Cannabis sales in Alberta slow growth as online ID verification deters consumers, retailers say

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Some licensed cannabis retailers haven’t seen a surge in online cannabis sales since Alberta allowed private companies to sell directly online earlier this year.

“As soon as the regulations changed, we got on board ASAP just to take advantage of it,” said Derek Shields, owner of Northern Lights Supply in Nisku, Alta.

In March, Alberta Gaming, Liquor and Cannabis shut down its provincial online sales website. Since then, of the 765 licensed cannabis retailers in Alberta, 232 operate online.

The two most popular types of online sales are click and collect, where customers can place an order online and pick up their product in person or on delivery.

AGLC regulations require companies to use their own couriers, Canada Post or a courier service.

After seeing an initial surge in online sales, particularly with click and collect, Shields said sales weren’t enough to offset delivery costs.

“Delivery is very difficult, especially with the cost of personnel, insurance, gas, the vehicle itself,” Shields said.

As an independent owner, Shields said that between competition with big chains opening more stores in Alberta and the costs of operating online, so far “there really isn’t much or no margin to do, to be quite honest, in delivery.”

“Heavyweight” two-step identity verification

Another barrier reported by retailers is the online identity verification process that customers must go through to visit the company’s website and place an order online. This verification is added to an identity check at the time of delivery or collection.

Omar Khan is Senior Vice President of Corporate and Public Affairs at High Tide, which operates 75 Canna Cabana stores in Alberta.

“We found that for many consumers they find it a bit cumbersome,” Khan said.

“What we’ve noticed in Alberta is that the extra first step of creating a profile and uploading your consumer ID has meant that the growth rate in terms of online sales in Alberta is much lower. than what we’ve seen in Ontario and other provinces,” said Khan.

Northern Lights supplies cannabis to Nisku, Alberta. (Anusha Kav/CBC)

The AGLC said in a statement that they “[require] cannabis retail websites to have robust age verification methods. To ensure that cannabis does not get into the hands of young people through online sales, age verification is required at the initial online sale and at the time of delivery. »

While online sales in Alberta allow both delivery and click and collect, provinces like Ontario only allow delivery through its provincially run website. Private retailers in Ontario are permitted to use click and collect.

Many provinces, including Ontario, do not require ID documents to be uploaded online before visiting the website. They require consumers to declare their age and have their identity verified upon delivery or collection.

Consumer favorite in-person purchases

Michael Armstrong is an associate professor at Brock University and has researched the business and policy aspects of cannabis legalization in Canada.

He said online sales in Canada only account for a small percentage of overall sales and consumers prefer to buy in-store because of a number of benefits, including a level of anonymity.

“First, they want to see and feel the product. Second, they like to get information from the budtender, advice,” Armstrong said.

“And number three, maybe they want to be anonymous so they show their ID, pay cash, walk out, there’s no record they were ever there.”

Armstrong also noted that larger companies might be better able to manage the costs of delivering and operating online sales, especially without expecting high returns and with multiple stores centralized on a single website.

“Because it involves setting up a website, because it involves organizing a payment system, in the case of Alberta you have to collect the ID, it’s a lot of additional overhead if you’re just an independent store,” Armstrong said.

“Going through that extra work and overhead so you can maybe get a few percent of your sales through that way? That doesn’t sound very appealing.”

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