking your first steps toward opening the business.


CONTENTS1 First Steps

2 Writing Your Business Plan

3 Estimating Costs

4 Securing Financing

5 Real Estate & Community

6 The Licensing & Application Process

7 Building Your Dream Team

8 Architecture, Design & The User Experience

9 Technology

10 Sourcing Your Product

11 Security Issues

12 Conclusion


C H A P T E R O N E

F I R S T S T E P S

You’ll notice one recurring answer in this eBook is “it depends”; each individual province has been left to design their own licensing, application, and compliance procedures, meaning the legal landscape in which retailers operate can vary dramatically. We’ll try not to harp on the point, but always remember that everything needs to be cross-referenced against the policies and procedures that cover the province in which you intend to operate.

Most provinces actively maintain a checklist of sorts on their official websites that detail how the application process works, which you’ll definitely want to take a look at (we’ve provided these links in Chapter 6, “The Licensing & Application Process”). Generally speaking, however, the four most important first steps in opening a retail shop — no matter the location — can be boiled down to finding your location, making sure you’ll get your license, raising your initial capital, and drafting a solid business plan. Let’s take a look at these in greater detail:

L O C AT I O NIn most jurisdictions, in order to even fill out the paperwork related to your license application, you’ll need to have a prospective physical location for the store already locked down. This means you’ll need to research the various municipalities in which you are considering operating in, paying particular attention to local demographics and possible additional hurdles when it comes to compliance at the local level. Chapter 6 of this eBook is dedicated specifically to the challenges associated with finding the ideal location for your store, and addresses all the major considerations involved in greater detail.

L I C E N S I N GUltimately, no license equals no store, so this is an excellent place to begin your research. Work with an attorney and perform an in-depth study of all federal, provincial, and municipal laws, along with licensing requirements. This site has links to the official cannabis portals for each province. The two most important things to look out for are “must haves” and “red flags” — “must haves” being requirements you must satisfy in order to obtain the license (such as residency, etc.), and “red flags” being items that can cause an instant rejection of your application (such as possession of a criminal record).


F I N A N C I N GJust like any other business, it takes capital to launch a retail cannabis venture. Because cannabis is federally legal in Canada, you should have no problems applying for and receiving traditional small business loans from banks or other financial institutions. And there’s definitely no shortage of investors with healthy budgets looking to get in on the green rush themselves.

B U S I N E S S P L A NYour business plan is by far the most important document that you will need to draft; you will use it to help secure financing, and to demonstrate to the authorities that your operations plan satisfies their legal requirements, among other things. Your plan will cover finding and developing the location you intend you use, the operations of your store, your financing, how you intend to handle security, your planned contributions to the community such as a commitment to hire locally, wages to be paid, and all other essential strategic elements.

You may want to consider hiring a professional consultant to help walk you through developing your business plan. Next, we’re going to take a closer look at the individual components of a good cannabis retail store business plan.


C H A P T E R T W O

W R I T I N G Y O U R B U S I N E S S P L A N

As mentioned in the last chapter, the business plan is the single most important document an owner needs to create during the process of opening their retail cannabis store. To keep things simple, we’ve identified seven critical areas of focus that your plan should address, in order to gain licensing approval and attract potential investors:

L O C AT I O NThere may be legal mandates or zoning laws in place that restrict potential locations for cannabis retailers (your attorney and realtor will advise you on this). Select the municipalities you are most interested in, get a feel for costs, and pay careful attention to any needed capital improvements. Also begin thinking about store design, traffic flow, and aesthetics/décor.

U S E O F F U N D SBreak down exactly how you intend to spend your initial capital; potential investors are going to want to know exactly what type of equipment and displays you plan on using in your store, along with salary projections, real estate costs, and any other major category of capital expenditures.

F I N A N C I N GOutline how much capital you need to raise, and where it will come from. You’ll need to address licensing/application costs, working capital requirements, the cost of your initial product stock, compensation for your staff, technology costs, real estate, and a number of other factors. You’ll need to be very specific as to who the investors are to ensure successful licensing.


