Ontario to privatize cannabis retail

Ontario to privatize cannabis retail

By Manisha Krishnan and Rachel Browne Jul 26, 2018

The Ontario government will allow legal cannabis to be sold in private stores, a reversal of the previous Liberal government’s decision to give the provincial liquor regulator exclusive rights over retail sales.

Under former premier Kathleen Wynne, the Liquor Control Board of Ontario was to have a monopoly of weed sales in the province, with 40 stores to open in 2018, followed by 80 in 2019 and 150 by 2020.

Sources told VICE News that Premier Doug Ford’s government is planning to overturn that decision, allowing for private retailers to sell weed in Ontario. Industry insiders wrote on social media on Thursday that the Ontario government will officially make the announcement on July 31, and that the province will still oversee the wholesale distribution of the product and online sales.

By Manisha Krishnan and Rachel Browne Jul 26, 2018

The Ontario government will allow legal cannabis to be sold in private stores, a reversal of the previous Liberal government’s decision to give the provincial liquor regulator exclusive rights over retail sales.

Under former premier Kathleen Wynne, the Liquor Control Board of Ontario was to have a monopoly of weed sales in the province, with 40 stores to open in 2018, followed by 80 in 2019 and 150 by 2020.

Sources told VICE News that Premier Doug Ford’s government is planning to overturn that decision, allowing for private retailers to sell weed in Ontario. Industry insiders wrote on social media on Thursday that the Ontario government will officially make the announcement on July 31, and that the province will still oversee the wholesale distribution of the product and online sales.

“I have on good authority that private retail will be the future of cannabis sales in Ontario. We won,” said Jack Lloyd, a prominent cannabis lawyer who has represented weed dispensaries fighting trafficking charges in court. Lloyd is hopeful this will mean black market dispensaries will now have the option to get into the legal market.

“If Doug Ford is serious about treating Ontarians fairly and Ontario taxpayers fairly then he will license storefront dispensaries.”

 

However Lloyd said he’s concerned that the government will only license chains like Shoppers Drug Mart and Sobeys.

“There’s a chance that it just goes to big business whose operational demands mean that they can’t satisfy the market. Only local businesses can solve this problem,” he said.

“It will save the province of Ontario billions of dollars if they license the existing dispensaries.”

Lloyd added police in the province should immediately stop all cannabis-related prosecutions.

Clint Younge, the CEO of MMJ Canada, a national chain of cannabis dispensaries, wrote on Facebook on Thursday evening: “This is the best bloody news ever for this province.”

“This is a very emotional day for me as I have had so many sleepless nights, we stood through raids, we never broke standard and we always tried to set the bar,” he wrote. “The pressure nearly beat me a few times, It feels nice to see this all paying off because I love and bleed MMJ Canada but it feels even nicer to know all my staff will be protected.”

A Ford spokesperson read, but did not immediately respond to emailed requests for comment from VICE News on Thursday evening.

Tyler James, a director at Sensible Ontario, a cannabis advocacy group who used to work at an Eden cannabis dispensary in Toronto before the Toronto Police cracked down on illegal cannabis shops, told VICE News on Thursday that he was pleased by the news of privatization in Ontario. But he’s looking ahead to the future with caution.

“I would say it’s bittersweet. I was quite taken aback by it, but we still don’t know exactly what is going to be announced,” James said. He hopes the province makes the application process for retailers as open as possible, to include those who were previously left out of the sales regime.

“I’m hoping they let the market dictate who are the best operators,” he said, and this should include people from marginalized and low income communities.

The Liberals’ plan to allow for a government monopoly was heavily criticized by those who were hoping to see a free market for weed in Ontario. Others noted that having a 40-store rollout to service a province of 14 million would not meet demand. Toronto alone has more than 80 dispensaries currently operating.

“I am so excited to apply and be able to sell cannabis. I’ve been waiting 18 years,” said Abi Roach, owner of Hotbox Lounge, a longstanding cannabis lounge in Kensington Market. Roach is also a member of the city’s Cannabis Friendly Business Association, which has been pushing the municipal politicians to give business licences to local cannabis businesses.

“I think the plan from the jump was ridiculous and when Doug Ford was elected, he knew it wasn’t going to work,” she added. Roach said Ford’s decision to allow liquor sales in corner stores gave her hope that he would also privatize weed.

“There’s no reason for the government to have a monopoly on anything but roads and education.”

Deepak Anand, vice president of government relations at Cannabis Compliance Inc., told VICE News on Thursday evening that he had heard rumblings about privatization over the last week.

The private model is going to do well in Ontario,” Anand said. “This is great news for small players as well … the fact that you’re not depending on the government monopoly to build this out.”

“But the devil is always in the details in terms of how the government will go about licensing it,” he added. Anand said he will be paying close attention to what mechanisms will be in place when it comes to safeguarding small businesses.

“And I’m concerned about the taxes and how high the wholesale markup is going to be.”

Anand added that he will be looking to learn more about how many deals the Ontario government has reached with licensed producers for recreational cannabis sales, how many kilograms of cannabis those deals will amount to, and whether it will all be enough to meet the demand in the province.

Chuck Rifici, founder of Nesta, a private equity firm that invests in weed companies, and co-founder of Tweed told VICE News this decision will help get rid of the black market.

“This should accelerate the transition from black market to regulated sales resulting in increased tax revenue for the province while forgoing most of the infrastructure costs of setting up their own retail footprint,” he said.

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