BC’s moat vs. Ontario’s laissez faire approach

Published on April 2, 2021 by oz. staff

Kiaro CEO Daniel Petrov spoke with the oz.

It isn’t easy to open a cannabis store in BC.

Kiaro recently purchased a licence in Kelowna to secure a prime location.

The company’s CEO Daniel Petrov has said there is an “unparalleled moat” around BC retail stores. We asked him to elaborate.

Here are the key points:

  • Petrov says BC has an unparalleled defensive moat around BC retail stores, and he contrasts it with Ontario’s current approach.
  • In Ontario retailers go through a process once with the province and they’re in. Municipalities who opted in there have no power to veto locations.
  • In contrast, in BC you have to go through the process from scratch with the province for every location, as well as gain approval from each municipality.
  • Petrov says he doesn’t judge either approach as right or wrong, better or worse.

Here is the full quote:

the oz. – Can you elaborate on this quote: “As for defensibility, I continually speak to the unparalleled moat around BC retail stores, and Kelowna BC is no exception. To prove that point further, the province has struck out on two of its three efforts to open its own cannabis stores in Kelowna.” What is BC doing specifically to create that ‘moat’?

Daniel Petrov –  I like to contrast BC with Ontario because it’s pretty easy to compare. In BC, if you have a store and you want to get a licence for cannabis you have to go find a lease for a store and then you have to make sure the lease is already compliant with the zoning and it can qualify for a cannabis store municipally. Once you find out you can qualify municipally, you get the lease. The City of Vancouver will let you call in and see if you quality. You have to send your lease to the province and the province takes a while for it. You have to fill out all the provincial application forms every time you submit a retail location. Then they go through there process of vetting which takes a long time—you go back and forth until you’re approved and it takes quite a bit of time to do that. The last step is once the province approves it, they send it back to the city for recommendation by council for approval. The city can do a number of things depending on what their process is. Our province is made up of a ton of municipalities and every one is different.  When it comes to getting a licence in BC, you’re going through these processes … and if the province took too long … we got in the last day of the municipal window for Port Moody. If we were short one more day by the province because of a bottle neck or we changed something we would have been out. That gives you an idea of the BC story.

Contrasting BC’s approach with Ontario

Obviously the whole process before with lottery was very different. But now that they’ve opened the door, they’ll prove you as a retail operator—so Kiaro now has its retail operator licence. Once you’re approved as a retail operator you do not have to be approved by the province anymore. You just go to municipality you want to be in, find a location and they give you an RSA and you can so many under your retail operator provincial licence.

In contrast BC, every location we have to go through the process: you have to submit the location to the province every time we get a location. Where in Ontario, you just do it one time with the province.

That’s one differentiator. The other differentiator in Ontario is they don’t allow the municipalities any choice. They have one choice in Ontario: You’re either in or you’re out. If you’ve opted in in a municipality in Ontario you have no say. In Ontario right now we could find any lease we want, apply to the province and if it’s a municipality that’s opted in, we’ll get that location. It could be next door to our competitor—literally next door.

I don’t want to judge it as right or wrong, or better or worse; I think it’s just different. BC is taking a slow and steady approach and Ontario has flipped like Alberta to, as you say a ‘laissez fair approach.’ Alberta has more licences per capita than Colorado now.

Coming soon – The second half of our interview with Daniel Petrov