Allowing municipalities to opt out of pot shops helps black market
As municipalities across Ontario weigh whether to allow cannabis retail stores in their neighbourhoods, experts and consumer choice advocates warn that having large swaths of the province opt out of brick-andmortar pot shops could fuel the black market.
Recreational cannabis can currently only be bought online in Ontario, and municipalities have until Jan. 22 to decide if they want to host private cannabis stores, which are set to open next spring.
Under the rules laid out by the Progressive Conservative government, municipalities that opt out can change their minds down the line, but once they sign on, they can’t back out.
In recent weeks, several municipalities - both rural communities and major urban centres such as Mississauga, west of Toronto - have chosen to reject cannabis retail stores, saying they want more control over the number and location of the shops before they consider opting in. Some have also said they want more time for public consultations. This, combined with the government’s recent announcement that it will only issue 25 retail licences by April - after initially saying it would not put a cap on the number - could embolden illegal pot sellers and allow them to thrive, experts and consumer groups said.
“Unfortunately, it’s turned out to be just a comedy of errors,” said Anindya Sen, an economics professor at the University of Waterloo who specializes in the cannabis industry. “When you take (those things) together, it’s possible that despite being legalized, Ontario might become one of the biggest black markets in the world.”
While the internet remains an option, Sen said delivery hiccups and limited selection at the province’s online cannabis store also undermine efforts to lure consumers away from illegal avenues.
That sentiment was echoed by David Clement, manager of North American affairs for the Consumer Choice Center. “Community opt-outs and limited storefronts is a toxic combination which pretty much guarantees that the black market will thrive,” he said. “Capping retail outlets and having entire communities opt out makes the legal market in Ontario far less accessible.” The Ontario government has said it was capping licences in response to a national cannabis supply shortage, which it said can only be tackled by the federal government.
“Ontario intends to transition to an open allocation system as soon as supply permits,” Jesse Robichaud, a spokesman for Attorney General Caroline Mulroney, said in an email. Robichaud further said that municipalities that have not opted out will have 15 days to provide written submissions to the Alcohol and Gaming Commission of Ontario, the provincial agency overseeing retail cannabis stores, on any proposed storefront location. He would not say whether the province was open to giving municipalities more control over the site selection. The province has pledged $40 million over two years to help local governments with the costs of legalization, with each municipality receiving at least $10,000. A first payment will be issued this year on a per household basis, but a second payment doled out after the January deadline will go only to those that opt in, Robichaud said.
As of Wednesday, roughly 30 of Ontario’s 444 municipalities had formally notified the AGCO of their decision, with at least 10 opting out, according to the agency’s website.