October’s legalization of recreational cannabis is expected to bring higher demand and rising rents for retail space according to a leading REIT.
RioCan’s CEO Edward Sonshine said on an earnings call this week that the country’s biggest markets could see a spike in the retail CRE market with cannabis retailers seeking prime locations for their burgeoning ventures.
With rules expected to limit how many pot stores will be able to open in each area, the market will be open to strong competition where multiple operators are vying for space.
Earlier this year CIBC forecast that the recreational cannabis market would be worth $6.5 billion in retail sales by 2020, larger than the spirits market and heading towards the size of the wine sector.
While the shape of the retail market is yet to be fully decided, Ontario this week announced that it will allow a private retail sales model by April 2019, a relief for the sector which was facing a government-run monopoly in the large market.