Cannabis Retailers Partner to Launch Significant Canadian Store Expansion

By Mario Toneguzzi

Kelowna-based Compass Cannabis is joining forces with Starbuds, a leading cannabis retailer in the United States, to create a network of retail locations across Canada.

Dave Martyn, president of Compass Cannabis which was formed in March 2017, says the joint venture foresees up to 40 retail locations - and perhaps more - in Western Canada.

Compass Canada currently operates as a medical cannabis consultation company with eight locations in British Columbia and Alberta and another 10 expected to open in those two provinces by early 2018.

Martyn says the company plans to have a number of its clinics converted into retail cannabis dispensaries upon legalization of cannabis for recreational use within Canada.

“If you are a patient that’s looking to access the ACMPR (Access to Cannabis for Medical Purposes Regulations) program in Canada . . . we can provide both consultations with medical doctors as well as educational services to help you choose your provider,” says Martyn. “That business exists. That business is still growing at a very steady and healthy rate within Canada. But as we go into 2018, retail is also opening up a new avenue particularly Western Canada looks like it will be a very strong market for that business as well.”

Martyn says some of its medical locations will be converted to retail use. The company will continue with its medical program and is actually looking at an international expansion of that sector of its business.

“We will have existing medical that will remain in B.C. and Alberta and we do foresee continued growth on the medical side but the expansion to grow on the retail side I think is a little more sizeable compared to the medical market as we go into legalization and beyond,” he says.

Compass Cannabis and Starbuds plan to leverage the expertise of Starbuds, which has been operating in a mature recreational cannabis market for over four years, to become a leading distribution business within Canada’s cannabis industry.

“Really what they offer to the Canadian market that no one has is their expertise,” says Martyn. “They’ve been based in the first regulated market in North America which was in Colorado. They’ve been through legalization 1.0. They understand what does retail look like from all the important stakeholders from public safety and compliance all the way through to retail sales, services, education for customers. All the important facets. They are experts in that business. The Starbuds group is now across multiple states in the U.S. and continuing their expansion as legalized markets open up.

Compass Cannabis at hemp fest expo (September 2017). Photo: Compass Cannabis Facebook

“Within Canada the challenge for a lot of the proposed retailers is they have a vision of what they believe will work but there’s no real world execution on those ideas. So for us we wanted to partner with a group that has been through legalization. They understand what real world operations look like. And they’ve delivered real results to the tune of tens of millions of dollars of sales in regulated legalized environments.”

Martyn says the initial target is that the company will grow to 40 retail locations in Canada and it believes it can expand beyond that number. The unknown right now is the number of permits that will be provided by the governments. Each province will regulate a certain amount. He says the company anticipates a mix of both franchises and corporately-owned locations.

“Ultimately we’re going to be choosy on our real estate. We want to be in quality retail locations. We don’t want to be a side street low profile site. We want to be in with quality retail partners and those sites aren’t necessarily easy to obtain or plentiful in some markets as well,” he says.

The medical side of the business is anticipated to grow to 10 to 12 locations.

Martyn says the company will be looking to expand beyond the B.C. and Alberta borders.

“Saskatchewan released regulations (recently) that do open that up. That is a province that we’re interested in. We have applied for a retail licence in Manitoba ... But primarily we believe that the two best markets are going to be B.C. and Alberta and I certainly think in terms of positive, free market type regulation Alberta seems like it will be the leader in cannabis in terms of many sectors, not limited to retail and medical but also including licenced producers and things of that nature. Alberta has definitely set itself as the most positive framework from the business sense of expansion. Alberta is very well positioned today.”

Compass Cannabis has also entered into an agreement with the acclaimed architecture and design firm, McKinley Burkart, to provide design services for their retail locations.

Starbuds has 11 locations across Colorado and will expand to both Maryland and Massachusetts in 2018.

“This merger is representative of the future of the industry. As cannabis continues to become more widely accepted and legalized across the globe, Starbuds rises above the rest, expanding and evolving to meet the demands of the market. Starbuds’ expansion into Canada is just the beginning and we couldn’t ask for a better partner in the Canadian market,” says Brian Ruden, Starbuds’ founder and CEO.

Mario Toneguzzi, based in Calgary has 37 years of experience as a daily newspaper writer, columnist and editor. He worked for 35 years at the Calgary Herald covering sports, crime, politics, health, city and breaking news, and business. For 12 years as a business writer, his main beats were commercial and residential real estate, retail, small business and general economic news. He nows works on his own as a freelance writer and consultant in communications and media relations/training. Email: mdtoneguzzi@gmail.com. 

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