Ford’s pot plan may go up in smoke
Ontario trusting the private sector to do the right thing on marijuana
In a summertime haze of delusion and confusion, Doug Ford has suddenly found clarity on cannabis.
His governing Progressive Conservatives, after lagging so long on decriminalization, are leading the charge on distribution. The premier has seen the light on letting people light up, handing off storefront marijuana marketing to the private sector.
While Ford’s botched buck-a-beer gambit fizzled — too few takers — tokers are stoked about his latest promise for private sector sales by spring. Not so fast.
The devil isn’t necessarily in the dope, but the details. With precious little public consultation to date, Ontario’s new government has embraced a for-profit model with mixed results across the continent.
Ontario’s LCBO, while imperfect, remains reliable and relatively popular. With its vast experience, marketing power and undivided allegiance to social responsibility, it would have been a reliable steward as Ontario transitioned into uncharted post-legalization territory.
Now, for better or for worst, our most experienced distributor of restricted substances has been dealt out of the equation, relegated to online and wholesale sectors. Ideology aside, for-profit marijuana marketing comes at a cost — the LCBO’s dominance would have maximized revenues and minimized expenses, with more cash flow to pay for, say, the welfare increases that Ford has halved, and the mental health hikes he has dialed back.
As a government-owned enterprise that follows orders, the LCBO requires far less scrutiny. Going forward, provincial and municipal regulators will face a much greater burden overseeing questions such as location, zoning, minimum age restrictions and responsible advertising.
No one can predict with certainty the future of private marijuana sales, but it’s worth recalling Ontario’s bizarre historical experiment with private alcohol distribution, courtesy of the much-maligned Beer Store. Under LCBO chair Ed Clark, who served as an adviser to the last Liberal government, Ontario finally broke the stranglehold of the Beer Store — owned by three big multinational brewers — which had been given a sweetheart deal by the last PC government.
As a former TD Bank chief, Clark understood that the best way to broaden distribution, while maximizing government revenues, was to restrict the number of licences and locations available to private supermarkets competing to bid up the price. It was an elegant win-win.
Under Ford’s private sector free-for-all, where is the maximization strategy for marijuana revenues? And how does Ontario prevent a future quasi-cartel rising up to dominate and distort dope sales, just as the Beer Store gained massive marketing muscle through years of relentless consolidation in the industry as the big brewers squeezed out and bought out smaller rivals?
Is the risk of replicating the Beer Store far-fetched? It’s worth noting that British Columbia and Alberta have imposed strict limits on the maximum market share of private operators, ensuring that big business doesn’t wipe out smaller enterprise. With no hint of that here, will Ontario become the Wild West for foreignowned cannabis conglomerates?
Quebec, by contrast, is relying on its trusted government-owned alcohol distributor, the SAQ, for all cannabis sales. Despite offering beer and wine in Quebec corner stores (another Ford promise), its government continues to restrict the sale of spirits (with their higher alcohol content) to the SAQ.
Which raises the question: Is Ford inclined to remove the LCBO’s monopoly on spirits, or will that too be parcelled out to private sellers, just like cannabis, as the Tories go down the road of privatization?
It’s not hard to imagine such a scenario. The rap against the LCBO has always been that its unionized workers make too much money, although critics tend to exaggerate how much its heavily part-time staff earns. Perhaps we shouldn’t be surprised that a premier who has rolled back a scheduled increase in the minimum wage to $15 would also push back against a living wage for unionized cannabis sales agents working for the government.
Speaking of wages, Clark has just announced he is leaving early as the LCBO chair — giving up his token dollar-a-year salary while the buck-abeer premier sets a new course for the province. Dollars for dimes? That’s the risk if you give away the store.