Can 7-Eleven's Big Gulp Change The Marijuana World? Maybe

This article was originally published on The Fresh Toast and appears here with permission.

Convenience store operators have taken notice of the Gallop poll last August about cannabis use surpassing cigarettes….and it has gotten them thinking more about the expansion of revenue potential. This could be HUGE as they sell over $24 billion annually in beer!

Convenience stores have already led the way in trends like lottery tickets, Airborne, and, of course, the Big Gulp. Coke suggested to 7-Eleven in 1976 they use an unheard-of 32-ounce cup to sell fountain drinks. It was a big leap from the then-current 20 oz but it turned into such a money maker, auto manufacturers had to change the design of cup holders.  Big Gulp helps turn nice profits for Coke and for convenience stores.

Again, Canada Leads The Way

Convenience store partners around marijuana kicked off in 2018 when Canada Couche-Tard, parent of Circle K, entered into a venture in 2019 with Toronto-based Fire & Flower, an adult-use cannabis retailer with more than 100 corporate-owned stores. ACT agreed to provide Fire & Flower with capital to accelerate its expansion strategy.

The alliance has since expanded to include the opening of seven Circle K co-located cannabis stores in Canada’s provinces of Alberta and Ontario, operating under Fire & Flower corporate or technology licensing business models.

The companies intend to pursue more opportunities to expand the Circle K co-located store program. “Couche-Tard continues to see promise in the cannabis market and is committed to learning more about the space as it evolves both in Canada and beyond,” said Alex Miller, the retailer’s executive vice president of operations for North America. Couche-Tard believes it is a natural extension to pair its convenient shopper experience with the growing demand for cannabis products, he added.

US Movement

Convenience is a strong channel in retail, and people want more access to cannabis,” said Ben Kovler, founder, chairman and CEO of Green Thumb. “The new RISE Express model is a huge step forward in making it easier and more efficient for patients to purchase high-quality cannabis as part of their everyday routine when stopping by their local convenience store.”

This year is also expected to see Jacksons Food Stores enter the cannabis market. Jackson BevCo, which is owned by Boise, Idaho-based Jacksons Food Stores, is teaming up with CordovaCann Corp., a cannabis-focused consumer products and retail company based in Toronto. A managed services agreement (MSA) between the companies will facilitate the opening of cannabis retail stores inside or adjacent to c-stores operated by Jackson BevCo, which has 65 Big Smoke and Tobacco Connection stores in the western U.S.

The cannabis retail stores opened under the MSA will be owned and operated by Jacksons, which will pay Cordova a royalty based on a percentage of revenues generated. The first of these stores are slated to launch in Washington, Oregon and Arizona.

“Cannabis is clearly an opportunity for c-stores at some point, but we are still five years to a decade out,” Alex Morrison, senior business analyst for Cadent Consulting Group predicted. When the time comes, Morrison does believe that cannabis will have the most success in the convenience channel because it is where most people already go to make their age-restricted purchases, including tobacco, alcohol and lottery.

With a total size in the US and Canada of $671+ billion in sales and over 155,000 convenience stores across the country, the market potential is HUGE!