On Robson Street in downtown Vancouver, British Columbia, just a couple of city blocks away from a Tiffany & Co. jeweler, a Coach purse retailer, and one of Canada’s largest Lululemon stores, sits a dispensary with a brightly lit sign that spells out: Inspired Cannabis. That storefront is Inspired Cannabis Co.’s newest shop and its flagship location, home to the company’s “House of Brands.” 

Looking around the store, Jesse Dhami, co-founder and president of Inspired Cannabis, still had a hard time wrapping his head around the transformation the space went through as he remembered exposed electrical wiring and gas lines when Inspired first took over the space.

“We wanted our windows open because 50,000 people walk here every day on Robson,” Dhami told Cannabis Business Executive. “A lot of these shoppers don’t necessarily live in this area. They might live in Surrey [a Vancouver suburb that does not allow retail cannabis stores] and they come through on the weekend to shop. If my windows are blocked and obscured, that new customer is not coming into my store.”

At this flagship, Canadian cannabis companies like Pure Sunfarms, Canopy Growth, Tilray, Cake & Caviar, and others have rooms or displays to showcase their brands’ voices–something Dhami and the Inspired Cannabis Co.’s management team felt was missing from the marketplace. “We did not want to be a traditional cannabis store,” Dhami explained. “The goal of this thing was to focus on the brands, focus on the customer, focus on the education, and teach, because we’re still a young industry.”

The downtown Vancouver location is one of 16 dispensaries the company operates across three provinces (B.C., Ontario, and Saskatchewan), and while the “House of Brands” is the pinnacle of the company’s approach to cannabis retail, it is by no means unique to that location.

Location, Location, Location

A chartered accountant from a family of real estate developers, Dhami never intended to operate a cannabis business. But in December 2019, his wife’s cousin approached him about partnering to open a dispensary. Dhami was hesitant at first–he had a sense of how difficult being an operator was thanks to some investments he made in some publicly traded cannabis companies. Despite those hesitations, the duo visited a potential retail location in Courtenay, B.C., on Vancouver Island with the understanding that it was an exploratory visit and nothing would come of it.

By May 2020, Dhami, leveraging his background in real estate (his family has built nearly 300 homes on the west side of Vancouver, he told Cannabis Business Executive in an interview) and his partner’s experience owning and operating eight pharmacies in the Vancouver area, opened the company’s first dispensary at that Courtenay location. “When we opened this store, it was like we drew it on the back of a napkin, tried to figure out the design, and we opened it,” Dhami said. 

Launching a dispensary in Courtenay within six months of committing to not making a hasty decision was the only catalyst Inspired needed. “Telling my friends I have a store in Courtenay, that’s not really going to mean something. We needed something in Vancouver,” Dhami remembered thinking at the time.

Later in 2020, Inspired opened its first Vancouver store–also on Robson Street, but in Vancouver’s West End neighborhood. That second store launch precipitated a flurry of business development activity. During the thick of the COVID-19 pandemic in 2021, Inspired entered the highly competitive Ontario market, taking a different approach than most dispensary chains and forgoing the larger markets. “We knew [we had to] stay out of … Toronto. We knew we needed to get into these smaller towns.”

Inspired has locations in Cobourg, Komoka, Gloucester, Kingston, Orleans, Welland, and St. Catherines, Ontario–all well outside the Greater Toronto Area. The company’s Saskatchewan stores are in Saskatoon and Regina, both larger communities, but are strategically located in busy malls. The Saskatoon location is flanked by a Shoppers Drug Mart (a national Canadian pharmacy chain) and the Regina store neighbors a Great Canadian Superstore.

 “Cannabis is all about convenience…. If you are near the convenience points–grocery, and alcohol [stores]–you’ll be successful,” Dhami explained. “With all of our stores, location matters. It’s the number one thing that we look at…Forget about the rent, we’ll figure that out after.”

On the rent front, a storefront like the downtown Vancouver store would normally be out-of-reach for a company without venture capital backing, but Inspired found the location and signed the lease near the peak of the COVID-19 quarantine period when approximately half of the storefronts on Robson Street were vacant. Dhami said that, as a result, the company was “able to secure a fair market rate” for a standard 5-year commercial lease.