S A L E S / M A R K E T I N GThis section of the plan should outline what you intend to do to differentiate yourself from the competition. This could include a greater focus on customer service, online ordering with in-store pickup capabilities, a superior design aesthetic that better appeals to your customer base than a room full of 420 posters, and a number of other factors. You’ll also want to ensure your plan discusses how you’ll stay compliant with federal and provincial marketing restrictions.

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T E A MDue to the enhanced legal scrutiny of the cannabis industry, retailers perhaps depend more on their staff for success than most other businesses. You’ll need to get top-notch professional services, including legal and financial advice, and you’ll also need to put together a team that handles your day-to-day operations, including budtenders, security, and administrative support, including an experienced store manager. For Cannabis Job Description Template click here.

ALL YOU NEED TO KNOW ABOUT OPENING A CANNABIS STORE IN CANADA

S E C U R I T YThe final important part of a successful business plan for a cannabis retail operation will deal with security. You will want to demonstrate your intended plan for the property in detail, to satisfy licensing requirements. Typically, this will consist of a fairly sophisticated surveillance and recording system, but you may want to bolster that with a live security presence as well. You’ll also need a plan in place to vet prospective employees according to license requirements.

While this should get you off to a great start, it really only scratches the surface of what your full plan should cover. We’ve written an additional article with lots of valuable information on the subject to further help you. The more detailed, thorough, and complete your plan is, the higher the likelihood your licensing application will be approved.

O P E R AT I O N S & C O M P L I A N C EThis part should focus on how your store will operate on a normal daily basis. Talk about your hours of operation, logistics, who will be on your staff and what roles they will fill, how you would manage and track your inventory and sales.

Tracking legal cannabis as it moves through the province is vital to any legal cannabis system. These rules – and the consequences for breaking them — have been exceedingly strict. If your store is not compliant, you could face fines, suspensions, loss of license, and potential arrest. Taking a casual approach to compliance can put your business in real danger.

In order to be compliant in most of the provinces in Canada, retailers need systems that can:• Track all cannabis sales and inventory in real-time;• Back up data daily or weekly and store it in a secure manner;• Create properly formatted reports for submitting to government agencies at a frequency ranging from every 2 weeks to monthly, depending on the province;• Assist with monthly inventory, and facilitate the discovery and reporting of discrepancies;• Track purchasing limits;• Verify the age of customers;• And strictly limit transactions according to operating hours.

To avoid serious fees or possible loss of license, retailers should utilize a reliable Point of Sale system that can help accommodate reporting and compliance concerns, improve transactional accuracy, and reduce human error throughout the retail store’s entire operation.

8ALL YOU NEED TO KNOW ABOUT OPENING A CANNABIS STORE IN CANADA

C H A P T E R T H R E E

E S T I M AT I N G C O S T S

In terms of total cost, while no two retail stores are created equal, you’re probably not going to be able to realistically make a go of things in any location with less than $150k. However, depending on the size and scope of your operation, you could easily need upwards of $2m or more.

Additionally, keep in mind that as a retailer, you are likely going to pay a significant premium over regular market rate for all sorts of products and services. Sometimes this is because some entities don’t want to be involved with those in the cannabis industry at all. Other times it’s because servicing your operation will require specialized knowledge above and beyond what a normal professional might know; for example, you’ll want legal and financial advisors that have cannabis-specific expertise.

Now let’s take a look at the major categories of startup costs for the average retailer, along with some very basic estimates:

A P P L I C AT I O N & L I C E N S I N G F E E SFor application fees, CAD$5,000 is a good general estimate. Permitting and licensing fees vary greatly, and there can be a variety of other supplemental fees as well. Here is a great resource that includes up-to-date licensing and application fees by province.

R E A L E S TAT ELikely to be your single largest expense. Easily CAD$50k-$100k on an annual basis for the rental of an average-sized facility in a moderately competitive market. You will likely also face an additional CAD$25k-$100k in renovation costs to finish the space in the style you desire – more to make it really stand out from the crowd. You may need functional additions as well, such as expanding available parking or ensuring handicap accessibility.


