How to Start a Cannabis Business in Alberta

Current Legal State Of The Province

The Alberta Cannabis Framework was developed following extensive public and stakeholder engagement to best achieve four policy priorities for cannabis legalization in the province:

  1. Keeping cannabis out of the hands of children and youth.
  2. Protecting safety on roads, in workplaces and in public spaces.
  3. Protecting public health.
  4. Limiting the illegal market for cannabis.

Alberta has now prepared Bill 26 – An Act to Control and Regulate Cannabis. The Bill was passed by the Alberta legislature on November 30, 2017 and received Royal Assent on December 15, 2017.

The Act will come into force by proclamation of the Alberta Government.

Bill 26 was passed to empower elements of the framework through legislation, which are largely in the form of amendments to the Gaming and Liquor Act.

The amendments will do three things:

  1. Provide authority for the Alberta Gaming and Liquor Commission (AGLC) to carry out oversight and compliance functions as well as manage the distribution of cannabis.
  2. Establish the authority to carry out public online sales, and to license privately owned and operated cannabis stores with strong oversight and province-wide rules.
  3. Establish provincial offences related to youth possession, public consumption and consumption of cannabis in vehicles.

If you are an entrepreneur interested in how to open a dispensary in Alberta, details on private cannabis retail, including the process and requirements for obtaining a licence, were relaesed in Febrauary and Alberta began accepting license applications on March 6, 2018.

Minimum Age: Who Can Legally Access Marijuana in Alberta?

Albertans of legal age will be able to purchase and consume cannabis (pot) products.

Alberta will set the minimum age for purchase and consumption of cannabis at 18.

This is in line with Alberta’s minimum age for purchasing and consuming alcohol and tobacco, as well as the federal government’s proposed minimum age for legal cannabis.

How is Cannabis Accessed? Private Stores/Online Retail

Albertans will have two options for purchasing recreational cannabis (pot/weed):

  • Privately run retail stores (also known as dispensaries)
  • Government-operated online sales

Physical retail locations (dispensaries) will be subject to government regulations and the terms of licenses granted by the Alberta Gaming and Liquor Commission.

Full details on licensing and establishing a dispensary (retail cannabis store) are available on the province’s website.

Online sales and home delivery will be operated by the government, so there will be a single online source for recreational cannabis.

Though cannabis cafes and lounges will not be permitted on July 1, 2018, the legislation also gives the authority to regulate these forms of establishments should government decide to allow them at a later date.

Albertans of legal age will be able to purchase cannabis products from retailers that will receive their products from a government-regulated distributor.

The distribution system will be similar to the system Alberta currently has in place for alcohol. A dispensary (retail outlet) in Alberta may be able to purchase products directly from a licensed producer.

Licensed retail establishments (aka dispensaries) will be the only stores that can sell cannabis, and will not be able to sell cannabis if they sell alcohol, tobacco or pharmaceuticals.

The provincial government will establish rules that guide hours of operation and location of stores (for example, the minimum distance retail outlets must be from schools, community centres, liquor stores and each other), age of staff and training, and controlling initial growth in the number of outlets.

Staff who work at cannabis retail outlets would have to be at least 18 years of age and have appropriate training to educate customers about the potency of products and the risks associated with cannabis use. Staff must also be trained to uphold the rules around the purchase of cannabis, including checking customers’ identification to make sure they are of legal age.

Consumer education will be embedded in the retail of cannabis, and retail outlets will display point-of-purchase signage and other materials to educate customers about risks and making responsible choices about cannabis

Where Can Cannabis be Consumed?

Albertans will be allowed to consume recreational cannabis in their homes and in some public spaces where smoking tobacco is allowed, but use will be banned in cars.

Though cannabis cafes and lounges will not be permitted on July 1, 2018, the legislation also gives the authority to regulate these forms of establishments should government decide to allow them at a later date.

In an effort to protect children and limit second-hand exposure, public smoking or vaping of cannabis in Alberta will be prohibited from any place where tobacco is restricted, and in the following places:

  • On any hospital property, school property or child care facility property
  • In or within a prescribed distance from:
  • A playground
  • A sports or playing field
  • A skateboard or bicycle park
  • A zoo
  • An outdoor theatre
  • An outdoor pool or splash pad
  • From any motor vehicles, with the exception of those being used as a temporary residences, such as a parked RV

There will also be no consumption of cannabis at any cannabis retail outlets.

Growing Cannabis

Adults will be able to grow up to four plants per household from seeds purchased from licensed cannabis retailers.

Renters, condo-dwellers and those who live in multi-family dwellings may be restricted from growing cannabis in their homes based on rules established in rental agreements or condominium bylaws. Government will work to educate landlords, renters and condo boards on the options available to them.

Possessing Cannabis

In Alberta, adults over 18 will be allowed to possess up to 30 grams of cannabis in a public place, which aligns with the federal government’s proposed possession limit for adults.

When transporting cannabis in a vehicle, it must be secured in closed packaging and not within reach of the driver or occupants.

Young people — those under the legal age of 18 — will not be allowed to purchase or possess any cannabis.