Inspiring Conversation

Inside the stores, Inspired tries to offer a more casual retail experience. The flagship store is free-from digital menu displays (as are most other locations), and there is no cash register counter to which customers are funneled. Instead, budtenders typically walk the floor and spark up conversations, much like at an art gallery.

Those conversations are made much easier at the flagship store. “Brand awareness has not been a priority to the consumer,” said James Nichol, senior director of retail at Inspired Cannabis. “We saw this [House of Brands] as an opportunity to present the brands in a very positive way, to give … the brands [the ability] to tell their own story.”

At any given time, each store carries between 300 and 400 SKUs. Product life cycles are very fast in the young Canadian market, Nichol noted, with purchasing decisions informed by individual store feedback and consumer data. Inspired isn’t seeing any noticeable product trend differences across the markets in which the business operates. Instead, the biggest difference is basket size.

“The Ontario consumer overall tends to spend a little bit more per transaction,” Nichol said–about $10-$15 more compared to Western Canada. “An Ontario customer will come and buy three different eighths in one purchase. The B.C. consumer probably would lean a little bit more toward a value [product], like an ounce package, as opposed to buying in those multiple formats. … The visit frequency is probably higher in British Columbia than in Eastern Canada.”

One product category that he’s seeing expanding sales in is infused pre-rolls. As consumers chase after an ever-higher THC figure, infused pre-rolls are interesting options at decent price points, and are easier to use than standard inhalable concentrates, he notes. Conversely, wellness products that were launched in the last 18 months like topicals and bath bombs seem to be dropping in popularity across Canada.

Inspired has managed to navigate the industry’s ebbs and flows well. Dhami, who also is an Advisory Board Member for the Independent Retail Cannabis Collective, a trade association promoting access to financial resources and professional education and development for independent cannabis dispensaries, said when adult-use sales began, stores were generating $2.5 million in revenue, on average. But as new stores increased competition and prices have compressed, “that number has now dropped to just under $1 million,” he said.

“We are fortunate enough, given our location and given what we’ve been able to do, that we have not dropped significantly. [Our revenues] are above the national average, and we are in a place where we’re profitable and very solid.”

The View From Up Here

There are lessons that American operators can take away from how the Canadian adult-use market rolled out, Dhami said, especially when it comes to these price correction phases. “When legalization happened here, everyone rushed in. People paid triple-premium rents. They didn’t care about location. They thought it was gonna be a green rush,” he said.

Dhami said retailers need to enter a market with “eyes open and knowing your market, knowing your locations, knowing your numbers, because ultimately this is going to level out. So you might be the first to market, you might make a lot of money initially, but when the market levels out, are you still going to be standing?

“That’s exactly what happened here. Everyone went out and took all these leases on. They were opening stores, not managing finances, and now it’s crumbled,” he added. “Greed really caused a lot of issues in this industry.”

Nichol noted that restrictions on how cannabis can be marketed and retailed in Canada have handcuffed both brands and dispensaries, and have put unnecessary barriers in the way of customers’ convenience–another potential lesson for Canada’s southern neighbor. 

“I do understand that it takes time for regulations to adapt, but I feel [regulators] went very heavy-handed when it came to trying to keep minors away from cannabis,” Nicol said. “It’s a little ridiculous that a woman with her stroller who’s going down Robson Street, who wants to pop in and grab her CBD gummy can’t because she’s got her child with her.”

These challenges, amongst others, have made making a long-term profit in the Canadian cannabis retail industry a near-Sisyphean task for many operators. With that context, Dhami said he expects to see retailers drop out of the marketplace.

“I think there’ll be a 40% consolidation of the retail side,” Dhami said. “A lot of companies are going under. We’re seeing deals get sent to us weekly from people who are trying to get out now.”

While Inspired is considering acquisition opportunities, Dhami shared that “a lot of owners believe the license has value, and even if the store is losing money, the license has value. … That’s why a lot of these deals right now don’t make sense. But over the next 12 to 18 months, I think they’re gonna start making sense.”

Photos by Brian MacIver