P E R S O N N E L C O S T SDesign a basic work schedule for your budtenders, administrative support, and security personnel, and count up the hours. You can expect to pay $15/hr. for budtenders, $16-$20/hr. for floor managers or supervisors, and $20-$27/hr. for experienced store managers. Paying six total employees an average wage of $20/hr. works out to almost exactly $250k annually.

C A P I TA L I N V E S T M E N T SCosts here are typically not extensive – barring your need for a sophisticated security and surveillance system. Your on-the-floor equipment will include computers, cash registers, and your POS system, and will probably cost CAD$25k. You’ll want to work with a security team to design a system that satisfies the legal requirements of your province and municipality, which can add another CAD$50k or more.

A DV E RT I S I N G / M A R K E T I N GBe aware that the way in which cannabis retailers can legally advertise and market themselves is highly regulated. Here is a great guide on the subject. Despite your somewhat limited options compared to traditional businesses, it is still easy to spend $25k or more annually on these activities. Traditional marketing activities like signage or radio/TV commercials are the most limited, so expect to have a relatively heavy digital presence; invest in a great website and strong social media marketing program.


P R O D U C T With the exception of Saskatchewan, the wholesale and distribution of non-medical cannabis will be government-run. Most provinces have modified the purview of their liquor and gaming authorities to include cannabis, and they will work directly with licensed producers to procure the supply for retailers. In Saskatchewan, retailers may purchase directly from a permitted wholesaler, retailer, or licensed producer, including one from another province — so long as that licensed producer or wholesaler is registered with the Saskatchewan Liquor and Gaming Authority and the product has a Saskatchewan excise stamp. You should budget roughly CAD$1,500 per pound of cannabis, though prices may vary based on several factors.

C A P I TA L I Z AT I O N R E Q U I R E M E N T SThis is another area in which province-by-province variance is huge. Your attorney or consultant should be able to advise you on particular capital requirements for the province in which you plan to operate, as well as exactly what any financial integrity investigations may entail in your province.

Assuming you’re not paralyzed with sticker shock, in the next chapter we’re going to examine some of the ways retail owners can successfully raise capital for their venture.

AV E R A G E S TA RT U P C O S T S AT A G L A N C E• Licensing/Application - CAD$5k

• Real Estate - CAD$100k+ annual rent plus CAD$50k renovation

• Staffing - CAD$250k annually

• Business Equipment - CAD$25k

• Security & Surveillance System - CAD$50k

• Marketing/Advertising - CAD$25k annually

• Product - CAD$1,500/lb.


C H A P T E R F O U R

S E C U R I N G F I N A N C I N G

In the United States, retailers and other cannabis businesses have had a general lack of access to professional financial services, due to cannabis’ federal status. But in Canada, cannabis business owners should have no problem securing financing through traditional means.

Now that we have some ballpark cost figures in hand, we’re going to discuss a few potential strategies you can employ to raise the capital to cover them:

Self-Funding – Probably the most popular option for entrepreneurs in any industry.

Friends/Family – Another popular option for entrepreneurs in all industries, but again even more popular in canna-business. When banks won’t easily lend, funds have to be raised somewhere.

Business Loans – Again, in Canada, banks and credit unions should not be averse to working with cannabis businesses simply because they deal in cannabis.

Partners – With no shortage of people looking to break into the cannabis industry, there are likely several potentially compatible parties that may be interested in developing a partnership. Not only is this a great potential source of investment capital, but their skillsets can often supplement yours as well.

Cannabis-specific Investment Groups – While the overwhelming amount of business capital used in canna-business comes from self-funding, in 2016 almost 18% of entrepreneurs were able to receive at least partial funding from investment groups specifically dedicated to cannabis.

Check out companies like:

• Green Acre Capital • Hill & Gertner Capital• The Arcview Group• Canopy Growth Corporation• Poseidon Asset Management

Capital Brokers – Getting in touch with a capital broker specializing in the cannabis industry is another fantastic way to find investors. It’s their job to locate and qualify potential investors from all over the world who are looking to invest in marijuana.

