Pot producers welcome reports Ontario mulling private stores
TORONTO The Canadian cannabis industry was chomping at the bit Friday over the prospect of being allowed to sell legalized marijuana in Ontario through private-sector pot shops, and not just those of the provincial government.
Until recently, the official plan for retailing recreational cannabis to consumers in Ontario — which would become Canada’s largest market after the drug ’s scheduled legalization on Oct. 17 — involved a tightly controlled and government-owned monopoly.
But new Premier Doug Ford had previously made remarks suggesting that model could be in for some tweaking. And after media reports surfaced Thursday evening about Ford and the Progressive Conservative government considering private pot stores, the cannabis industry snapped to attention.
Leading marijuana producer Canopy Growth Corp. had previously expressed interest in operating a retail pot shop at their headquarters in Smiths Falls, Ont., and earlier this month announced it planned to acquire retail-focused Hiku Brands Company Ltd.
“We think when you exit prohibition, the first year is going to be all about fact-based education, quality transactions, where informed people are your guide,” said Bruce Linton, chairman and co-CEO of Canopy. “We like it, but it’s actually more like the launch pad value than the immediate margin opportunity.”
While Ford has not officially announced Ontario is pivoting pot sales to the private sector, Simon Jefferies, Ford’s director of media relations, said the government is reviewing the previous proposal to turn the distribution model for the drug over to the Liquor Control Board of Ontario.
Some pot firms were quick to applaud Thursday’s news. Gatineau, Que.-based Hydropothecary Corp. — which recently secured a $10-million investment in Fire & Flower, an adult-use retail cannabis store — said in a release that they were pleased to see reports of Ontario considering privatization.
For those that can get a toehold, the payoff could be significant.
“What we have noticed is that the business demand for private retail is palpable, as evidenced by recent market activity,” noted Eight Capital.
“In our view, (licensed producers) that have a strong presence at retail will be able to favourably position their brands and products in front of consumers in an early effort to establish brand equity, loyalty and awareness.”
Canaccord Genuity analyst Matt Bottomley was not quite convinced that Ontario could change lanes so near the Oct. 17 legalization date and not have some hiccups.