HIGHLIGHTS
- Ontario government to propose amendment to allow click-and-collect pot shopping
- Cannabis industry experts cite click-and-collect as step in the right direction
- Online pot reservations seen boosting individual purchase values
Cannabis retailers in Ontario did not get the regulatory overhaul that some were hoping for on Wednesday, but the provincial government did what industry experts called “a step in the right direction” toward providing an online tool that could increase sales and take some market share away from illicit sellers.
The Ontario government said in its fall fiscal update that it aims to permit licensed pot stores to offer online shopping combined with in-store product pickups – a service known as click-and-collect – giving the nascent industry in Canada’s biggest consumer market a new way to reach consumers and spur larger purchases.
“Giving retailers the ability to offer an online shopping experience, anything that the government can do to bring that consumer online experience to customers today, will be a big boon for those who choose to obey the rules,"said Omar Khan, national cannabis sector lead for Hill+Knowlton Strategies, adding this move is “an aggressively good thing.”
“In terms of brand awareness, what it allows is for retailers to be able to reach consumers where they are."
The service will “absolutely 100 per cent” increase retail cannabis sales," Mr. Khan said.
A click-and-collect service enables shoppers to browse for products online, reserve purchases, and pick up the items in the physical store after proving they are of legal age to consume cannabis. In Ontario, only two dozen legal stores have been granted licences and opened.
“This would help ensure consumers’ preferred cannabis products are available and would decrease wait times at retail stores,” 2019 Ontario Economic Outlook stated.
Though illicit delivery services for cannabis are readily available, this proposal marks a positive step toward offering licensed retailers the opportunity to compete with the illegal market, facilitate brand recognition, and move one step closer to operating like a typical consumer business.
Also in its fiscal report, the provincial regulator said the provincial government proposes to amend legislation that will allow licensed producers to open retail stores in relation their production sites, also known as farm-gate sales.
Ontario’s fiscal update confirmed an earlier Cannabis Professional report that the changes to the retail system were coming.
Leafly Canada, the biggest online cannabis platform in the country, already offers click-and-collect service in Alberta, where retail is privatized.
“Retailers report a 20 per cent higher average order value,” said Jo Vos, managing director of Leafly Canada, adding that more than 900 retailers and licensed medical cannabis locations across North America participate in the company’s pickup service.
“It’s a step in the right direction. It’s all about convenience. I think it’s going to be a valuable tool to help Ontario.”
Edmonton-based Fire and Flower Holdings Corp., one of Canada’s biggest cannabis retail chains, offers a click-and-collect option in Alberta and Saskatchewan. While provincial regulations in Saskatchewan allow shoppers to pay online before physically picking up their goods in a store, rules in Alberta only permit payment to be made upon pickup in stores.
“It’s a small step in the right direction and if retailers are allowed to avail themselves on their own initiatives, that’s great. This is not a solution, this is not a Band-Aid even,” said Trevor Fencott, chief executive of Fire and Flower.
“We definitely see it increasing sales. People who are using click-and-collect are typically driving higher basket sizes because their shopping experience is more focused."
Though foot traffic in physical stores remains the dominant way to shop for cannabis, click-and-collect is “definitely an active segment of the business,” Mr. Fencott said.
The Cannabis Council of Canada applauded the Ontario government for its steps forward in the cannabis sector.
"Today's Economic Statement sends a strong signal to the legal cannabis industry in Ontario. It will improve how consumers purchase and access legal cannabis products and better equip the industry to replace the illicit market," said Megan McCrae, Board Chair of the Cannabis Council of Canada.
The Council urged the provincial government to immediately announce a timeline for retail expansion in Ontario, “For the sake of industry, job creation and the sustainability of cannabis sector jobs in Ontario.”
The Ontario government said it is committed to shifting toward an open allocation for cannabis retail store licences – rather than the current lottery system – that will see the number of stores fall in line with market demand.