• JW Asset Management• Tuatara Capital• Seventh Point• Privateer Holdings


C H A P T E R F I V E

R E A L E S TAT E & C O M M U N I T Y

Narrowing down your search for potential locations for your store is actually easier than you might think. Usually, the province in which you intend to operate is dictated by residency requirements, so there isn’t much real choice there.

Choosing the specific municipality within your province, and ultimately the specific site, can be a bit more difficult. Here are five specific factors to keep in mind when evaluating the suitability of potential locations:

Additional Compliance Burden – The first thing to take a look at is whether an individual town or city has local regulations that will result in an increased regulatory or compliance burden for you. Some communities want to encourage the development of the cannabis industry and some do not, and they often accomplish this by adjusting their laws accordingly. For instance, in BC, the cities of Richmond, North Vancouver, West Vancouver, Abbotsford, Tofino, Pitt Meadows, and Whistler have all ruled against cannabis retail in their jurisdictions.

Zoning Considerations – Another common situation is the restriction of sites for cannabis retail stores based on zoning law. For example, in Vancouver, BC, retail shops cannot be located within 300 meters of schools, community centers, youth facilities, and other cannabis businesses. Depending on where you are located, you may be forced to choose from an extremely limited variety of real estate. Your realtor and attorney can help guide you through this portion of the process.

Cost Assessment – The next factor you’ll want to evaluate is cost. If possible, work with a realtor that has cannabis-specific contacts (you should be able to find some in your area with a simple web search or two), as this can reduce time wasted on property owners uninterested in working with the cannabis industry. Try to locate sites that are at least partially equipped with the physical features your store needs to minimize the amount of development you’ll need to perform.

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Community Attitude - Spend some time pounding the pavement in areas you are prospecting, and speak with your potential neighbors. Try to get a feel for their attitudes toward a new cannabis retail shop opening in their area. The last thing you want to do is move into a location and find yourself facing hostility from residents; instead, work with the community to ensure their needs and concerns are met as well as yours, particularly when it comes to safety, security, and compliance with all aspects of the law. A letter of recommendation from your city can carry a great deal of weight in the application process as well. Some cities go so far as to mandate the development of a community involvement or education plan, which details how you intend to actively better the community, ensure your product does not end up in the hands of minors, and other similar considerations.

Customer Demographics - One final piece of research you can conduct on prospective locations is an in-depth look at the local demography. Find out the type of people that live in the area, and how you can best market yourself to them. Find out what type of space and experience they want in their local cannabis shop, and work with your architect/designer to provide it. Investigate foot traffic versus road traffic and ensure your facility is equipped to accommodate it all. Both foot traffic as well as local vehicle traffic — and the way you present your storefront to both — will play a huge role in the amount of new walk-ins you get.

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Online Research – The first part of the licensing process is always researching your province’s procedures online. Some provinces have more information readily available than others; in other provinces, the first round of retail licensing has passed, but there may be more licenses available in the future. Here are links to non-medical cannabis retail information/application pages for provinces in which private retail sales are authorized:

• British Columbia• Alberta• Saskatchewan

C H A P T E R S I X

T H E L I C E N S I N G & A P P L I C AT I O N P R O C E S S

In our final chapter, we’re going to examine the actual process involved with applying for your cannabis retail license, breaking it down into a few easy-to-understand steps. We’ll also highlight a few key components you’ll need to have complete and in-hand to successfully navigate the process, regardless of the province in which you intend to operate:

• Manitoba• Ontario• Newfoundland and Labrador

Red Flags – Next, you’ll want to check to see if there are any potential red flags within your business plan that may cause your application to be denied outright. Not meeting age or residency requirements can trigger such a denial, as can criminal convictions.

Administrative Paperwork – The next step in the process is actually filling out all of the forms and applications the province requires. This is usually fairly straightforward; ensure you are open and honest to the best of your ability, and double check that you have every one of the required elements of the application.

Investigation – Next, you’ll wait while the provincial licensing authority investigates your application and performs its due diligence. If any problems are turned up during the investigative portion of the process, the applicant will typically be notified and given an opportunity to respond.


