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by Stockwatch Business Reporter

The S&P/TSX Cannabis Index lost 2.75 to 40.00, while the CSE Composite Index added a fraction to 292.44. Canadian cannabis sales hit a new monthly record in May, clocking in at $375.8-million, according to data released this morning by Statistics Canada. This is up from $373.3-million in April and $312.9-million in May of last year.

In Canada's largest market, Ontario, sales edged up to $151.5-million in May from $150.8-million in April, for an increase of 0.5 per cent. This is its slowest rate of increase all year (excluding when sales fell by 4 per cent between January and the shorter month of February). The slowdown comes as retailers grapple with stiff competition and rising reports of store closures. Of Ontario's current store count of about 1,600, roughly 1,000 opened in 2021 alone, boosting consumer spending at the provincial level but hurting it at the per-store level.

One problem is not the number of stores, but where they are opening. The U.S. market research firm Cannabis Benchmarks estimated in May that Ontario could support as many as 2,000 cannabis stores, based on population (using a per capita ratio of one store per 7,500 people). Yet many stores are clustered in dense urban markets such as Toronto, leaving other cities and towns underserved. Then there are some cities, such as Mississauga, Richmond Hill and Vaughan, that currently forbid cannabis stores within their limits. An openness to different locations and a loosening of some city-level restrictions could allow many more stores to compete profitably.

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