The Real Deal New York

RioCan REIT expects a “gold rush” once Canada legalizes pot this fall

“With retail struggling, it’s good to have any sort of growth opportunities.”
August 11, 2018 02:00PM

(Credit: James St. John)

RioCan REIT is expecting a ganja “gold rush” to hit Canada’s retail markets in a matter of weeks.

The rosy outlook comes after Ontario’s premier Doug Ford said he was considering changing the province’s approach to distributing marijuana. The previous liberal government announced storefronts selling pot would be managed by government entities just as alcohol is sold in Ontario, however Ford has opened up the possibility of allowing private stores to enter the space, according to Bloomberg.

“There’s no question that whatever rules finally come down, they’re not going to want four cannabis stores at one corner — there’s going to be some control over that,” RioCan CEO Edward Sonshine told analysts on a recent earnings call, as reported by Bloomberg. As a result, retailers will be trying to “stake a claim at the best locations, many of which we own.”

Estimates by JLL say Canada’s burgeoning pot industry will require over 8 million square feet worth of industrial space by 2020. Sonshine predicts 200,000 square feet will be needed in retail.

Edward Jones & Co. Matt Kopsky says he’s seen a similar “gold rush” effect with cannabis occur in Colorado and expects Canada’s legalization will further what is already “a growing segment within the retail market.”

“With retail struggling, it’s good to have any sort of growth opportunities,” he added to Bloomberg. (The analyst has a buy rating on RioCan.) [Bloomberg]Erin Hudson