Cannabis retail stores in British Columbia come in all flavours, from standard-issue government stores to small, rural, independent mom-and-pop shops. This article highlights key differences between government stores and private retailers and comments on challenges faced by rural stores.

Ten years ago, who would have predicted that the B.C. government would own and operate weed stores? And, yet, with B.C.’s fairly unique retail regulatory model, that’s exactly what has happened. The provincial government is both the exclusive wholesaler of cannabis products in B.C. and a retailer, operating a mail order platform and 39 bricks-and-mortar stores.

The government stores look much like B.C. Liquor Stores: they carry a wide variety of products from growers/processors located inside and outside of B.C. and can charge prices that are sometimes lower than private retailers. But the selection of products can vary dramatically from store to store and can pale in comparison to some private retailers. This is a feature (or perhaps a bug) of the regulatory model.

The 487 private retailer stores must purchase all cannabis products from the wholesaler. This occurs in two ways. First, they can order directly from the government; known as purchasing from “Central Delivery” the products are shipped from the province’s Richmond warehouse.

Second, they can purchase and take delivery directly from a limited class of small B.C.-based sellers. The provincial government still takes its 15% cut of sales but the products are shipped directly from the processor to the retail store. This “Direct Delivery” model is not available to government stores, limiting the selection available to those products selected by the BC Liquor Distribution Branch for purchase into Central Delivery.

Direct Delivery, introduced in 2022, was intended to support small B.C. growers, but has failed to capture a significant part of the market. Shipping costs and convenience are key issues. Central Delivery shipments all come at one time and shipping charges are spread out among many items. With Direct Delivery, shipping fees are paid (by the store grower) for each shipment. This eats away at margins. Direct Delivery orders are still subject to the 15% fee charged by the province even though its warehouse isn’t involved. Uptake has lagged as a result.

One other retail store type exists. That is the Producer Retail Store, colloquially known as “farm-gate” and intended to allow B.C. growers to directly make retail sales much like a vineyard or craft brewery. There is only one such store in B.C. The reasons for the minimal uptake are unclear but may be that these licenses attract the same $15,000 application fee as a standard retail store license.

B.C. also limits the number of private retail stores that can be owned by one company to eight. This is in sharp contrast to Ontario, where the cap was recently expanded from 75 to 150. It is also in contrast to Quebec, which has no private retail and maintains a total provincial monopoly on sales.

In addition to the differences between private and government-run retail stores, B.C.’s size creates significant challenges for stores operating in geographically remote or lower population areas.

A key component is shipping cost — the same item at a retail store in Langley may cost more in Fort Nelson because it costs more to ship there. This is particularly true for items ordered via Direct Delivery.

Another challenge is customer base. While cannabis products are becoming increasingly popular, the continued stigma from almost 100 years of prohibition means that many British Columbians remain cautious about trying it. Less customers means less cash flow, which produces a ripple effect on ability to have a diverse inventory... which leads to less customers.

Cannabis retail in British Columbia is a changing regulatory space. The provincial government has shown willingness to change its model in response to industry feedback and market conditions. As more experience is gained, and lessons are learned from other provinces, this area of regulatory law is certain to continue evolving.