Consultation – Assuming all the information provided on the initial application checks out, most provinces will then proceed to schedule an in-person consultation between the prospective owners and the licensing board. Everyone will have to attend, and assuming your application is approved, you will typically be expected to render payment at this time. There may be additional elements of legal compliance after initial approval as well, such as fingerprinting.

Local Compliance – After the province approves your license, you may also be required to seek additional approval at the local level — or, you may be required to demonstrate local approval as part of your provincial application. Work with the specific municipality in which you are considering operating to ensure that you are fully compliant on both local and provincial levels. Local applications can often end up taking longer to process than provincial ones, so be sure to account for any extra time needed.

Tax/Financial Issues – Finally, once all licensing and compliance details are handled at the provincial and local levels, there may be additional financial or taxation related issues to handle. Typically, you will need your formal license approval before you are allowed to begin applying for these types of documents.

LICENSING & APPLICATION MUST-HAVESBusiness Plan – You aren’t getting anywhere without one.

Financial Integrity – Be able to clearly demonstrate possession of the appropriate amount of capital and any other financial requirements to the licensing authority.

Full Team List – For background checks and fingerprinting purposes.

Location – Make sure your selected location is fully compliant with all provincial and local laws.

Security & Surveillance – Having a finalized security plan for your facility is a critical part of the licensing process.


C H A P T E R S E V E N

B U I L D I N G Y O U R D R E A M T E A M

When it comes to the personnel you’ll need to open and run a successful cannabis retail store, they can be broken down into two groups: professional services, and your day-to-day staff. First let’s take a look at the most important professional services you’ll need to retain:

Legal Advice – Probably the single most important relationship a cannabis entrepreneur has is with their attorney. There are two specific areas of legal expertise you’ll want covered. First, you need to have access to someone familiar with the licensing, application, and compliance processes of your province. Next, you’ll want to make sure you’ve got world-class representation, just in case something ever goes horribly wrong.

CPA – Few would argue that the relationship with your accountant is only slightly less important than that with your lawyer; remember, Al Capone eventually went down for tax fraud, not trafficking!

Compliance Officer – As mentioned earlier, every province has created its own system of regulation and compliance that you’ll have to deal with. A full-time compliance officer should definitely be one of the very first hires you contemplate. They will help you manage and document all aspects of your business, as well as handle any administrative reporting mandated by the province. Most retailers will train their office manager into this role over time, though during startup you may require additional assistance from someone with more experience.

Security Consultant – Most provinces require you to detail your adherence to their security and surveillance guidelines as part of the licensing and application process, so you’ll want to begin working with someone to help you design your security system as soon as possible. You’re going to need a 24/7/365 security presence including live personnel, transport planning, alarms, cameras, and recording equipment at the bare minimum.


Now let’s take a look at the basic categories of employees you’ll need to hire as day-to-day staff:

Security Officers – While not legally mandated in every province, it is still a very good idea to consider hiring well-trained security personnel to protect your operation from theft and other issues. Cannabis retailers are attractive targets for both employee theft as well as outside criminal activity, and you need to protect yourself against both.

Budtenders – Your budtenders are the front-line troops of your retail store; their performance can literally make or break you. Mistakes like selling to an underage customer can quickly result in the loss of your license, so make sure to train them extensively. They should also be trained to function as real ambassadors for your brand; empower them with information to help customers select the best strains of flower for their needs, and educate them as much as possible. Think of them like waiters in a restaurant — no matter how good your product is, their performance is going to define your customer experience to most visitors.

Inventory Manager – With so much riding on the accuracy of your inventory, it’s critical to hire a dedicated inventory manager whose sole job is to conduct daily inventory audits and reconciliations and handle any inventory reports or inspections by governing or regulating agencies.

Store Management – Perhaps most importantly of all, you’ll need to retain an experienced retail store manager (with verifiable references!). This person can assist you during the initial set-up of the store, advise on best practices, help evaluate suppliers, recommend potential employees, and provide a great deal of general assistance in running your storefront – they can even be empowered as a secondary point of contact for regulatory and law enforcement agencies. An Inventory Manager is also usually a smart idea; in smaller operations, this function is usually filled by the Store Manager, but larger stores often employ a separate person specifically for this purpose.

