How Cannabis Laws in Manitoba Affect Businesses

Current Legal State Of The Province

A regulatory framework and licensing regime is in development for Manitoba (MB).

Bill 11: The Safe and Responsible Retailing of Cannabis Act sets the framework for Manitoba’s retail model by legislating that the Liquor and Gaming Authority of Manitoba has been renamed the Liquor, Gaming and Cannabis Authority of Manitoba (LGCA). It will be responsible for licensing cannabis stores, both retail and online, as well as cannabis distributors, while the Manitoba Liquor and Lotteries Corporation (MBLL) will secure and track supply of cannabis sold in the Province. The LGCA will provide more information once the details of licensing, compliance, and social responsibility are confirmed.

With a top priority for public safety and health, Manitoba is also committed to: protecting its youth, working to eliminate the black market, prohibiting home-growing for recreational purposes to protect the real estate market, keeping roads safe, and supporting economic development.

On November 7, 2017 the Province announced that it is adopting a hybrid retail and distribution model that combines provincial control with private retail outlets, opening the door for residents of Manitoba to own and operate their own stores throughout the province.

In February 2018, Manitoba published “Zoning for Cannabis: A Guide for Manitoba Municipalities” for individuals and organizations who require details about municipal considerations, zoning for retail cannabis stores, and what you need to know if you’re a holder of a retail license or considering applying for a provincial license to retail non-medicinal cannabis.

Minimum Age: Who Can Legally Access Marijuana in Manitoba?

Manitoba’s minimum age to possess, purchase and consume cannabis is 19 years old, a year later than the legal age for drinking alcohol (18 years old).

How is Cannabis Accessed? Private/Public Retail Stores

In Manitoba, when recreational cannabis (pot/weed) is legalized in Canada, Manitobans of legal age will be able to purchase non-medical cannabis exclusively through private retail stores (a Manitoba cannabis dispensary). The private sector will be responsible for selling the product and it won’t be available for purchase where alcohol is sold. It will also be available through online retail. All of the cannabis in stores must be purchased by Manitoba Liquor and Lotteries (MBLL), which will get it from federally licensed producers. Safe storage and shipment of product will be managed through either MBLL-owned and operated facilities and/or contracted third parties licensed through the Gaming and Cannabis Authority of Manitoba (LGCA). The LGCA will be responsible for licensing and regulating cannabis retail stores (dispensaries) and cannabis distributors.

The government will maintain a wholesale monopoly and regulate distribution, but private stores will sell cannabis at a price they can set themselves. Additionally, municipalities can ban recreational cannabis stores if they want.

Rural Areas

The Government of Manitoba recognizes that retail access for people in rural areas will require a different approach than those used in urban communities and rural community leaders are working together to establish regional approaches to the issue.

Wholesalers/Distributors

Like many other provinces, Manitoba will have a government-run wholesale distribution model. The provincial regulation of wholesaling, distribution and retail will be through LGCA, will be the only wholesale distributor of non-medical (recreational/adult use) cannabis in Manitoba.

Online/ Website Sales

The licensed private retailer will be the only retailer permitted to sell non-medical Manitoba cannabis products online at this time. Anyone who orders and accepts a package of weed will need to sign for it, as is the case with receiving most packages, and that information will be kept on record by the LGCA. Consideration may be given to allow public online sales in the future.

Non-Cannabis Products & Edibles

Licensed retail outlets (dispensaries) will be the only stores that can sell non-medicinal cannabis. Initially, they will not be allowed to sell other products, except for cannabis accessories. A cannabis accessory is defined as: “A thing, including rolling papers or wraps, holders, pipes, water pipes, bongs and vaporizers that is represented to be used in the consumption of cannabis or a thing that is represented to be used in the production of cannabis.”

Cannabis retail stores must be self-contained businesses. There is an exception to this rule in rural areas, where a self-contained cannabis retail store may not be a viable business.”Rural areas” have not yet been defined. Neither has the model for a cannabis retailer in a rural area.

The legal sale of edible cannabis products is expected to come into effect nationally one year after weed is legalized.

Licensing

According to Manitoba’s Premier Brian Pallister, applications from retailers will have to meet a “wide array of stipulations,” including things such as distance from schools and protection of cannabis supply sources. If you are an entrepreneur interested in how to open a dispensary in Manitoba, more details on retail licensing and establishing a retail cannabis outlet (dispensary) will be available at a later date. General evaluation criteria that highlights areas to consider when determining the siting of a cannabis-related facility are detailed in the “Zoning for Cannabis: A Guide for Manitoba Municipalities.”

The LGCA will allow for two types of private retail outlets. One will be age-restricted, preventing the entrance of anyone under 19 years of age. The other will be open to any age but be required to follow strict rules regarding the display of cannabis products, similar to the sale of cigarettes. In each case, operators will need to obtain a retail license and ensure appropriate, standardized staff training.

