Is Ontario Killing Cannabis Retail?
NOW Toronto recently published an interesting article entitled, “How Ontario is Killing Cannabis Retail”. Written by a cannabis retailer, you can debate whether or not it is a biased opinion or an insider view. However, objectively speaking, the article does raise some good points about the way the province regulates its retail cannabis industry. Although cannabis reform is happening officially only at the federal level, Ontario might do well to review, too.
The article breaks down how Ontario is killing cannabis retail into five areas:
- Ontario Cannabis Store’s virtual monopoly
- Undercutting retailers
- Hoarding high-volume product
- Pay to play
- Compliance conflict of interest
How Ontario is Killing Cannabis Retail – LPC
The first example the NOW article gives is the Ontario Cannabis Store’s (OCS) monopoly on wholesale cannabis. On the face, there is nothing unusual about the OCS in Ontario. It is set up similarly to the Liquor Control Board of Ontario (LCBO), which similarly regulates the wholesale and most retail of liquor in Ontario (excluding beer, which it shares with The Beer Store).
However, it is killing cannabis retail because the industry is run slightly differently than liquor. For one, there are 1,000+ private cannabis retailers in Ontario – and the OCS is in direct competition. Not only that, the OCS can legally do things that cannabis retailers can’t, such as cannabis delivery.
Ontario is also killing cannabis retail from small producers. The OCS regularly lists and delists cannabis products – delisting is a common practice in all retail. However, this practice affects craft cannabis (micro-cultivation) the most. Now that the OCS is the largest cannabis wholesaler in the country, its decisions have a huge impact. And its policies mean that craft cannabis is struggling to get shelf space. Pay-to-play schemes that force licensed producers to pay for shelf space also keep many craft cannabis producers out of the market.
Hoarding Cited as Another Way Ontario is Killing Cannabis Retail – LPC
The article also touches upon the OCS “hoarding” high-volume product. For example, if there is a popular cannabis product, it may be out at your local cannabis retailers, but available to order online. This is coupled with the fact that the OCS limits the amount of any one product you can bring into your store – effectively rationing supply. When the store runs out, it has to wait for the next shipment. Of course, the OCS would have no limits on this. The article doesn’t offer anything in the way of proof that this is actually happening. However, we feel the point is that the OCS system could allow such a situation, either intentionally or unintentionally. That in itself means it should be something that’s addressed.
Either way, it’s another contributing factor to how Ontario is killing cannabis retail.
The article also cites compliance conflict of interest. This theory is that the organization regulating owners and workers in the industry also benefits if cannabis retail licences fall through. Plus, the OCS (or the Ontario government) is making money from those applications: $6,000 for a cannabis retail licence and $750 for a manager’s licence, to name a couple. Again, the article does not offer any proof that the OCS is purposefully rejecting licences in order to gain more of its own cannabis retail sales. But it is a good point – an arm’s length between the two would reduce the risk of conflict of interest.
All in all, is Ontario killing cannabis retail? Given that the Ontario cannabis market is now the largest in Canada, that’s a hard argument to make. But it’s clear that whether because of growing pains or a cobbled-together cannabis market (as the article suggests), Ontario should consider a review and reform of its retail cannabis market.
Read the Full Article at NOW Toronto
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