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420 with CNW — Data Provides Insights on Canadian Cannabis Company Closures in 2023

Cannabis News Wire, Media Partners

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According to new data given by regulators overseeing the three major Canadian cannabis marketplaces — British Columbia, Ontario and Alberta — an unprecedented number of stores in Canada experienced shutdowns or ownership changes in 2023. The data, sought by MJBizDaily, indicates a retail environment characterized by intense competition in certain places and moderate growth in others.

Alberta saw a shift in dynamics as, for the first time since marijuana was legalized in the province in 2018, more marijuana retail licenses were revoked or not renewed than were issued last year. Forty-eight new marijuana store licenses were issued in the province in 2023, while 62 were not renewed or revoked. This marks a departure from 2022, where 140 new licenses were issued compared to 73 cancellations or nonrenewals.

While the data presents a nuanced picture of store closings, the regulator, AGLC, cautions against drawing straight conclusions about license cancellations and business exits from the industry, noting variables such as relocation.

Alberta is regarded as Canada’s most developed cannabis retail sector, with 749 marijuana providers.

Meanwhile, in Ontario, the country’s largest cannabis market based on sales, new retail cannabis store applications have gradually waned since 2021. More than 1,000 applications for retail stores were submitted in 2021, according to information provided by the regulator, AGCO. More than one-half of applications were lost the next year, to 429 new RSAs, and then another 50% fell to 269 in 2023.

The number of license cancellations has not increased as fast. Only 8 applications were terminated in 2021. In 2022, the number increased to 106, but in 2023, it dropped to 92. According to the data, more retailers are reportedly opening in Ontario than closing.

Only 47 cannabis licenses have been approved in British Columbia (BC) in the last year, which is a drop from the 2022 numbers and around 50% fewer than the 98 permits that were granted in 2021. There were 17 expirations or cancellations in 2023, 6 in 2022 and 12 in 2021, according to data from the LCRB.

Currently, BC has 493 operational cannabis stores. The provincial system does not specifically track store closures; hence, the solicitor general and public safety ministry advise against taking the statistics as an accurate depiction of business closures.

A spokesman for the Public Safety Ministry pointed out that the analysis failed to take license dormancy into consideration, which could result in permanent closures. Dormancy occurs when an establishment ceases operations, requiring license holders to inform the LCRB in 10 days if closure exceeds 90 days.

Stores that fail to disclose closures for less than 90 days and permits that lie idle for up to 24 months also add to the difficulty of keeping track of changes in the business. The number of inactive or unrenewed licenses varies throughout the year due to licensees’ one-year window to reactivate their licenses after they expire.

The continued operation of companies such as Aurora Cannabis Inc. (NASDAQ: ACB) (TSX: ACB) is testament to the resilience of the marijuana industry in the country amid the challenges that have stood in the way.

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