City marijuana store: Proceed with caution

Last month, the government of Ontario passed the Cannabis Act. It gives the province a monopoly on the sale of recreational marijuana through an estimated 150 stand alone stores to be run by the new Ontario Cannabis Retail Corporation.

While the new law piggybacks on the federal decision to legalize recreational marijuana this summer, as well as a new federal-provincial revenue sharing agreement that will give the provinces and territories 75 per cent of federal marijuana revues, it has not been without controversy. In the Ontario Legislature, 27 Progressive Conservatives opposed the law, citing concerns from police associations that more financial support is required for law enforcement. While the NDP supported the law, some of its MPPs expressed concerns about the uncertainty of revenues to be provided to municipalities, as well as the small number of store fronts (40) to be opened this summer, which they see as inadequate to put a dent in the existing black market.

The extent of Ontario’s financial support for municipal costs of the administration and enforcement of recreational marijuana remains an ongoing concern. I have written in this space in 2016 and 2017 about the likely financial impact on the City of Peterborough of the federal government’s decision to legalize marijuana this summer.

Late last year, the president of the Association of Municipalities of Ontario said this: “Property tax payers should not pay for any part of the federal and provincial legalization framework. For example, one large police services board in Ontario estimates that it will require an additional $6.9 million per year to do training, purchase new roadside equipment for tests and revise new procedures alone. Applying this number to the first 14 sites selected, municipal policing costs would be about $10 million ... and that does not include the cost of any new staffing.”

Ontario has made all the right noises about compensating municipalities, but it holds all the cards and no funding agreement has been reached.

There are some Ontario municipalities such as Smiths Falls who have taken full advantage of the liberalization of marijuana laws. Medical marijuana firm Tweed – since renamed Canopy Growth – has become the world’s largest publicly traded marijuana producer and the town’s largest private-sector employer. Cobourg’s former Kraft plant is to be repurposed as a new medical marijuana facility. A new marijuana operation is moving forward in Owen Sound. Kapuskasing has entered into an agreement with a marijuana producer to create a new production facility that will provide the town with an equity position in the business.

On the other hand, a number of Ontario municipal leaders have rejected outright the idea of hosting the first wave of retail stores, including the mayors of Richmond Hill, Markham and East Gwillimbury. They cite the need for delay until questions are answered about costs, public safety, marijuana use in private homes and especially high rises, and odour complaints. The mayor of Oshawa has called on the province to defer the provincial naming of store locations.

Peterborough has been named as a community to have a new marijuana store opening on July 1 or later this summer. However, provincial representatives have indicated that they will defer locating in communities who indicate that they do not want a store until outstanding local issues are settled.

Peterborough city councillors, who have been placidly mum on the entire marijuana issue, would be wise to consider whether a request for a delay in the opening of a Peterborough store until outstanding questions are answered would help give municipalities some leverage and be the right course for this city.