Chris Jones figured out the secret to succeeding in cannabis
As the cannabis market in Ontario continues its fifth year since legalization, sobering statistics have some businesses feeling that the grass isn’t greener on the other side. A July 2023 report details that store counts in the province have risen by nearly 40% while the average monthly sales have declined by 20%.
But whether or not Ontario has reached a saturation point is up for debate (external link) among the producers and retailers that make up the cannabis industry; sales in March 2023 reached $158.9M in Ontario, up 12.8% compared to the same period in 2022.
Chris Jones, Founder and CEO of CANNABIS XPRESS (external link) , still thinks there’s room to grow. “Everyone opened a store thinking they were going to get rich,” he says of the media conversation about saturation, “but a lot of these [retailers] have weak strategies.”
Following 14 successful locations, CANNABIS XPRESS opened its first outside Ontario – the first private cannabis store in New Brunswick. Jones (Law and Business ‘13) follows a strategy based around customer convenience and a limited product selection that’s about 75% less than competing retailers. It's an approach the Globe and Mail once described like 7-Eleven, but simpler (external link) .
“Location selection is important. Our business is profitable, and that’s because we picked areas that that aren’t as attractive as opening in Toronto – small to medium-sized towns with little or no competition,” he explains. “One of our stores as rent as low as $400 per month.”
“I think the market has caught on to the fact that you don’t need large, or expensive, real estate to sell pot,” says Brad Polous, a lecturer in entrepreneurship and strategy at the Ted Rogers School of Management specializing in the cannabis industry. “So like any retail operation, it comes down to first and foremost location, and then the other basics like well-trained, courteous and helpful staff, the right assortment, and fair pricing.”
Changes in the industry
The growing cannabis industry faces regulatory changes and evolving customer expectations. The Alcohol and Gaming Commission of Ontario is considering changing the rules (external link) not allowing cannabis retailers to display products in storefronts.
“Customers are getting more educated on what products they like, trying new product types that are easier to use or less stigmatizing than smoking,” adds Jones. “Not being able to see inside the cannabis store is intimidating and turns off customers; it doesn’t normalize [cannabis].”
Normalizing cannabis extends beyond what is and isn’t included in storefronts; Jones points out that financing options at the big banks for small businesses remain virtually non-existent for cannabis retailers.
“This is a well-understood issue and has to do with the fact that most of our banks have significant U.S. operations, where cannabis is still illegal federally,” says Polous. “Their risk management sees too much risk in potentially being offside with U.S. laws.”
CANNABIS XPRESS eyes the future
Jones’ interest in cannabis began as a student at TRSM, but most of the job opportunities at the time were in medical research and cultivation. Today, his day-to-day revolves around contracts and overseeing the team that manages his network of stores.
“We’ve gone through different periods of growth. I did a lot more driving and site visits when opening stores in Ontario before slowing down. Now, the focus is New Brunswick,” he says.
With his current team, Jones estimates he can get to 20 stores, with an eye towards other eastern provinces with license frameworks similar to New Brunswick.
“I like to wear many hats, like marketing and finance. Down the line, I can sell the business. The plan was always to build, sell, then start again.”