A Brief Summary of Key Legalization Points

  • Minimum age 18
  • Government will wholesale cannabis to retail outlets via the AGLC
  • Online sales will only be provided by the government
  • Retailers will be privately owned and licensed through the AGLC
  • Cannabis retailers cannot sell alcohol, tobacco or pharmaceuticals
  • AGLC will provide oversight and compliance functions
  • There will be rules about opening hours and locations
  • There will be initial limits on the number of dispensaries (retail outlets)
  • Adults can possess up to 30 grams

How Cannabis Legislation Will Affect New Businesses

Section 90.22 of the legislation indicates that a cannabis supplier may sell cannabis to any person other than the AGLC if the supplier holds a federal sales license for cannabis. This seems to permit federally licensed cannabis sales organizations to sell cannabis and cannabis products directly to retailers.

Bottom Line Impact

If you’re buying from the AGLC, you’ll pay the same wholesale price as every other dispensary (retailer). So, the only way to increase your margin on AGLC products is to be able to charge more than other retailers:

  • Have an up-market store
  • Ensure that you have knowledgeable and helpful staff
  • Provide additional service

You may be able to buy cannabis products directly from federally licensed cannabis sellers (LPs and sales organization), so you may be able to obtain better pricing and/or exclusive product lines.

Selling accessories and clothing. These items are not provincially or federally regulated, so you can handle this as you want to.

You can set up your business with strong branding or use the branding from the products that you purchase.

Top 5 Common Problems Faced With Cannabis Business Plans

1. Using a Template

As with many other industries, there are many templates available. Some are free, and some you pay for. Reality is that using a template is really going to cost you.

  • Is the template Canadian or American?
  • Does the template assume that you’ll be able to sell all cannabis products? You’ll only be able to sell flower and non-concentrated oil for the first year.
  • Is your business going to be the same as every other business?

Garbage in – garbage out. Your final plan will only be as good as the template. If you are uncertain about the feasibility of your basic concept, how to research the market opportunity, or where to find your startup costs, you need expert help from a business plan consultant. If you don’t know what you are doing with the company, a template will only help you write a plan faster, but can’t make your launch successful or improve your chances of raising funds.

2. What’s The Point?

One of the first questions you should ask before writing a business plan is “Why am I writing this plan?”

  • Are you looking for financing?
  • Do you want to see if the business will actually work?
  • Are you trying to obtain a license?

A successful business plan should always be targeted to your audience. Most business plans that we see are generic. Sure, they follow a format, but it is hard to understand the actual purpose of the plan.

3. Not Focusing on The Competition

  • Playing down the competition
  • “We have no competition”
  • No competitive analysis

Competition is almost always an issue with every business. You want your customers to spend their money with you rather than with your competition. Don’t dismiss your competitors. Unless you really do “know it all,” you have to do your market research to write a good business plan. Check out the competition. What’s their niche? Why do their customers choose them? How do you know that your competition won’t get in your way? Even if you believe that you have a unique business, there will still be other businesses competing for your customers’ money.

4. Inadequate Market Research

  • How large is the total market for your products?
  • What share of the market can you expect?
  • How do your products and service compare to the competition?
  • How does your pricing compare to your competition?

Good market research can help you define and refine your value proposition. Not dissimilar to your USP (Unique Selling Proposition) your value proposition answers the question: What is the compelling reason for customers to buy your product? This question can also be rephrased as: Why should a customer choose your product/service over every other option available to them?

5. Unrealistic Financial Projections

  • Financials do not make sense
  • A “hockey stick” growth curve
  • No cash flow or break-even analysis
  • Assumptions not listed
  • Essential expenses omitted

Let’s face it. Opening a business is going to cost you money. Not just to open and equip the store and buy inventory, but also to pay the rent, meet the payroll and take care of operating expenses until you make decent profits. You’d better have a solid Financial Model so that you KNOW “what it’s going to take and what it’s going to make.”

Summary of Article

Wholesale Cannabis

  • Wholesaling will be run by the Alberta government through the AGLC
  • Federally licensed cannabis sales organizations may also be permitted
  • Licensed producers may be able to sell directly to retailers

Online Cannabis Sales

  • AGLC only

Dispensary/Retail Cannabis Outlets

  • Regulated by the AGLC
  • Cannot also sell alcohol, tobacco or pharmaceuticals
  • Numbers will be limited initially
  • Opening hours and locations will be regulated
  • Staff have to be properly trained

In Alberta, private cannabis retailers have a great once in a lifetime opportunity. If you can get a license, you’ll be able to open a dispensary, and that looks like you’ll be able to make a lot of money.

How Sharp Business Plans Can Help You

  1. We are business plan experts. We’ve been writing business plans for over 30 years and helped hundreds of people realize their dreams of owning and operating a successful business.
  2. All of our business plans are reviewed by a professional accountant to make sure that the financial statements and financial information make sense.
  3. We are experts at writing business plans for the cannabis industry in Canada, Australia and the U.S.
  4. We have written over 40 business plans for licensed producers and potential licensed producers under the ACMPR. Some of our clients have already received their licenses. We have also written ovewr 20 business plans for dispensaries.
  5. We understand the Canadian provincial regulations have not yet been finalized, so we can prepare business plans targeting the politicians that will help smooth the way for your license.
  6. You need to know how much you’ll have to invest in a cannabis business and how much you should make in profits. You’ll also need to know the cash flow information…especially for the first couple of years, when you won’t be able to sell concentrates or edibles.

If you have any questions about Alberta’s cannabis private retail licensing, the Cannabis Act (C45), or Access to Cannabis for Medical Purposes Regulations (ACMPR) or want more information on how we can help prepare a cannabis business plan for you, call us toll-free at 1 (800) 661-9842 and contact us today for a free consultation.