Tokyo Smoke is the latest Canadian cannabis retailer to close some of its locations and seek creditor protection in an unpredictable industry grappling with too many stores, high overhead costs and ultra-low retail prices.A Tokyo Smoke store is pictured in Toronto on Aug. 29. Tokyo Smoke is the latest Canadian cannabis retailer to close some of its locations and seek creditor protection in an unpredictable industry grappling with too many stores, high overhead costs and ultra-low retail prices.
"But at the same time, it's no surprise to people in the industry, and I think people in general, that the cannabis industry is going through a little bit of turmoil."Mauer notes that the range of chains — big brands, mom-and-pop stores, people who own one or two stores versus those that own 10 or 15, some of which are franchised — makes the market a mixed bag.
That was one of the challenges outlined in Tokyo Smoke's filing: It cited "a thriving grey market" as having impacted its revenues, and that it "disproportionately" impacts licensed retailers, diverting money from them into an illicit market estimated to be worth between $2 billion to $4 billion.
Monthly recreational weed sales peaked in August 2023 at $469 million, though that growth has slowed in the last year, with June 2024 sales coming in at $405 million,Ontario introduced a lottery system for weed retailers in 2018, allowing a select number of retailers to operate while Canada's weed supply stabilized. It then switched to an open-market system in 2020.
"So … you've got a huge influx of stores and businesses coming online more or less within the same year to two-year time period," said Mauer. "And can't tell if someone's opening across the street from you."The first legal pot shops opened in the City of Vancouver five years ago. But business isn't booming for some independent stores.
But Canada might still be a model — for better or for worse — for other countries seeking full legalization of cannabis at the federal level, with powers to each of the provinces.by Statistics Canada in April found that out of all Canadian consumers who'd used cannabis in the last 12 months, more than two-thirds had bought it legally.