In theory, cannabis legalization should be a fantastic business opportunity for head shops across Canada.
But some owners of those cannabis accessory stores fear legalization could actually hurt their businesses, as future legal marijuana stores prepare to sell pipes, bongs and vaporizers alongside cannabis itself.
Aaron Switzer of Ontario's Happy Dayz head shop chain was "absolutely floored" when he first heard that the Ontario Cannabis Store, a government-owned marijuana monopoly, plans to sell cannabis paraphernalia.
"If the OCS is successful, we can see a very, very dramatic change in what smoke shops have been or will continue to be," he said.
Switzer expects legalization to encourage new cannabis users, some of whom "have never smoked a day in their life" and could use guidance on high-tech accessories like vaporizers.
"If they put us out of business, then there will be a very small selection, with not a lot of time for explanation, and a lot of people who are really going to be moving out into cannabis use without being properly educated."Advertisement
Ultimately, though, Switzer said "this isn't a cannabis conversation — this is a small business conversation."
'Back off and step out'
The Canadian Federation of Independent Business agrees. The organization represents "several dozen" head shops across the country, mostly in Ontario.
"Anywhere where the government is going to encroach on that existing market, we will absolutely, like in Ontario, call for them to back off and step out, because it is unfair to the existing small business owners to have a taxpayer-backed monopoly come into your market," said Ryan Mallough, CFIB's senior policy analyst for Ontario.
Some CFIB members who produce cannabis accessories are also concerned about the future of their business after legalization, said Mallough.
"Now they're feeling like they are forced to have to choose between the government sales model that may very well be the only game in town a couple years from now, or ignoring the government sales model, staying with the retail guys who may be forced out a couple years from now."
In an April call for products, the Ontario Cannabis Store sought submisisons for cannabis accessories including "bongs and pipes," "rolling papers, filters, (and) trays," "grinders," "lighters and multi-tools," "cleaning supplies," "storage," "vaporizers," "weighing scales," and "indoor grow" equipment.
Like cannabis suppliers, cannabis accessory producers who supply Ontario's stores will have to carry $5M worth of commercial general liability insurance and a $15M recall insurance policy.
Abi Roach, owner of the long-standing Hotbox Lounge and Shop in Toronto, suspects one reason the OCS wants to carry so many accessories is to fill up their stores. Cannabis sold at OCS locations will be locked away behind a counter, and unavailable for customers to smell or even view.
"I think there's a lot that they don't realize, in terms of market trends and consumer trends — how do cannabis consumers buy their products, what makes them choose that product — and I think they're going to find that they may fail," said Roach.
"I understand if they want to sell a few small things at the cash counter, but let's not turn the entire store into a head shop. Let the private entrepreneurs continue what they've been doing."
Prohibition, based in Laval, Quebec, has operated "smoking boutiques" since the 1980s. Vice-president Christopher Mennillo said his company employs about 120 people at its 17 locations, including a new store in New Brunswick.
Quebec's cannabis retail monopoly also plans to sell accessories, which Mennillo considers "more of a minor annoyance than anything."
"I can't picture, for example, a government-run monopoly like that selling glass pipes or bongs, I just really can't see it," said Mennillo. "Maybe a couple packs of rolling papers, grinders, vaporizers for sure."
In March comments reported by The Canadian Press, Mennillo noted, the CEO of Quebec's provincial alcohol monopoly said its cannabis subsidiary would not "aggressively compete" for the cannabis accessory market.
"It would be a shame, absolutely, to be closed down by our own government, of course," said Mennillo.
"Is there a level of concern? Definitely, there is definitely some level of concern, but the only thing that we can do as business owners is really the best that we can do in terms of offering a really solid business offering" and hoping customers keep coming.
New private sector competition
It's not just government-owned weed stores that have Canadian head shop owners worried.
In Brandon, Man., Rick Macl is afraid private sector cannabis shops could hurt business at his store Growers n' Smokers, which sells accessories and growing equipment.
"Let the dispensaries sell nothing but pot, and that's it, because we've already got head shops that are already here doing the business," said Macl.
"You've got a whole bunch of small business people that have been working their asses off for decades to keep their businesses alive... They're going to open up a store, right close to mine, as close as possible. Then how am I going to compete?"
At the very least, Macl said, he still sells growing equipment.
Hotbox Lounge owner Abi Roach said small businesses like head shops need to be flexible to face the future.
"If you can't figure out how to be agile and be competitive... then it may be time to move onto a different business," she said.
"But I think I'll be able to figure out a way to get around the competition, and I think I have more experience and more knowledge. I have 18 years on these people to know how to be ahead of the game, and how to stay competitive."