The provincial government in Alberta has awarded a 3-year, $4.6 million dollars contract to manage online sales of cannabis in the province to an Ohio-based company. Meanwhile, Canadian cannabis producer Golden Leaf plans to light up the US with brick-and-mortar stores.
The Alberta Gaming and Liquor Commission (AGLC) announced on Tuesday that the US-based company OnX Enterprise Solutions has been awarded the contract for online sales of recreational cannabis in the province, once sales become legal this summer.
The contract could have easily gone to any other of the 6 companies which applied, however, the AGLC went with OnX Enterprise Solution due to their reputation and great past experiences.
Namely, OnX has worked with a number of companies such as Rogers, Canadian Tire, and American Express, giving them significant experience over their competition in the field of e-commerce sales.
Alberta will be ready this summer
AGLC spokesperson Michelle Hynes-Dawson said privacy, security, ease of payment and selection and age verification are of the utmost importance for the future of cannabis sales online.
Just a quick reminder — in Alberta, cannabis rules say that it can’t be consumed by anyone under the age of 18.
“We’ve heard very clearly from the government of Alberta that’s one of their key priorities,” said Hynes-Dawson. “So we’ll make sure we have a strong system in place.”
Hynes-Dawson also stated that it is not yet known which types of articles will be found on the shelves of the online store.
She added that none of the licensed producers have yet been contacted regarding this issue as the government has yet to decide which products will be offered.
Even though there have been many indications that several provinces won’t be there in time to launch sales this summer, Hynes-Dawson claims that the online sales will start as soon as weed goes legal.
“We will be ready for Day 1 when cannabis is legalized,” she said.
Alberta has recently published the budget for the upcoming year in which cannabis revenue is being factored into Alberta’s budget and it expects to get around $26 million in taxes from recreational cannabis sales once they go legal.
This money would come in from the provincial tax on cannabis sales, which is planned to be at the 10% mark.
McDonald’s, Starbucks, and Golden Leaf?
Can Golden Leaf (CNSX: GLH) become the next household name and the de facto brand of the cannabis industry?
They are certainly planning on becoming one, as their new plans to infiltrate the US market are quite similar to what some of the most successful brands have done so far.
“Like Starbucks is to coffee, we believe Chalice will be to cannabis,” said William Simpson, CEO of Golden Leaf.
Even though recreational cannabis is not legal yet in most US states, Golden Leaf has laid out a plan according to which every entrepreneur wishing to join the industry will be able to easily do so.
In order to open one of the Golden Leaf stores in the states with legal recreational cannabis entrepreneurs will need only $50,000 USD in order to pay for the franchising license.
The store would later still pay a mere 5% royalty fee for using the brand name Golden Leaf.
However, they wouldn’t be the first to implement this system in the cannabis industry either, as Oregon-based Chalice Farms has been working on developing a franchise of their own as well.
So far, their most successful store has averaged around $400,000 per month in gross sales through the third quarter of 2017, while their slowest location averaged about $100,000, still more than decent.
Even with such great results one of the biggest problems that Chalice Farms have run across so far is the inability to move their product across state borders. This issue prevents them from rapidly growing their business, as the US federal legislation is still turned against marijuana.
Golden Leaf plans to overcome this problem by outsourcing their operations for growing cannabis. Their plan is to have locally-grown cannabis in states which plan to accommodate the Golden Leaf franchise.
The second option they also took into consideration was developing a list of approved manufacturers and products in each state or region as necessary.
The CEO of BlackShire Capital, Kevin Reed, said that the plan is to open 35-45 stores in the coming two years as the investment company and Golden Leaf are currently in talks are in talks to create a joint venture for the franchises.
Accordingly, BlackShire intends to invest up to $19.4 million USD for future Canadian and U.S. operations.
“We believe that we’re going to build something that will be around forever,” Simpson said. “It’ll be part of the household names when people think of cannabis in 20 years.”