An opportunity just waiting to be seized
Cannabis can be to Hamilton what the grape is to Niagara Region
Despite the threat of serious repercussions hanging over their heads, the dozens of stores that continue to illegally sell cannabis in Hamilton are evidence of the intense local demand for retail marijuana. On Jan. 14, city council has the opportunity to legitimize the retail sale of cannabis in Hamilton by opting in to the regulatory regime recently created by the province.
The Hamilton Chamber of Commerce has long advocated for policies that enhance the social and economic prosperity of Hamilton. Cannabis has the opportunity to be to Hamilton what the grape is to Niagara Region. This potential is reflected in market analysis, public sentiment, and Hamilton city staff analysis.
Deloitte projects the legal sales of cannabis to generate up to $4.34 billion across Canada in the first year of legalization alone. And despite online delivery options now available, Deloitte’s research also indicates that almost half (47 per cent) of all recreational products in Canada will be bought from physical locations, based on consumer preference.
When it comes to local opinion, results from an online survey conducted by Public Square Research show 93 per cent of Hamiltonians agree there is a lot of money to be made in the legal cannabis industry, and four in five Hamiltonians understand that cannabis legalization will provide business opportunities for local people.
On Dec. 18, Hamilton city staff released a report advising city council to opt in to cannabis retail stores in Hamilton. Therein, staff considered the merits of opting in, based on the positive impact it will have on economic development, public health and municipal funding.
The Hamilton area is already establishing a strong market share in the booming cannabis industry, and we are poised for continued, rapid growth. At present, Hamilton is home to several licensed cannabis producers that employ hundreds of people and will bring in billions of dollars in revenue. At a time where we are actively trying to grow the commercial tax base, this form of advanced agriculture will add to the diversity of our growing economy.
Allowing vertical integration, from seed to production to physical retail, is not just sensible, but allows our local economy to have greater participation in this growing, profitable industry. It is especially important to opt in now, as the province has just announced that it is initially capping the number of licences granted; firstmovers will be getting an advantage. It would be a huge missed opportunity not to support the introduction of legitimate, Hamilton-owned, brickand-mortar businesses that are looking to contribute to the local economy.
Opting in to cannabis retail stores presents an opportunity for significant municipal revenue streams. By opting in, the city will receive an additional $574,493 in provincial funding and a portion of excise taxes from national sales. The government excise tax on cannabis has been set at about $1 per gram; the federal government will be keeping 25 per cent of excise tax revenue, while the remaining 75 per cent will go to provincial governments. In Ontario, the provincial government has promised to give 50 per cent of the excise tax funds to the municipalities that choose to opt in to the retail model.
Hamilton Police estimates there are 30 illicit shops currently operating in Hamilton. With limited resources, it is incredibly difficult for local law enforcement to prohibit illicit retail cannabis in Hamilton. City staff have reported that the city has insufficient funds to cover the ongoing municipal costs associated with the legalization of cannabis; the additional excise tax revenue from opting in may be our only means of addressing illicit retail. Aside from giving local police resources to cover additional policing costs, any additional revenue could serve to finance projects across the city.
For those concerned about a lack of local control under the provincial regime, it is important to consider that there is another law that will help govern this industry: the law of market competition. As noted in Deloitte’s market report, “like any other retailer, those selling cannabis will need to meet or exceed (consumer) expectations and needs if they intend to succeed.”
Consumers vote with their dollars, and they will prefer reputable retail stores that adhere to the highest property standards.
If we opt in, we will be in a position to work with the province to fix any of the bugs that emerge in this new regime and have a greater ability to co-ordinate with the Alcohol and Gaming Commission of Ontario and the OPP on strict enforcement. You can be sure that the province will work with municipalities to optimize the regulations and protect the income stream that comes from legal retail.
Prohibiting legal recreational cannabis retail stores in Hamilton would ignore the clear consumer preferences. Retail cannabis is here to stay in Hamilton, whether council decides to opt in or out. The choice facing us now is whether retail remains seedy and illegal, or whether we embrace this bold new world that will grow our economy and usher in an era of competition that increases city revenues.