COMMON LEGAL AGREEMENTS These are some of the most common legal agreements you will need in order to get your cannabis shop up and running:

Leasing Agreement – Pay special attention to usage clauses, as well as anything to do with physical changes you are making to the property.

Employment – The biggest difference in the standard employment agreements a cannabis retailer uses are clauses to do with background checks and compliance issues.

Non-Disclosure/Confidentiality – Anyone involved with the intellectual property your store is creating (basically, your professional service providers) should definitely sign one of these.Non-Compete – Another agreement to consider asking your professional service providers to sign.

Product Sourcing – You’ll definitely want to have custom product sourcing agreements drafted, which cover exactly how your store will acquire and transport your flower.

Province/Municipal-Specific – This final category is a catch-all meant to describe specific agreements that may be mandated by provincial or local law in your jurisdiction.


“we try and provide a legendary customer experience to everyone who walks in the door.”

C H A P T E R E I G H T

A R C H I T E C T U R E , D E S I G N& T H E U S E R E X P E R I E N C E

Bringing in an architect and interior designer to consult with you on the final design, aesthetic, and layout of your store is a very smart decision. Cannabis retail ops have a number of unique features that differ from other retail operations; configuring your space to deal with these ahead of time will increase your internal efficiency and save funds in the long run. Here are the most important factors you should consider related to your overall design:

Public Versus Private Space – The segmentation of the internal area of your store into ‘public’ and ‘private’ areas are mandated in most jurisdictions. Public areas are where your customers will browse, relax, and interact with budtenders. Private areas include shipping/receiving, product processing, and inventory/storage, and often have a heightened need for security; they may require a badge to access There may be additional legal requirements to consider, such as not having a storage vault located on an exterior wall, and you usually have to post a variety of specific signage around your store as well.

Traffic Flow Patterns – Putting some thought and consideration into how visitors will flow through your store will go a long way toward providing them superior service. Identify potential choke points, such as at cash registers or in the order fulfillment area, and add plenty of additional seating and countertop space to alleviate congestion. Also consider an express checkout line if you have a smaller store footprint but anticipate a lot of traffic; this can reduce wait time and keep lines moving faster.

Krystian WetulaniPresident, CEO, City Cannabis


Décor/Aesthetic – Gone are the days when painting your cannabis shop Rasta colors and plastering the walls with Grateful Dead posters was considered sound design strategy. These days, most people are looking for a space that looks professional and safe. Take inspiration from other local businesses that are already successful with the target demographics you want to serve. By creating an ambiance that puts people at ease, you can help move people away from the negative stigma sometimes associated with cannabis. Don’t assume décor begins and ends with visuals either – music is a core component of most places known for their great aesthetics. Provide them plenty of space to browse and sit as well.

Brand Experience – A final consideration for your store is the type of experience you want to deliver. You can also consider what, if any, additional products you want to offer; depending on the province, you may be allowed to sell cannabis consumption accessories, like rolling papers and pipes. Although you may be restricted by provincial regulation as to the type of products you can sell, think about how you could use this as a way to further separate yourself from the competition — for example, you could curate a selection of specialty glass pieces from a local artisan.

“We wanted to give a west coast feel so we used all natural pieces of wood from the coast here.”


Krystian WetulaniPresident, CEO, City Cannabis

C H A P T E R N I N E

T E C H N O L O G Y

The average cannabis shop is a far more complex retail environment than you might initially imagine. Not only do you face the same performance burdens as other businesses, but you also have to deal with significant legal and compliance requirements. Choosing the right technology infrastructure for your store can go a long way toward mitigating many of these challenges. At a very basic level, you’ll need wifi network, computer and POS and Inventory management system to run your store. Let’s take a look at some of the additional key considerations you’ll want to keep in mind:

Compliance – The number one concern for retailers is ensuring they always stay 100% compliant with federal, provincial, and local regulations. A cannabis retail POS can help you accomplish this by preventing your budtenders from making sales outside store hours, helping them monitor daily sales limits and inventory levels, and storing your reporting data according to requirements. It backs this up with a robust reporting suite that includes the ability to run a full audit history on your business at any time.

