U.S. Markets closed

Shipping container cannabis stores aim to cash in on neglected rural markets

(Yahoo Finance Canada)

The death of the retail industry may have been greatly exaggerated – but that doesn't mean the industry isn't currently going through major disruptive and fundamental changes. For this special series, Yahoo Finance Canada will look at how the retail scene is developing, what companies are doing to adapt, and what could come next. Click the image above to see our full coverage of what the future holds for the Canadian and global retail scene.

Cannabis retail is in its infancy, but that hasn’t stopped one startup from thumbing its nose at the status quo.

Toronto-based POPCANN is betting on pop-up cannabis stores, as the name implies. The company is looking to deploy mobile, shipping container-based retail hubs into rural communities and regions currently underserved by brick-and-mortar shops.

Co-founders Mike Girgis and Jake Neiman also are also eyeing events like music festivals as venues for temporary locations if cannabis is allowed to be sold under Special Occasion Permits like alcohol.

The pair have developed a prototype POPCANN store they say is ready for market once a license can be secured. The retrofitted shipping container currently sits in a fenced off parking lot near the company’s studio in Toronto’s west end.

The retrofitted shipping container currently sits in a fenced off parking lot near the company’s studio in Toronto’s west end. (Yahoo Finance Canada)

‘Quick Service Cannabis’

Future customers will approach POPCANN stores on wooden ramps enabling full accessibility. The container’s large steel doors display age and identification instructions. The entrance leads into a small room where security personnel can check IDs.

The interior is modern and crisp. Today, projectors on the ceiling cast images of lakes and mountain ranges onto the walls, but the graphics can be customized to suit any occasion.

Deeper into the container, skylights and floor-to-ceiling windows let in plenty of natural light through one-way glass designed to keep transactions out of public view.

Customers have the option of browsing on tablets or approaching a clerk behind a counter underneath screens displaying product and price information. Behind the heavy steel countertop, a secure set of drawers is ready to be stocked with cannabis.

This particular model comes with an open exterior window that could serve as a drive-thru in jurisdictions where those type of sales are allowed.

Girgis and Neiman explain POPCANN stores can be securely sealed, like a shipping container. It can also be moved to anywhere in the world, like a shipping container.

“While the Fire & Flower's and Tweeds of the world are spending big money to open up massive retail stores in major metropolitan areas, were focused on the smaller towns and communities. Five thousand, 8,000, 20,000 population markets,” Neiman told Yahoo Finance Canada on Tuesday.

“Our focus is to enable people to access cannabis very quickly. It's more reflective of a Beers Store scenario where you go in, order the beer you want, pick it up and go.”

The concept takes aim at the notion of cannabis consumers wanting luxurious, in-depth retail experiences where they smell terpenes through jars and spend time learning about the product from experts.

In Toronto, that assumption has seen Edmonton-based retail chain Fire & Flower Holdings Corp. (FAF.V) place a big bet on leasing a ritzy, yet-to-be-opened Yorkville location. Tokyo Smoke, a retail arm of cannabis giant Canopy Growth Corp. (WEED.TO) has opened up shop inside the former HMV flagship store on Yonge Street in what is expected to become Canada’s largest brick-and-mortar cannabis store once it‘s fully built out.

POPCANN’s stores require a far smaller investment by comparison. They can also be easily redeployed if a location is not suitable, and a license for another address can be secured through provincial regulators.

“There is nothing better in terms of logistics,” Neiman said. “Eighteen-wheelers are designed to transport shipping containers. Cranes and forklifts are designed to move them around and position them in place.”

POPCANN has an agreement with the self-storage company StorageVault Canada Inc. (SVI.V) to operate on 170 of its properties across Canada upon securing licenses.

The company expects to make its first sale this year, and announce additional partnerships in the coming weeks. Girgis and Neiman said they are also in private talks with major U.S. cannabis retailers to use their concept as satellite extensions of existing stores.

POPCANN has patents pending related to the prefabricated design and layout of its stores, as well as a trademark filed for “Quick Service Cannabis.”

The stores are designed to expand using additional shipping containers. Girgis and Neiman said they’re built to be stacked, and have multi-storey designs on display on their studio next to others that use solar panels to charge an internal power supply. There’s even a design for a cannabis vending machine that uses biometric technology to match a human face to a piece of government identification.

Rural revenue opportunity

The idea is rapidly bring physical cannabis retail into the scores of communities where the nearest conventional store is hours away. In five years time, Girgis and Neiman expect to have a network of a few hundred POPCANN stores in rural and remote markets.

They also plan to introduce a franchise model where operators pay them royalties.

Plans to roll out true pop-up cannabis stores at music festivals and outdoor events are held back by regulations that don’t yet exist.

Brian Gray, a spokesperson for the Ministry of the Attorney General, told Yahoo Canada Finance in an email that there are currently no plans in place to allow Special Occasion Permits for recreational cannabis in Ontario.

Nick Pateras, vice-president of strategy for Lift & Co. (LIFT.V), said he doesn't see temporary sales licences being issued any time in the near future.

“It's an interesting idea, and perhaps they know something I don't, but I'd not expect to see this in market in 2019,” he said.

Girgis suggests the versatility of his go-anywhere stores could help provinces move things along.

“If they (provinces) want to experiment with Special Occasion Permits and pick events or festivals … we can enable them to do tests,” he said. “We are working very closely with them to make sure that we comply, and that we bring solutions forward that they are looking for. They are certainly impressed our innovation.”

Click to subscribe