ONTARIO RESTRICTS POT SHOPS
Region may miss out on retail options
Southwestern Ontario, one of Canada’s largest potgrowing belts, could be frozen out of the marijuana retail business amid the Ontario Progressive Conservative government’s abrupt move to limit legal marijuana stores for the entire province to 25 chosen in a lottery. Critics are fuming about yet another 11th-hour change to the industry in Ontario, which has already delayed storefront pot sales by months and where as many as 1,000 stores were expected with no limits on retail licences under Doug Ford’s new government. The restricted rollout of only 25 stores for Canada’s most populous province, even fewer than the former Liberal government proposed as a first phase, will do nothing to fight illegal sales in the black market, one London MPP warned. “It’s a huge concern, because part of the rationale for a retail model — whether it was the one proposed under the previous government, or what Doug Ford has announced — is to control the illegal cannabis market,” London West NDP MPP Peggy Sattler said Friday.
“If Southwestern Ontario has seven or fewer retail outlets, it’s not going to make a dent in the illegal cannabis market,” she said. “We were concerned when the Liberals announced 40 outlets (provincewide). Twenty-five is just going to make things so much worse.”
Home to more than a dozen major marijuana producers and would-be producers, including industry giant Aphria of Leamington, Southwestern Ontario was expected to see dozens of recreational pot stores open next spring. But the Tories snuffed out that prospect late Thursday with their limit on the number of retailers that can open April 1. The Tories cited a nationwide marijuana supply shortage affecting licensed producers, with two Tory ministers from Southwestern Ontario pointing the finger at Ottawa. “Ultimately, what we’re trying to achieve is to eliminate the black market, or reduce the black market usage,” said Essex MP Tracey Ramsey, who held a meeting at her office Friday about cannabis concerns surrounding producer and medicinal licensing. Windsor Mayor Drew Dilkens said this week he thought the city should opt out of retail cannabis outlets. Infrastructure Minister Monte McNaughton said “it would be irresponsible” for Ontario to issue sales licences “knowing that the proper (pot) supply isn’t there.” “This is a national issue that demands a federal government response,” said the Lambton-KentMiddlesex MPP.
A leading cannabis lawyer says the Tories’ latest pot pivot could leave large regions of the province without dispensaries, while putting potential retailers in limbo. “It means that consumers are going to continue to choose the black market over the legal one for a longer period of time than we’d anticipated,” Trina Fraser, an Ottawa lawyer who advises clients in the marijuana industry, said Friday. In Ontario, the sole province
without legal dispensaries, adults can order marijuana only through the province’s online monopoly sales service.
Fraser questioned whether the supply shortage is the real reason behind Thursday’s about-face, noting that licensed producers and their affiliated companies aren’t eligible to enter the lottery.
“If it’s truly about supply, then why wouldn’t you even let licensed producers at least start selling from their site?” she said. “I think there’s more to the story here.” Seven of those 25 licences — which will be doled out under a lottery run by the Alcohol and Gaming Commission of Ontario (AGCO) — will be granted to applicants in the west region, a vast area stretching from Windsor to Niagara to Waterloo. Municipalities with populations under 50,000 can’t enter the lottery.
“The odds of those licences coming to Sarnia, London and Windsor are very small,” said Sarnia Mayor Mike Bradley, who called the province’s pot plan poorly executed. Limiting initial retail licences is bad news for would-be retailers who went on lease-signing sprees in recent months. London-based marijuana grower Indiva had plans to open about a dozen storefronts across Ontario, including in London and Windsor, through a 9.9-per-cent stake in Retailgo Corp., which will operate a string of dispensaries under the name Ouid. The company has already signed leases for many of those locations.
Indiva chief operator Koby Smutylo questioned the government’s reasoning for dropping the bombshell announcement just days before it was set to begin accepting applications for retail licences.
“It just speaks to the fact that the government is not making decisions based on policy ... and it doesn’t send a good signal to Ontarians,” said Smutylo, who also voiced concern about the lack of details released on who is eligible to enter the lottery. “There’s so much uncertainty.” Indiva has spent thousands of dollars planning a retail space at its Hargrieve Road facility, Smutylo said, but now it’s unclear when it will ever be allowed to open. Fraser predicts that the winners of the lottery — for which expressions of interest must be submitted to the AGCO between Jan. 7-9 — may be tempted to sell their coveted licences to the highest bidder.