Fears emerge stampede to set up marijuana stores in Calgary could hurt budding industry

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Marijuana dispensary firms’ efforts to launch dozens of franchises and shops in Calgary has ignited concerns of a chaotic scramble ahead of the drug’s recreational legalization.

Calgary-based Spiritleaf has attracted 40 entrepreneurs willing to put up a $25,000 franchise fee to operate a cannabis retailing store under the company’s name, said CEO Darren Bondar.

“We’re well-positioned to be ahead of the game and being an iconic brand based in Alberta,” said Bondar, who’s exhibited at marijuana industry expos in the city.

The prospective franchisees have been told the total startup costs range from $300,000 to $450,000.

He said there’s probably room for “a couple of hundred” recreational cannabis shops in the city, given there’s about 2,100 liquor stores throughout the province.

According to the Alberta Gaming and Liquor Commission, there are 447 liquor stores in Calgary.

As Spiritleaf and other players sign up franchisees or scout out possible locations in Calgary ahead of recreational marijuana legalization expected next summer, city and provincial officials still haven’t ironed out exactly how the shops would be located or regulated.

The province has said private industry will operate bricks-and-mortar shops, while the government will handle online marijuana sales.

One veteran retailer of medical cannabis who plans to enter the province’s recreational market said he’s concerned about what he sees as a reckless stampede into the new commercial era.

Fred Pels of the Green Room, which operates stores in B.C. and information centres in Calgary, said he’s concerned about franchisees being enticed prematurely into a market only to be left high and dry once rules are hammered out.

He said many of the sites identified by franchisers as viable to franchisees likely won’t be approved by the city.

And a flood of neophytes, he said, could also harm the entire industry.

“This is something that takes expertise and diligence,” said Pels, adding acceptance of such a contentious, fledgling sector is fragile.

“I’ve been fighting for this industry for a decade and I don’t want any black marks on it — it’s worrisome.”

Pels said he knows of about 30 different would-be players jostling for a piece of the Calgary green gold and figures there’s realistically room for about 100 shops in the city.

His own company, he said, hopes to open eight stores in Calgary, none of them franchises.

“We don’t want to be responsible if something doesn’t work out for them,” said Pels.

Bondar said his firm is well aware of the risks involved in entering such a new field, as are its franchisees.

“Our franchisees are going in with their eyes wide open, there’s full disclosure,” he said, adding the company has been in regular discussion with the city and province.

“We’re taking the appropriate measures, not going into communities that don’t want them … everyone wants to be socially responsible.”

He said the company’s and franchisees’ plans can be adapted to whatever regulations the province and city ultimately craft.

A city official involved in the process wasn’t available for comment Wednesday.

The gaming and liquor commission, which is expected to issue licences for cannabis retailers, is still awaiting guidance from the province as to the number of permits to be made available and distribution timelines, said spokeswoman Heather Holmen.

But she said the marketplace will be a prime arbiter of retail viability.

“We could give out 5,000 licences, but will there be 5,000 successful businesses?” she said.

BKaufmann@postmedia.com

On Twitter: @BillKaufmannjrn

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