Ontario’s legal cannabis market is moving more product than ever, but selling it is becoming a losing game for many shop owners.
New data from the Ontario Cannabis Store’s 2024 By the Numbers report shows a record-breaking $2.15 billion in retail sales, an 11% increase from 2023, with nearly 409 million grams of tested flower and pre-rolls sold.
Yet behind that growth is a churn that has rattled the province’s once-booming dispensary scene.
In 2024, the OCS onboarded 234 new stores, a 15% drop from 2023, while offboarding 214, a 52% spike in closures. Toronto alone lost 43 dispensaries, an 11% decline in a city once considered the capital of Canada’s cannabis retail revolution.
“Cannabis dispensaries face the same economic pressures as other brick-and-mortar retailers, plus additional obstacles specific to our industry,” said Ayman Makawy, franchise owner of Spiritleaf Ancaster and long-time cannabis advocate. “No big banks want to work with us. That makes it nearly impossible to get small-business loans or even basic payroll software support that other businesses take for granted.”
Makawy says government programs that cushion other small businesses—grants, low-interest financing, tax credits—rarely extend to cannabis operators.
“That’s a huge disadvantage when economic headwinds hit,” he said.
Growth Without Winners
According to the OCS, Ontario ended 2024 with 1,720 authorized cannabis stores, up only six from the year before.
It’s a stalled map: sales are climbing, but storefronts are flat or folding.
That contradiction mirrors earlier reporting from StratCann, which found 2023 sales near $1.94 billion (+12%) even as 142 stores closed, up from 114 in 2022. In the same period, new authorizations plunged from 497 to 276.
It’s a treadmill effect: lots of movement, little progress.
The Market That Won’t Go Away
While legitimate retailers wrestle with financing gaps and shrinking margins, the unregulated market continues to thrive in the background.
The Ontario Provincial Police’s cannabis enforcement team reported in 2021 that it had shut down 78 illegal storefronts and seized $178 million in unregulated product over two years. Operators say that the cat-and-mouse dynamic remains largely unchanged.
“For every illegal shop that gets closed, another pops up,” said Makawy. “We’re trying to build a regulated system that keeps consumers safe, but it’s hard to compete with someone who pays no tax and faces no oversight.”
Rather than taking shots at the underground trade, many retailers see it as proof of policy failure: a signal that Canada’s legal system remains too bureaucratic, too expensive, and too slow to evolve.
Toronto’s Pullback
The OCS report shows a surprising shift: the Greater Toronto Area gained 40 stores, but Toronto proper lost 43. It suggests suburban markets may now be outperforming city centers, where rents are higher and competition is brutal.
Wholesale pricing adds more pressure. The average wholesale price for dried flower fell to $3.81 a gram, down from $4.05 the year before, tightening margins even further. Lower prices help consumers but squeeze operators who already lack access to capital and government support.
Where It’s Headed
Ontario’s legalization experiment has made clear progress. Consumer confidence is growing: 72% of Ontarians now say the legal market is better than the underground one, and 70% trust its quality and consistency.
But the province’s retail backbone (independent shop owners) is still burdened by policies that treat cannabis like a pariah business.
Until banking rules and small-business programs catch up with the reality of legalization, Canada’s largest cannabis market will keep moving record amounts of weed while offering fewer doors to walk through.
Photo: Shutterstock