Important takeaway points:

• Most licenses will be “age-restricted licenses,” whereby young persons may not enter the store
• There will also be “controlled access licenses,” whereby customers will not be allowed to view or access cannabis or cannabis packages until after they have purchased them
• Retailers (dispensaries) will be able to sell cannabis online and deliver
• There will be no co-location with alcohol sales
• Retail staff must have completed specified training courses

Cannabis Lounges

Cannabis lounges and cannabis cafes will not be licensed at this time. The Province will be considering this type of license at a future date.

Where Can Cannabis be Consumed?

Manitoba will generally allow adults to use recreational cannabis in public spaces where tobacco smoking and vaping are permitted. However, to minimize child and youth exposure, smoking and vaping of non-medical cannabis will be banned in areas frequented by children, including community beaches, parks and playgrounds. Use of cannabis in any form will also be banned for all occupants in vehicles.

Local governments will be able to set additional restrictions, as they do now for tobacco use. In addition, landlords and strata councils will be able to restrict or prohibit non-medical cannabis smoking and vaping at tenanted and strata properties.

Growing Cannabis

The provincial legislation restricts Manitobans who don’t have a medical permit from growing plants inside their homes. Growing plants at home is a provincial offence under the Cannabis Act, despite the “federal legislation” making it legal to grow up to four plants at home.

When Bill C-45 (Cannabis Act) takes effect “it would allow cannabis cultivation within a ‘dwelling-house,’ including any land that is subjacent to it and the immediately contiguous land that is attributable to it, including a yard, garden or any similar land.” Manitoba outdoor cannabis growing will be legal as far as the federal government is concerned, as long as it’s on the grower’s residential property. That said, provincial governments, municipalities, and landlords or condo boards can set specific restrictions on where cannabis can be grown. It’s noted, however, early indications suggest provincial laws may be unfriendly to outdoor cannabis.

Additionally, all producers of cannabis (a grow op for example) or cannabis products will, under the proposed Cannabis Act, need to be federally licensed to operate. Following the “coming into force” of the proposed Act, the Government of Canada will establish application processes and criteria for those individuals or entities who wish to become producers of legal cannabis.

For information pertaining to the laws for growing medical cannabis in Manitoba or the application process to become a licensed producer of cannabis for medical purposes, please consult the ACMPR.

Possessing Cannabis

A person under 19 years of age cannot buy cannabis at a cannabis store and are prohibited from possessing or using cannabis. Possession of cannabis products for those over 18 will be restricted to a maximum of 30 grams per person at a given time.

Heavy penalties apply to those who give or sell cannabis to minors. Penalties can reach as high as $5 million in fines or up to 14 years in prison. The packaging, labelling, and display of cannabis is highly restrictive as well, with the intent to reduce the product’s visibility and appeal to young people.

A Brief Summary of Key Legalization Points

• Minimum age 19
• Government-run wholesale cannabis distribution to retail outlets through LGCA
• Online sales will only be provided by licensed private retailers
• Only private cannabis retailers
• Privately-owned cannabis retailers will be licensed by the LGCA
• Cannabis retailers cannot sell alcohol
• Operating hours, at minimum, will follow current municipal bylaws for hours of operation of retail services or industrial uses. The municipality has the authority, through the conditional use process or adding regulations to the zoning bylaw, to further restrict hours
• There will be no initial limits on the number of dispensaries (retail outlets)
• Municipalities can set their own rules
• Legal-aged adults can possess up to 30 grams at any given time

How Cannabis Legislation Affects New Businesses

There seems to be a huge opportunity for distributors and for retailers with online sales.

Bottom Line Impact

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

• Have an up-market store or offer low prices
• Ensure that you have knowledgeable and helpful staff
• Provide additional service
• Online stores will be a key to a successful license

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.

Manitoba announced in February 2018, that they have conditionally accepted four organizations for multiple retail licenses. It is not known if they will issue other retail licenses.

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 Manitoba government through LGCA
• Federally licensed cannabis sales organizations may also be permitted
• Licensed Producers may be able to sell directly to retailers

Online Cannabis Sales

• Only licensed private retailers

Dispensary/Retail Cannabis Outlets

• Regulated by LGCA
• Cannot also sell alcohol
• Opening hours and locations will be regulated
• Staff have to be properly trained

In Manitoba, private cannabis Manitoba retailers have a great once-in-a-lifetime opportunity. If you’re wondering how much does it cost to open a dispensary, you must first apply for a license. All individuals or entities, including federally licensed producers, who wish to pursue a retail operation under the proposed Cannabis Act will be required to meet any criteria that may be set out by the province.

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.
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.

If you have any questions about Manitoba’s cannabis private retail licensing, 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.