Pot shop owners say they worry about losing customers and running out of product if the Ontario Cannabis Shop delivery disruption continues and consumers turn to the illicit market.
Stores said Tuesday they were left with no choice but to make do with the stock they have after being told Monday by the provincial marijuana distributor that a cyberattack faced by one of its logistics partners prevented it from processing or delivering orders. of marijuana. shops and customers.
“I don’t like to order massive amounts of one thing because I break a lot of things, so when I get interrupted, it means the shelves are going to be empty,” said Elisa Keay of K’s Pot Shop in Toronto. .
“It means some customers will walk in, shake their heads, upset that they won’t get what they want and go elsewhere because they don’t want to hear that it’s not my fault…and there was a cyberattack.”
The OCS has said there is no indication that its systems were attacked or that its customer information was compromised during the Aug. 5 attack on the parent company of its third-party distribution center, Domain Logistics, but deliveries were stopped “in abundance”. precautionary measure to protect OCS and its clients”.
Domain Logistics has not responded to a request for comment and the OCS has not offered a timeline for when it might restart deliveries, but promised to provide an update later on Tuesday.
The moment is terrible for Keay. In the last few weeks, he has seen an increase in sales, but not getting a delivery means he is selling items faster and he is more likely to have to turn away customers if the products are not shipped to his store. .
Like all other cannabis shops in the province, you also can’t look for cannabis elsewhere because the approximately 1,333 licensed pot shops in Ontario must buy the products they sell from the government-backed OCS.
“When you’re my only wholesaler and you have a firm grasp on who can take delivery and when we can take delivery, it leaves us no choice,” Keay said.
“We are totally at their mercy.”
Small businesses ‘crazed’
With no idea when deliveries might restart, High Tide Inc. has begun reallocating inventory from its lower-volume Canna Cabana stores to higher-volume ones, senior vice president of corporate and public affairs Omar Khan said in an email. .
But independent businesses with unique locations can’t model that behavior, said Sean Kady, co-owner of Cosmic Charlies, a Toronto pot shop.
Independents are also less likely to have a large booking because most do not place large orders.
“They have a tighter fixed budget, so from week to week, we can only spend so much and if you’re not getting the product you need, what are you supposed to do and how are you supposed to pay the rent? ” he said.
While her store was nearly “overstocked” on Tuesday, she heard other retailers “freaked out and pulled their hair out” because of their dwindling supplies.
The situation has created problems for Lisa Bigioni, owner of the cannabis chain Stok’d.
She estimates she has enough marijuana to keep her stores stocked for a week, but worries that the disruption to deliveries will continue after that.
She also had to postpone a new store opening over the weekend with a grill and games in the parking lot because she’s not sure when the product will arrive.
“We put a lot of time and effort into planning the grand opening … and all of that will have to be rescheduled,” he said.
Cameron Brown, vice president of The Retail Cannabis Council of Ontario, says this delivery disruption could cause a “significant shortage of cannabis in Ontario” if it continues throughout the week.
“The next concern for many retailers is when their next shipment of inventory is coming to get through not just this week but another big weekend in August, one of the busiest times yet in cannabis.”
OSC waives delivery fees until September 30
A letter from the OCS to retailers obtained by The Canadian Press said “as a goodwill gesture,” the OCS will waive retailers’ delivery fees until September 30 and a $500 processing fee for an order of emergency per store between September 1 and March 31, 2023.
But many store owners don’t feel it’s proportional to the risk their businesses face.
Keay believes that if customers can’t find the products they want in his store, they’ll go elsewhere: to a rival store in the crowded Ontario market, or even to an illicit dispensary or distributor the industry has been battling ever since. legalized recreational marijuana.
A client who finds another option could be lost forever, which is why Keay said: “There is no compensation that can repair the damage to someone’s business.”
This incident follows an OCS announcement on May 11 that the Ontario Provincial Police was investigating the “misappropriation” of sensitive store sales data.
That breach “was not a failure of security or IT systems,” the OCS said, after it quickly launched an investigation to identify the source, restricted access to internal data reports and notified police.
Both breaches came amid heightened competition in Ontario’s cannabis industry, which has seen the number of pot shops explode in recent months.
Store closures are on the way, many predict, because cannabis demand hasn’t increased at the same rate as store openings, the illicit market remains strong, and stores are constantly having to squeeze their margins as rivals lower prices. constantly.
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