Shopify 'confident' on pot e-commerce because 'cannabis isn't Kylie Cosmetics'

Shopify Inc.'s vice president is "very confident" that the first day of recreational pot sales in Canada will be smooth on websites backed by its software because "cannabis isn't Kylie Cosmetics."

While pot demand may be high on Oct. 17, it is unlikely to exceed the tens of thousands of orders of Lip Kits per minute on Kylie Jenner's company website, which uses Shopify, said the Ottawa-based e-commerce company's vice president and general manager Loren Padelford.

"These stores are going to get hit hard, and there's going to be a lot of people browsing... If this is bigger than a Kylie Lip Kit drop, I think that's going to surprise everybody," he said.

When Canada legalizes cannabis for adult use on Oct. 17, age of majority consumers will be able to purchase certain marijuana products in some stores, but the vast majority of sales will be online.

For example, Ontario will not have any brick-and-mortar cannabis retail stores until next spring after the Progressive Conservative government changed the distribution model from government-run outlets to private retailers. In British Columbia, there will only be one physical store ready in Kamloops, B.C.

Ontario, British Columbia, Newfoundland and Prince Edward Island — where online sales of cannabis will go through government portals — as well as some private retailers in other provinces, are using Shopify for their e-commerce websites.

Months of testing, mock checkouts

The company has spent months preparing for the first day of legal pot for adult use with the provincial entities and retailers using its e-commerce software, Padelford said.

The technology company has conducted a "tremendous" amount of testing on these cannabis stores, including mock checkouts, and will continue preparing until the sites go live at 12:01 a.m.

The portals will be largely similar to online shopping for other products, but there will be age-verification components and the cannabis sales portals will have educational information for consumers, he said.

Also, similar to online sales of alcohol in some provinces, there will be identification-checking and signatures needed upon delivery, and no unattended packages will be left at buyers' doors.

Encryption, data storage requirements

Protocols will also be in place to protect buyers' personal data, such as encryption and data storage requirements depending on the province's privacy law, he added.

"There's lots of attention being paid to the security of the data and ensuring that people's private information isn't shareable or easily accessed," Padelford said.

Data privacy concerns in connection with cannabis have been heightened in light of recent comments from the U.S. Customs and Border Protection agency that marijuana users as well as those who work in the legal industry may face additional scrutiny when heading south of the border, where the drug remains federally illegal.

Meanwhile, the cannabis industry globally represents an opportunity for Shopify, as more countries warm up to the drug for medicinal and recreational purposes.

"This is really a global story right now. And we're already working with international customers like Jamaica... We're going to be excited on the 17th, but that's just the beginning of how this market will go. We really think Canada is going to be the benchmark for the world."