Some 150,000 or­ders were placed with the On­tario Cannabis Store dur­ing the first week of le­gal­iza­tion, but only a frac­tion have been filled. What’s the deal?

NOW Magazine - - NEWSFRONT - By KIERAN DELAMONT News@now­toronto.com | @now­toronto

You may have no­ticed the lack of clouds of pot smoke waft­ing over ma­jor cities amidst the post-le­gal­iza­tion reverie in On­tario. That’s be­cause street-level dis­pen­saries won’t be open un­til next spring, and few peo­ple in On­tario have had their weed de­liv­ered through the On­tario Cannabis Store (OCS) web­site, the only le­gal source avail­able right now. Al­though some 150,000 or­ders were placed on­line in the first week of le­gal­iza­tion, only a frac­tion have ac­tu­ally made it to cus­tomers. What’s the deal?


The most ob­vi­ous ex­pla­na­tion for the short­age is that it’s just hard to ship 150,000 or­ders, es­pe­cially when you’ve never done it be­fore. We’re ac­cus­tomed to think­ing of ship­ping as a cal­cu­lated, ma­chine-per­fected op­er­a­tion, and to a de­gree it is, but the OCS says it’s still try­ing to fig­ure out its distri­bu­tion sys­tem.

“Ef­fi­cien­cies and ways to fur­ther ex­pand ca­pac­ity at the OCS distri­bu­tion fa­cil­ity con­tinue to be made to help meet the mas­sive de­mand,” says OCS pres­i­dent Pa­trick Ford in a state­ment re­leased Sun­day, Oc­to­ber 28.

These “hic­cups” in the early-go­ing are noth­ing to stress out about, says Deepak Anand, VP of busi­ness de­vel­op­ment and gov­ern­ment re­la­tions at cannabis con­sult­ing firm Cannabis Com­pli­ance Inc. Anand says ev­ery­one from in­dus­try to re­tail­ers to con­sumers for­got about the fact that “in pretty much ev­ery state that’s le­gal­ized, this has hap­pened,” with line­ups in Colorado, Ore­gon, Wash­ing­ton and Cal­i­for­nia. “Un­for­tu­nately, I don’t think a lot of at­ten­tion was paid to that.”


In­dus­try ex­pert Trina Fraser, a lawyer at the Ot­tawa law firm Brazeau Seller, sug­gests that the tim­ing of le­gal­iza­tion – only a few months af­ter a pro­vin­cial elec­tion that was all about clean­ing house – led to a lack of readi­ness.

She sug­gests that the out­go­ing Lib­er­als “weren’t go­ing out of their way” to make sure the sys­tem was set up to run smoothly. “In the months lead­ing up to the elec­tion, we just stopped hear­ing up­dates,” she notes.

On­tario was sup­posed to have 40 gov­ern­ment stores, but by the time the Lib­er­als were voted out, ten­ta­tive plans had only been re­leased for four. The Ford gov­ern­ment ex­ac­er­bated the sit­u­a­tion by de­cid­ing not to fol­low through on the Lib­eral gov­ern­ment’s plans to sell through LCBO-run stores, adding to the frus­tra­tion of On­tar­i­ans, who will now have to wait un­til April for pri­vate stores to open. Street-level dis­pen­saries op­er­at­ing in the grey area be­fore le­gal­iza­tion have mostly closed up shop, fear­ing stiff fines an­nounced by the Ford gov­ern­ment.

“Pol­i­tics cer­tainly play a role in this,” says Anand. “As flawed as the Wynne gov­ern­ment pro­posal was, there were

still peo­ple hired to run those stores,” he says. “Even if On­tario had those few stores that were planned, that would have helped.”


The OCS has shifted at least some of the blame to Canada Post, cit­ing the “on­go­ing im­pacts of the Canada Post labour dis­rup­tions” in the form of ro­tat­ing strikes that have slowed things down “as the back­log… con­tin­ues to pile up.”

