Ontario turning the right new leaf on cannabis sales

The Ford government’s new approach is an improvement

The provincial government announced Monday it’ll let businesses handle all storefront cannabis sales in Ontario. This switch from public to private-sector retailing will mean more convenience for Ontario cannabis consumers. That will help legal cannabis compete against black market products.

The Conservatives’ action on this topic is much needed. The ex-governing Liberal’s plan for a public-sector retail monopoly, Ontario Cannabis Retail Corp., was heading for disaster. OCRC expected to open only 40 outlets in 2018 and 150 by 2020 to somehow serve Ontario’s 14 million residents. By contrast, Saskatchewan has already awarded 51 retail licences to serve just one million people. Similarly, Alberta originally expected to license about 250 stores for its four million residents, but by April, it’d already received over 450 applications.

Ontario’s second problem is slow implementation. OCRC announced the first four store addresses in April but then went silent. Renovations on those sites didn’t begin until July, no other locations or cannabis supply contracts were announced and only 50 employees were hired provincewide. Yet selling was somehow supposed to begin Oct. 17.

Ontario’s new plan will focus OCRC mostly on cannabis wholesaling. Its only retailing will be online. The private sector will handle all retail stores but not until April. That delay allows for public consultations and legislative revisions.

This simplifies OCRC’s task. The change saves it the upfront costs of building a retail network from scratch. It now can focus on negotiating supply contracts and preparing its website. This change’s biggest benefit will be consumer convenience. Businesses will open far more stores than OCRC would have, with numbers depending on the government’s approach.

The Prairie Provinces provide several examples. Alberta is processing applications for individual retail licences without specific limits on total numbers. Saskatchewan is also licensing individual stores but limiting the store counts per region. Manitoba, instead, is licensing entire retail chains. It’s authorized four to open across the province. Following Saskatchewan’s rationed example would imply some 700 cannabis stores opening across Ontario in 2019. Taking Alberta’s free-market path could easily put the number over 1,000.

Those numbers may look high, but Aurora Cannabis alone is eyeing over 100 potential retail locations in Ontario. Canopy Growth’s Haiku subsidiary is already building coffee shops for later conversion to cannabis. Consider too, that Ontario has over 2,000 locations selling alcohol.

The switch to private-sector sales should also mean more competition, variety and innovation in serving consumers. Some stores may provide wide selections while others emphasize convenience.

Additionally, more stores mean more retailing jobs and more rent for commercial landlords. The increased store quantity and variety will greatly help legal cannabis compete against the illegal stuff. More consumers can go legit. (On the downside, the greater retailing power will surely drive more total consumption. And so, perhaps more problems like impaired driving.)

The delay to April will frustrate growers and consumers but may offer a silver lining. Many observers expect a temporary cannabis shortage when sales simultaneously begin across Canada in Oct. But by the time Ontario’s stores open in spring, that shortfall should become a surplus. That’ll allow better availability and lower prices.

The delayed opening will also better fit the legalization timing of cannabis edibles. Products like pot brownies and beverages will become legal sometime in 2019.

While not perfect, the government’s new approach is reasonable.

It certainly improves on the mess it inherited.