Reliability – The overall reliability of your technical infrastructure is another primary concern for retail owners. A system crash can quickly land you out of compliance when it comes to regulations, disrupt your supply chain, and end up costing you thousands of dollars in lost sales — and unfortunately, many operators learned this the hard way when one of the biggest cannabis tech companies suffered a service disruption, leaving their clients to either suspend business altogether or record sales by hand. Invest in a solution that can document its uptime, has numerous redundancies, a sophisticated cloud-based data repository, and an offline processing mode, and you will be fully prepared to continue operations even on your busiest days or while dealing with technical issues.


Improved Retail Experience – With the average lifetime value of a retail customer being so high, it only makes sense to do as much as you can to improve the customer experience your store offers. An integrated POS that provides product details at the touch of a button can turn all of your budtenders into experts to help guide customers through their purchasing journey – customers return to stores they trust. You can also build brand recognition and loyalty by allowing customers to order online and pick up the product in-store or using a tool such as an interactive app that allows customers to learn about the product at their own pace, along with digital signage and menus that help improve and streamline the retail experience for users.

Connectivity/POS – You’ll definitely need to set up Wi-Fi at your store, and you’ll also need a point-of-sale system to complete and track all your transactions, manage your inventory, and keep your data safe and secure for reporting purposes.

Computers & Other Digital Equipment – Finally, you’re going to need to evaluate your need for computer equipment throughout your operation. At the bare minimum, you’ll need one set up at reception for processing intake, and one in the back for tracking inventory. You may choose to supplement this with tablet devices for a self-serve experience, and you’ll also need a variety of accessories, such as the barcode scanners and receipt printer.

Data Privacy – Canada takes the security and privacy of consumer data very seriously, so you’ll want to ensure that your system is fully compliant with the requirements of PIPEDA — the Personal Information Protection and Electronic Documents Act. Of chief concern here is your customers’ personal information, such as their names, ages, and ID numbers.


C H A P T E R T E N

S O U R C I N G Y O U R P R O D U C T

In all provinces except Saskatchewan, the wholesale and distribution of non-medical cannabis will be government-operated. Most provinces have modified the purview of their liquor and gaming authorities to include cannabis, and they will work directly with licensed producers to procure the supply for retailers. Here is a breakdown of each province’s supply chain:

British ColumbiaIn BC, licensed retailers will order cannabis products for their stores from the Liquor Distribution Branch.

AlbertaThe Alberta Gaming and Liquor Commission (AGLC) will buy product from federally licensed products and distribute it to licensed private retailers.

SaskatchewanSaskatchewan is the only province in which retailers may purchase cannabis product directly from licensed producers or other retailers. You may also purchase directly from permitted wholesalers, retailers, and licensed producers from other provinces, so long as they are registered with the Saskatchewan Liquor and Gaming Authority and the product has a Saskatchewan excise stamp.

ManitobaManitoba retailers will purchase product directly from the Manitoba Liquor and Lotteries Corporation.

Ontario With the last-minute change Ontario’s private cannabis retail policy, the province is still constructing its framework. You can check this page regularly for provincial updates.

Newfoundland and Labrador All cannabis product will be stored by licensed producers. Though the Newfoundland and Labrador Liquor Corporation (NLC) will not be responsible for warehousing or distributing product, the details surrounding distribution are unclear at this time.


C H A P T E R E L E V E N

S E C U R I T Y I S S U E S

The primary purpose of a cannabis security plan is to provide a safe and secure environment for the store’s employees, customers, and visitors, while abiding by all legal requirements. Let’s take a look at the three most important components of any retail shop security plan:

1. Facility SecurityThe physical security of the store is typically comprised of a camera system, an alarm system, and an access control system, bolstered with active security personnel. Both internal and external theft are potential issues; employees can pocket cash or merchandise, and the possibility of armed robbery or burglary is very real. You’ll also need a system to archive and store your security footage for the appropriate period mandated by law. You may want to potentially consider hiring an external security service to monitor your alarms and handle the camera footage storage requirements.


