Cannabis: a new online sales model

Licensed cannabis sellers can now operate an online store to sell their products to Northerners, a decision that was made after the failure of the GNWT store.

Cannabis sales in private stores are now counted as “warehouse” in NWT Alcohol and Cannabis Corporation reports. From December 1, 2020 through the aforementioned periods, only the City of Yellowknife had private stores. We assigned the warehouse data to Yellowknife as the warehouse only supplied stores in the capital. (Sources: NWT Bureau of Statistics, NWT Alcohol and Cannabis Corporation)

Selling cannabis online will not have been profitable for the Northwest Territories Government. Of sales of $ 33,224 in the first quarter of 2018, they have fallen almost continuously to $ 2,532 between July and September of this year, shortly before the government opts to close its online store and pass the torch to interested authorized stores. .

The online store for the Liquor and Cannabis Corporation of the Northwest Territories (SACTNO) ceased operations on October 17, exactly three years after it opened. It sold for a total of approximately $ 88,500 with an average of 78 transactions per year. This was operated by the cannabis producer Tilray who, when he opened the online store, offered four products for sale and, when it closed, only 14, reports Todd Sasaki, spokesman for the Ministry of Finance of the territorial government.

“The cost to develop the online store was approximately $ 300,000 and the annual costs to operate it were $ 200,000 per year,” says Todd Sasaki in an email exchange with Media ténois.

This store will have cost about $ 900,000, ten times more than the sales made thanks to the platform.

“Yes, the Northwest Territories Cannabis and Liquor Corporation lost money on the online store,” he confirms.

When cannabis was legalized in 2018, SACTNO “anticipated a huge online market as there were only six stores licensed to sell cannabis in the entire country. This market did not materialize, ”he continues.

The Northwest Territories Cannabis and Liquor Corporation directs those who want to buy cannabis on the Releaf NT website

(Photo credit: Marie-Soleil Desautels)

Expensive and little choice

Professor at the University of Waterloo School of Public Health, David Hammond, who studies trends in cannabis use, among other things, visited the old online store before it closed. “It’s no wonder we had such low sales with so little supply,” he said in a telephone interview.

He found that the prices of the few products were also much higher than in other parts of Canada. “There was nothing to sell for under $ 40 and that’s not counting the shipping costs. In Ontario, there are hundreds of competitively priced products and shipping has been free since the pandemic, ”he says.

With the desire to increase the volume of online sales, the territorial government launched an expression of interest in July 2021 “to get ideas on after-sales models for an online store,” says Todd Sasaki. Six responses were obtained. Among the ideas received: completely redesign the online store; operate a new warehouse accompanied by an online store; Allow stores that are already licensed to sell cannabis on the NWT to operate their own online store.

“All ideas were evaluated and SACTNO decided that local cannabis vendors in the NWT were best suited to provide this service. “

Releaf NT Online

So far, only Authorized Dealer Releaf NT, which has a store in Yellowknife, has jumped into action. “In a few weeks, we set up an online store, doubled our inventory and will soon double it again to be competitive,” says its president, Luke Wood, by phone. Their online store has been open since October 18 and offers more than 250 products from multiple vendors, rather than just one.

“If we get an order online before 8 am, we ship it the same day via Canada Post from Yellowknife,” says the owner, overwhelmed since the store’s launch.

He also believes that the lack of product offerings hurts the old store, as well as shipping costs and the delay in receiving, as the products were shipped from “anywhere in Canada,” he says.

Your company set the shipping cost at $ 15, regardless of the purchase amount. It is not yet possible to deliver orders to Yellowknife, Ndilo and Dettah, but Luke Wood hopes this will happen as GNWT allows the delivery of liquors from October 19 to the communities with stores in the area. ‘Alcohol.

“What, Fort Simpson, Inuvik or Tuktoyaktuk, orders are coming in, but I’m not expecting a huge demand. Not yet. At the moment, we mainly serve small communities where illegal cannabis was purchased online. People keep going to the stores where they are, ”he continues.

A third retail cannabis store in the Northwest Territories, It’s 4:20 Somewhere, opened on September 24, this time in Hay River, joining the two private stores in Yellowknife.

Although the GNWT does not know if this new online selling model will eventually materialize the anticipated market, “maintaining an online presence is important given that most communities do not have access to legal cannabis,” said Todd Sasaki of the Ministry of Finance.

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