Ontario Cannabis Stores Could Exceed 1000 With No Market Cap
The Ontario PCs have been busy this week. The Doug Ford administration recently announced that a number of Wynne era cannabis policies were on the chopping block. Yesterday Ontarians were treated to the news that smoking weed in public would be permissible wherever tobacco is allowed. This was a logical and much-needed change as enforcement of a public smoking ba promised to be a nightmare. Additional this policy did nothing to help remove the stigma that surrounds cannabis. The next major change announced by the provincial government involved scraping a bizarre cap on the number of Ontario cannabis stores that would have been permitted.
Come legalization October 17, Ontario will not have any brick and mortar dispensaries operational. The Ford administration began their quest for establishing a functioning retail system two steps behind. Rather than working with the hand they were dealt, the PCs did away with the disastrous government-owned brainchild of Kathleen Wynne. Apparently, a cannabis economy that was projected to lose money isn’t a great idea. In the meantime, the online government-operated, marijuana store will have to get Ontario stoners through the winter.
The PCs have stated that April is the projected date for Ontario cannabis stores to be operational. In the meantime, the Alcohol and Gaming Commission of Ontario will be accepting applications from entrepreneurs who wish to establish retail operations. With no cap on the amount of Ontario cannabis stores, some are projecting that the total number could exceed 1000.
This is not an inflated estimate either. Alberta under the Notley administration has pursued a similar privatized model to Ontario. With a population of just over 4 million, the province has already accepted over 500 application. Ontario by contrast has a population of nearly 14 million.
Who Gets To Participate?
The process of vetting Ontario cannabis stores is sure to be a painstaking one. The AGCO has a long road ahead to ensure that the transition into the post-prohibition world will go smoothly. Attorney General Caroline Mulroney is of the opinion that the immensity of this process will prevent all applications for Ontario cannabis stores from being assessed come spring of 2019.
“There will be, I’m sure, a lot of applications to the AGCO and they’re going to have a lot of work in order to do the due diligence that’s required. I don’t expect that all applications will be granted immediately.”
As a result of this lag, that 1000 stores number might be a distant target. How many brick and mortar stores will be operational come April is anyone’s best guess.
Issues With Monopoly
Alberta was keen to enact the proper legislation to ensure that larger corporations do not dominate the entire cannabis retail industry. In the prairie province, Notley has set 15% as the upper limit of retail licenses that can be owned by any one entity. This savvy policy is sure to act as a safeguard against a dystopia where a handful of corporations dominate the entire cannabis industry. Such a status quo would squeeze out small business from market participation. For an analogous case study, one need look no further than the oligopolistic nightmare that is the Canadain telecom industry.
Some are worried that Doug Ford has not set in place the proper precautions to ensure the wellbeing of small business. Mulrooney attempted to placate Ontarians in her address to the public but was markedly vague.
“We want to make sure that the market is not dominated by one or two parties. If municipalities and local residents feel that the concentration is too high or there are issues related to the store location or the particular applicant, they have an opportunity at that time to speak directly to that.”
This sounds less like a solution, and more like a tacit acknowledgment that there might be a problem somewhere down the road. Phoning into some bureaucratic Ontario cannabis stores hotline does little to address the potential disaster of oligopoly. It will, however, enrage dispensary owners with mind-numbingly bland stock rock and elevator jazz.
The PCs have shocked and awed all with their sensible plan for legalization. Ontario is on track to reap the financial benefits of private cannabis. The government estimated that it will save around $150 million by not opening the 150 government operated stores that the Wynne administration planned for 2020. This is to say nothing of the tax revenue that will flood the coffers of Ontario’s municipal and provincial governments.
While the administration was silent on the costs that the AGCO will absorb from the inspection and vetting of Ontario cannabis stores, this is sure to pale in comparison to the profits acquired from this metamorphosis.
By: Stefan Hosko