Calgary leads the country in cannabis retail as city grapples with costs

Calgary is leading the country in cannabis retail with 24 licensed pot shops — more than twice as many outlets as the next highest jurisdiction — despite the province’s decision last fall to stop issuing further store licences.

“We’ve had remarkably little problem with the retailers here,” Mayor Naheed Nenshi said Thursday. “We have 24 private retail outlets in Calgary, which is by far the largest in the country.”

The mayor said that despite the city’s free-market approach to regulation, the province’s decision last November to halt licensing due to a shortage of cannabis supply has left some Calgary entrepreneurs in limbo.

The city has now approved development permits for 167 stores in Calgary, more than a dozen of which are stuck waiting for the province to lift a moratorium on new licenses.

“I’ve said from the very beginning, there is no way the Calgary market can support that number of stores,” Nenshi said. “(But) it’s sort of a shame that instead of letting the market sort it out, the first 24 who got in kind of won the lottery because there was then a moratorium on other stores.

“That said, we’ve taken a very free-market approach to this and I anticipate the market will sort itself.”

A proposal is in the works to help Calgary businesses stuck in limbo with extensions on development permits, since the majority of permits are set to expire as early as July.

“We’ve certainly heard concerns from businesses about not being able to open their doors yet, concerns over the development permits expiring,” said Matt Zabloski, lead for the city’s cannabis team.

“That was part of the reason why we’re addressing it. Also, (looking) at what can be done for the interim: whether these stores can operate as something else, (such as a) cannabis accessories retail store.”

Edmonton has the country’s second-highest number of cannabis stores operational, with 11 outlets; Winnipeg is third with 10. Vancouver has three official cannabis stores. The first cannabis stores in Ontario will open in April.

But while provincial and federal governments have already begun to see financial benefits from the federal cannabis excise tax and revenues from provincial product sales, municipalities such as Calgary say they’ve been left out of the equation.

A report presented to a city council committee Thursday showed Calgary is facing a $6.6-million budgetary gap as costs related to cannabis administration, regulation and enforcement exceed provincial support.

The province previously announced Calgary would receive $3.8 million to assist with costs related to the transition to legalization.

But city administration said Thursday that the city has already incurred costs of more than $4 million, and the total amount of cannabis-related costs is expected to exceed $10 million by the end of the year.

“We remain extremely frustrated that the federal government’s very clear direction was that their cost-sharing with the provinces on the cannabis excise tax was meant to reimburse municipalities for their costs and, frankly, we’re just not getting it,” Nenshi said.

“We anticipate that we’ll be about $6 million in the hole on our costs of enforcing cannabis while other orders of government actually make money off the taxes and we don’t. We just don’t think that’s fair.”

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Twitter: @mpotkins