The British Columbia Marijuana Economy — Legalization Under John Horgan
Our legalization tour has finally led us to Canada’s stoner province. British Columbia marijuana is renowned as some of the finest around the world. Given such a lofty reputation for elite cannabis, expectations could not be higher for BC’s cannabis economy. Will the legalization initiatives of John Horgan hold up to the Puff Puff Post’s scrutiny?
Thus far, our legalization tour has shown us that there are many unique systems with which to distribute cannabis after legalization. This has ranged from the free market route of Alberta to the heavily restrictive, socialized Quebec. So where will British Columbia’s marijuana economy fit into the spectrum? The truth is, the province might be difficult to neatly classify.
The NDP party is typically known as the most left-leaning of Canada’s big three. Therefore, one would expect a state monopoly under the John Horgan administration, with every dime bag stamped with a glorious portrait of Vladimir Lenin.
However, this is not the case and this province’s system of cannabis distribution might be a tad more business-friendly than one would expect. BC intends to have a sort of mixed economy with state-run and private stores operating side by side. The province will issue retail licenses using the same methods it uses for alcohol.
The Liquor Distribution Branch will be the wholesale distributor of British Columbia’s marijuana. Additionally, this organization will be in charge of provincial retail operations. The provincial government essentially has a monopoly on public wholesale distribution. They will also control online distribution.
So where does private retail fit in? The LCRB will also license non-medical, private sector stores, and act as a sort of overseer and regulator of the entire industry.
Only One Store?
John Horgan is unprepared for October 17. How unprepared? Exactly one store more prepared than Ontario to be specific. Like Ontario, online sales for British Columbia’s marijuana will be up and running parallel to federal legalization. However, one solitary brick and mortar store in Kamploops stands as the only other distributor of cannabis in the province.
This is not due to a lack of ambitious entrepreneurs. The LCRB currently has 115 applications in for private retail stores. Supply of cannabis doesn’t appear to be an issue either. The provincial government has signed supply agreements with 30 licensed producers, including some of Canada’s largest. These include such industry giants as Tilray Inc., Aurora Cannabis Inc., and Canopy Growth Corp.
So what excuses are John Horgan and his administration offering up for this lag in establishing a functioning cannabis retail economy? British Columbia’s Solicitor General, Mike Farnworth, believes that the immensity of the task is to blame for the delay.
“This is the largest public policy shift in this country in decades and it’s not something that just happens overnight. The fact that we went out and said we’re going to consult with local government and make sure that communities are involved right from the get-go was the right approach to take. To say that because you only have one store, this is a failure, quite frankly I just don’t accept that one bit.”
This excuse does not hold up to scrutiny. In our case studies, we have seen that both Alberta and Manitoba have been capable of establishing enough cannabis retail outlets to satiate the province’s demand.
Perhaps John Horgan and the NDPs are biding their time until the conclusion of B.C.’s municipal elections, which take place on October 20. Just a few days after legalization.
With bylaw complications posing a potential obstacle, one can assume that the process of establishing British Columbia’s marijuana retail economy will be more seamless after this date.
Emphasis on Grass Roots
While BC municipalities have hampered a seamless transition into the post-prohibition world, they will also be a source of economic strength come October.
Earlier this month, the Union of B.C. Municipalities proposed an audacious tax plan to John Horgan’s provincial government. The union, which represents British Columbia’s municipalities suggested that it receive as much as 40 percent of the tax revenue derived from cannabis sales. The proposed agreement would span 2 years, after which, the provincial government and the UBCM would be allowed to come back to the negotiating table.
It would appear that in politics, fortune favors the bold. Much to the surprise of the Canadian public, the provincial government stated that they were amenable to the idea.
Finance Minister Carole James had this to say regarding the proposed division of revenue.
“I’d say we’re open to having that discussion. I think that’s important and I’m glad for the work that they’ve done because it will help us in our conversations,”
This bold suggestion could set a precedent for municipalities across Canada for establishing a fair system of distributing tax revenue from marijuana.
The Possibility for Experimentation
By allowing for two opposing economic models to coexist, John Horgan and the NDP have shown a keen eye for pragmatism. Rather than commit themselves to one philosophy or another, the provincial government seems content to attain some valuable real-world data from experimentation.
However, how long these to models will coexist while driving in the same lane is anyone’s best guess. Perhaps one system of distribution will simply function better than the other and triumph. Or maybe the two will continue to operate parallel to one another with great success. Trial and error will be the only way to determine this.
An Open Door to the Grey Market
British Columbia, like the rest of Canada, plays host to a number of grey market dispensaries. Not quite legal, and not always tolerated, these enterprises have played the part of British Columbia’s marijuana economy in the awkward gestational phases of marijuana legalization.
The federal government has vacillated between ambiguity and hostility towards these cannabis businesses. John Horgan and his administration have taken a different, more accommodating view. The NDP government has provided a gateway into the new legal British Columbia marijuana economy.
With a plethora of experience on the front lines of cannabis distribution, it makes no sense to shut the door on these entrepreneurs from a pragmatic stance. While BC currently finds itself at a major deficit of stores, this process will undoubtedly act as an effective political expedient.
If not for its unpreparedness, British Columbia’s marijuana economy might have surpassed Alberta as the most promising candidate.
John Horgan’s pragmatic approach has left wiggle room for the sort of trial and error based methods that effective public policy is built on. While only time will tell if the provincial government is able to thrive in the business of cannabis, their prospects look favorable.
By: Stefan Hosko