2. Product SecuritySecuring both your cannabis and your cash receipts is another primary concern for retailers. You’re going to need a ton of locked safes and secure product storage. You’ll want to have a main vault for flower storage, and controlled security cases for areas where it is displayed to help prevent shoplifting by overly curious customers. Consider investing in shatter-resistant glass as well. To handle your cash, you’ll want at least one more heavy-duty safe. At the end of the day, your entire stock of cannabis, concentrates, seeds, and everything else you offer must come off the floor and into a locked space (double check that you’ve designed your safe room with adequate space to accommodate this). Consider segregating employee access based on job duties; budtenders don’t need to do anything with cash other than receive it, so they don’t need safe access. On the other hand, your bookkeeper does need safe access, but does not need access to the inventory or product storage areas of your facility.

3. Policies & ProceduresDeveloping a comprehensive set of security-related policies and procedures to follow is of critical importance for cannabis retailers. All employees should receive extensive training in this regard. The most important thing to develop is an extensive auditing procedure that can track and account for every gram of cannabis that passes through your facility and tie it either directly to inventory or to a receipt. Usually, retailers will audit their sales floor inventory on a daily basis, supplemented with a whole-store check once per month or so. Work with your attorney and security consultant to flesh out these documents and ensure you are in compliance with all laws for your province and municipality.


C H A P T E R T W E L V E

C O N C L U S I O NAssuming all goes well at your licensing hearing and your petition is granted, you’re now ready to officially launch your new retail operation, and join the green rush in earnest.

These are incredibly exciting times for those interested in the future of cannabis; it is hardly an exaggeration to say that the changing of our societies’ viewpoints on the matter is one of the biggest social shifts of the past few generations (try comparing the original Reefer Madness of 1936 to the musical version of 2005 for a laugh!).

We never would have gotten to this point had it not been for the tireless activism, work, and enthusiasm of cannabis proponents over the years. The dedication and passion for the industry that they show is inspiring, and probably one of the major reasons you decided to start investigating the industry yourself (the potential financial rewards don’t hurt either).

That’s why we wanted to create and share this eBook with the world ourselves; at Cova, we share your passion for cannabis, and we saw that there was a real need for more

information on the subject. As a Canadian company, we’re extremely proud of our country leading the way in federal cannabis reform.

We’ve done our best to provide you with a comprehensive overview of what is involved in opening a non-medial cannabis retail operation, along with all the information and resources you need to make your own informed decisions about how to proceed.

However, that’s not enough, and we know it. We know you’re going to have more questions as you begin navigating your way through the process, and that you’re going to need additional help.

When you find yourself in need of additional information or assistance, we hope that one of the first places you turn to is our regularly updated blog – it’s full of articles, whitepapers, and other strategic insights that will truly help you take the performance of your store to the next level.

ALL YOU NEED TO KNOW ABOUT OPENING A CANNABIS STORE IN CANADA

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Cova designs and builds retail software solutions specifically for the cannabis industry. We’re relentless with our goal of creating the industry’s first lovable POS – but we’re not stopping there. Our full retail suite, coupled with our dedication to being a strategic partner rather than simply a software provider, is a powerful recipe for growth for our clients.

Our point of sale (POS) and suite of digital solutions make complex operations simple, so retailers can stay compliant, streamline their operations and deliver an amazing experience every time.

What sets Cova apart? Our award-winning design, lightning-fast transaction time, and automated compliance features will impress you. Our technology platform currently powers 20,000 retail stores of all sizes and verticals with virtually no downtime, even on 4/20, making us the most robust and reliable cannabis POS system available.

Our roots are in Canada — but more importantly, they’re in retail. Our Canadian headquarter is in Vancouver, BC and we have offices in Regina and Winnipeg.

We work closely with our customers to solve problems and create great experiences for owners, staff and customers.

Growing your empire takes time, experience and the right technology partner.

We know how. Join us.

ABOUT

COVA


Contact Us

FAAI [email protected]