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Head Shops Left Behind By Cannabis Legalization Worry For Their Future

EDMONTON—Fred Pattison’s head shop on Calgary’s 17 Ave. S.E. is stacked to the ceiling with pipes and bongs.

The clean, spacious store has blue-trimmed white walls and a kitschy mural of the city with a Canadian flag behind one of the display cases.

It could be a cannabis lover’s dream, except for one problem: He’s not allowed to sell cannabis.

“With every second customer, it’s a walkout, because we don’t have cannabis,” he said.

Retailers who can sell legal pot, meanwhile, are allowed to stock all the same merchandise he sells.

Pattison says this is unfair and it’s killing his business.

“That doesn’t really make sense, how if I got the licence to open a cannabis store, I can add accessories to my cannabis store. But if I already own an accessory store, I can’t add cannabis to that,” Pattison said.

In the last year and a half, Pattison said he has cut seven of the 13 employees at his three The Next Level stores, and he blames the loss of income squarely on dispensaries.

A customer makes a purchase The Next Level in Calgary. The store’s owner says his business is taking a hit as his clients go to cannabis retail outlets instead of his accessory store for pipes and other gear.

After more than 14 years, he is worried for the first time that he might have to shut down entirely.

“That’s a concern, for sure. As time moves on, it feels more like that,” he said.

Head shops were the front line of cannabis culture for years in Canada, offering all the accessories to indulge in a substance that was still illegal. It was often rumoured that at many stores, if you knew the right way to ask, you could score some weed in the back.

But when the federal government legalized cannabis for recreational use last October, head shop pioneers — among them some of the strongest legalization advocates — were left behind.

Pattison thought he would be a shoo-in for the first round of dispensaries, but was told he would have to launch a separate business if he wanted to stock cannabis.

He couldn’t afford to do that.

Alberta Gaming, Liquor and Cannabis Commission (AGLC) spokesperson Heather Holmen said cannabis retailers have to meet a long list of requirements — including criminal checks, cameras and heavy-duty security systems — making it unrealistic for existing shops to simply start stocking the substance.

Fred Pattison, owner of The Next Level, says his business is taking a hit as his clients go to cannabis stores instead of his accessory store for pipes and other gear.

Not even drugstores can add cannabis to their product list without creating a separate business.

“There needs to be that integrity in the legal market, to make sure that it’s being run properly and safely,” Holmen said.

But when the country’s legal cannabis supply started running out, the AGLC relaxed its policy to let some approved cannabis retailers open and sell just accessories while they waited on weed to fill the rest of their shelves.

Pattison saw the move as an unfair double standard.

He has lobbied the city to restrict dispensaries from selling accessories, but hasn’t had any luck.

Pattison has changed his business model to stay relevant by revamping his web store and offering free shipping for online purchases, but that might not be enough.

Alberta has more than 100 cannabis retail stores, which is the most in the country.

On May 30, AGLC lifted its moratorium on cannabis retail stores as more supply became available, and announced five new stores will be licensed every week, meaning competition is quickly ramping up.

Retail store licensees who had waited months to sell pot rejoiced over the moratorium’s end, but it was a blow to Pattison.

Fred Pattison, owner of The Next Level, says his business is taking a hit as his clients go to cannabis stores instead of his accessory store for pipes and other gear.

“Everybody’s fighting over the little bit of marketplace that’s left. And a lot of these people really wanted to support this legal regime, really had hopes that it was going to work for them,” he said.

“Now you’ve made 200 7-Elevens for cannabis. Nobody’s different.”

Abi Roach, executive director of cannabis advocacy group NORML Canada and owner of Toronto store Hot Box, said head shop owners are in “pivot mode” as they scramble to find ways to keep up.

Roach said she patiently awaited legalization, hoping she would be able to sell pot after running her law-abiding business for almost two decades, only to learn that was not the case.

“The sense of urgency is out there, where businesses that have been very successful for the last decade or two are really struggling to keep up with regulations that just don’t make sense,” Roach said.

But some in the accessory business are making it work.

Drip Glass and Vape in downtown Edmonton specializes in smoking gear made from high-end glass, much of which is hand-blown locally.

Manager Skyler Chisholm said a lot of people who have come in since legalization are looking for weed, and they leave after asking where the closest dispensary is.

Connor Grieve works behind the counter at the newly opened Smoker’s Corner in southwest Edmonton.

He said he has noticed fewer people coming in to buy smaller items like rolling papers these days, but the big items still sell.

Chisholm said that’s because the store is mostly stocked with items that won’t be found in dispensaries.

“We have noticed that a lot of shops are shutting down. But we’re pretty lucky because we try to target a pretty niche market,” Chisholm said.

Some bigger chains like High Tide Inc. are playing both ends of the market.

The Calgary-based company runs Smoker’s Corner head shops in British Columbia, Alberta, and Nova Scotia, and also operates the Canna Cabana cannabis retail stores.

High Tide converted seven of its 19 head shops to Canna Cabanas after legalization.

But chief strategy officer Nick Kuzyk said he thinks there is still room to grow for stores that only sell accessories. This month, his company opened a new Smoker’s Corner in Edmonton’s Chappelle area on the southwest outskirts of the city.

The new Smoker’s Corner location in southwest Edmonton opened this month while other head shops are struggling.

He said the pot enthusiasts will go to Smoker’s Corner for products like e-liquids, high-end vaporizers and intricate water pipes that they can’t find at a dispensary, while others will use Canna Cabana as a one-stop shop.

“The customer who has been shopping with us prior to legalization, if they’re still situated close to a Smoker’s Corner and they know the staff there and recognize that the selection there is more broad, then they’ll keep going to that Smoker’s Corner and they’ll recognize that we bring in new things all the time,” Kuzyk said.

University of Alberta business professor Kyle Murray said he’s not surprised that head shops are feeling smoked out after legalization, especially with multimillion-dollar cannabis retailers pouring big budgets into their store designs and layouts.

Murray said some head shops will evolve to survive, and others simply won’t make it.

While he said the business owners have some legitimate complaints, evolution is the nature of the market.

“It seems like kind of a natural result of increased competition — and in a lot of cases, really well-funded competition that sells the core product, not just the accessory,” Murray said.

“They’re against really tough competition.”

source: www.thestar.com

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