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OCS Reducing Inventory

Cannabis retailers may be seeing less selection in Ontario as the Ontario Cannabis Store (OCS) has started limiting shipments from licensed producers (LPs) due to efforts to support public health measures.

George Smitherman, CEO of the Cannabis Council of Canada, says, “Licensed producers received no notice from the OCS that May orders would be delayed while the OCS dealt with slower volume from existing stores due to restrictions on clients being inside stores, slow uptake on the newly licensed stores, many of which are apparently waiting to open once foot traffic is allowed again, and general concerns at their OCS warehouse where they’re trying to  reduce the risk of COVID transmission amongst employees.

Daffyd Roderick, Senior Director, Communications & Social Responsibility at OCS says, “Like all operators in the retail sector, necessary public health measures in our warehouse facility to manage COVID-19 and keep workers as safe as possible have reduced the speed with which we are able to receive new deliveries from our licensed producer partners. We are still receiving orders from LPs on a daily basis we are just not able to do the same volume as we can under normal operations.”

This reduction in inventory of cannabis products may start impacting stores and OCS.ca customers shortly, particularly with some more popular products, which Roderick states “may be temporarily out of stock in May.” Smitherman states that LPs were told to hold off sending shipments for a month, so inventory levels at OCS will definitely be dropping.

The OCS cites “significantly reduced retail store ordering with in-store shopping currently closed”, yet despite other shutdowns, sales in Ontario have been increasing steadily each month as more stores open. 30 new stores are also opening each week and these stores will attract more new customers, so it seems like an inopportune time to start limiting incoming shipments.

Smitherman notes, “It was really a startling situation that occurred for licensees without notice, but we do anticipate that volumes will pick back up.”

This situation follows on the heels of a SKU rationalization that affected the products that LPs could sell to OCS. Just when the industry is getting to a point of improved product selection for consumers, OCS is reducing that choice. Let’s hope it’s a very short term problem.