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Profile on BC Liquor Distribution Branch

A “surge” of premium cannabis products should be hitting store shelves in British Columbia over the next several years as local craft growers transition to licensed production. That is welcome news for licensed retailers and their consumers who have increasingly selective and sophisticated tastes.

“BC Bud has long been held to be superior to cannabis strains grown elsewhere in Canada and other parts of the world,” says Gayle Corah, Executive Director, Cannabis Operations for the British Columbia Liquor Distribution Branch. “Retailers and consumers have demonstrated a loyalty and preference for BC craft cannabis since legalization, and we’ve responded by ensuring smaller, more premium, BC-based craft partners make up a proportion of the wholesale assortment.”

And, as the market has matured, British Columbia’s private retailers are making more “specific requests” for certain suppliers and products, she added.

Products on offer to retailers have shifted significantly over the past two years, but there is plenty of room for unique craft products in the market from the 32 micro-cultivator and three micro-processor license holders in the province.

While dried flower products containing more than 20% THC and higher remain popular, consumers are also paying close attention to production practices and “other product characteristics such as strain, species, and terpene profiles,” she states.

“The first year of legalization was an educational period as many consumers visited stores and spoke to store staff, trying to identify products and strains that were similar to what they were used to,” notes Corah. “Now shoppers come in with a knowledge of what they like, and looking for what’s new.”

The province’s recent commitment to allow farm-gate retail at production facilities in 2022 will also be an important leg up for aspiring craft and micro-producers, who hope to emulate the province’s wine tourism economy.

The Branch is notoriously stingy with wholesale and retail sales figures, but the most recent annual report notes that sales of liquor and cannabis products combined topped $3.8 billion in the fiscal year ending in 2020, driven in part by “expanded cannabis product lines.”

Private retailers can expect that trend to continue, as the Branch continues to add to its wholesale offerings and cannabis consumption becomes more socially acceptable, the Branch noted.

About 24% of cannabis products sold in BC are purchased from the government’s own online store and its 25 retail storefronts, leaving 76% of the market to 315 licensed private retail locations.

While the Branch tries to provide a “wide variety of products to allow each store to customize their assortment to best serve their customers,” Corah notes that sales trends don’t vary much between stores.

BY THE NUMBERS
as of March 31. 2021
323 Private Retail Stores
25 Government Stores
32 micro-cultivators
3 micro-processors

Regulation changes promised late last year will allow craft producers to deliver cannabis directly to private retailers, opening the door to a greater diversity of products in the market and allowing retailers to better differentiate themselves with unique product lines.

The change will also allow smaller producers easier access to their target markets.

“We’ve heard clearly how important these kinds of sales are for smaller cannabis producers trying to get a foothold in a market currently dominated by larger players,” Mike Farnworth, Minister of Public Safety and Solicitor General, said at the time.

Government-owned BC Cannabis Stores will not be far behind their private competitors in the push for more diversity. Corah says that finding unique cultivars and production practices to add depth to BC Cannabis Stores’ product selection remains an ever-greater focus.

To expedite the growth of a more diverse retail selection, the provincial government has introduced programs to encourage craft growers in their transition to licensed production, but the hurdles to legitimacy remain stubbornly high.

Hundreds of small-scale cultivators are “desperate to be part of the regulated system,” but with costs nearing $350 per square foot to build out a licensed growing facility, the capital investment is out of reach for many, says Jaclynn Pehota, executive director of the Association of Canadian Cannabis Retailers.

On the retail side, the past will predict the future.

Corah has observed a considerable shift in consumer preferences for edibles over the past year and promised to adapt to rapidly changing consumer tastes.

Chocolates containing THC and/or CBD quickly became the best-selling edibles in the market after the category launched in December 2019. Since then, gummies have taken over the top spot, with chocolates in second place and beverages as the third most popular product line.

“We are still working on expanding our assortment of certain Wave Two product categories, especially extracts and concentrates, gummies and other unique edible options,” she explains.