While it is true that em­ploy­ees in the GTA did par­tic­i­pate in a strike ac­tion once last week, Fraser doesn’t buy that it’s what’s caus­ing the en­tire de­lay. “I was dis­ap­pointed that they were try­ing to cast the blame on Canada Post and the labour dis­pute is­sues,” she says. “A bet­ter ap­proach would be to say we just weren’t ready for this kind of vol­ume. The world is gen­er­ally quite for­giv­ing if you’re will­ing to take re­spon­si­bil­ity for your mis­takes.”

A Canada Post spokesper­son says they are “at­tempt­ing to min­i­mize the im­pact of the labour ac­tion on cus­tomers.” Even the con­ser­va­tive think tank C.D. Howe In­sti­tute agrees that it’s hard to say how much of the blame Canada Post ac­tu­ally de­serves.

But Anand ar­gues the gov­ern­ment should have had al­ter­nate de­liv­ery mech­a­nisms in place. “On­tario knew very early on that it was bank­ing on e-com­merce,” he says.


If you be­lieve some of the con­spir­acy the­o­ries on­line, the OCS’s fail­ure to launch could be part of a larger plot by the Ford gov­ern­ment to semi-in­ten­tion­ally tank the gov­ern­ment’s out­let for sell­ing cannabis in or­der to let the pri­vate market, when it is in­tro­duced, have carte blanche over the multi-bil­lion-dol­lar in­dus­try. This is not that hard to be­lieve, al­though the gov­ern­ment specif­i­cally chose to be re­spon­si­ble for on­line sales.

“Ev­ery­thing that’s come out of this gov­ern­ment has come out of an in­ten­tion to main­tain a mo­nop­oly on on­line sales,” says Fraser. “It would be coun­ter­in­tu­itive for them to want to have a mo­nop­oly and run it in­ten- tion­ally poorly.”

But what ex­actly do we mean when we say the sys­tem is work­ing poorly? If your met­ric is how many peo­ple have the weed that they’ve paid for, then, yes, the sys­tem isn’t do­ing well. But if the met­ric is how many peo­ple are try­ing to buy weed from you, then the prob­lem the OCS is ex­pe­ri­enc­ing is symp­to­matic of too much suc­cess (i.e., too many peo­ple try­ing to buy weed legally), not too much fail­ure.

It would’ve been a worse fail­ure, if you think about it, had the OCS had few or­ders. That would mean more peo­ple were stick­ing with their il­licit market dealer.

“If any­thing, I’m quite pleased that the de­mand for le­gal cannabis prod­ucts has been so sig­nif­i­cant,” says Fraser.


Min­is­ter of Fi­nance Vic Fedeli has blamed drug deal­ers. He sug­gested to re­porters at Queen’s Park last week that “the crim­i­nals lied” to the gov­ern­ment about what de­mand would look like.

“All of the cannabis store as­sump­tions were made… based on il­le­gal data, il­le­gal in­for­ma­tion from il­le­gal sales,” he said. “And guess what? The crim­i­nals lied to us. They did not prop­erly re­port their sales, if you can imag­ine that hap­pen­ing.”

Fedeli’s bizarre ex­pla­na­tion only led to more ques­tions: had the PC gov­ern­ment un­der­taken a con­sul­ta­tion process with black-market deal­ers? Why was the gov­ern­ment trust­ing the word of peo­ple who it calls “crim­i­nals?” Fedeli did not re­spond to NOW’s re­quest for clar­i­fi­ca­tion.

Econ­o­mist Ros­alie Wy­onch of the C.D. Howe In­sti­tute sug­gests Fedeli is blow­ing smoke. “Just look­ing at the On­tario prices and de­mand from Sta­tis­tics Canada es­ti­mates, I re­ally don’t think that the de­mand is that much higher,” she says.

In­deed. The prob­lem for the OCS isn’t sup­ply, but de­liv­ery. Though in­ven­to­ries were def­i­nitely thinned out, On­tario hasn’t run out of weed the same way Que­bec has, for in­stance.

Over­all, though, Wy­onch says that peo­ple shouldn’t lose their heads right away. “This is a new market, and there are go­ing to be grow­ing pains.”

“As flawed as the Wynne gov­ern­ment pro­posal was, if On­tario had opened the few stores that were planned, that would have helped.”

On­tario was sup­posed to have 40 gov­ern­ment cannabis stores in place for le­gal­iza­tion.

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